Vancouver-based Silvercorp Metals (TSX:SVM) has denied allegations that it’s involved in a “$1.3 billion accounting fraud.”
The company, which operates four silver mines in China’s Henan province, said Friday it had received an anonymous letter addressed to the Ontario Securities Commission, the company’s auditors and media outlets that claimed the company hasn’t accurately reported its financial statements or the true quality of the ore at its mines.
Silvercorp said there has been a dramatic increase in the short position of its shares over the past two months, now totalling some 13% of the company.
The accusation comes amid increased concerns about Canadian companies with operations in China, notably Sino-Forest, allegedly defrauding their investors.
Silvercorp has assembled a “task force” of independent directors to investigate and discover the identity of the mystery short seller.
“This type of manipulative scheme is baseless and … depresses our share price and harms our shareholders,” said company CEO Rui Feng.
“While we are fighting these manipulation schemes, we will continue with our ongoing share buyback program, increase our investor relations efforts and continue to focus on growth through exploration, acquisitions and mine development.”
The company further stated that its reported net income, cash position and the grade of its ore deposits have been published accurately.
At press time, Silvercorp’s shares were down 2% to $8.07.
Joel McKay
Twitter:jmckaybiv