Silvercorp’s Ying getting back its zing

Even after a KPMG forensic report cleared Vancouver-based Silvercorp Metals (SVM-T, SVM-N) of all anonymous allegations of accounting fraud in October, the largest primary silver producer in China has retained two independent consulting firms – AMC Mining Consultants and Golder Associates – to prepare updated National Instrument 43-101 reports on four of its properties in China.

The company said that it “intends to ensure that there is brand-name verification of its resource and reserve estimates, which helps alleviate any concerns that may linger from the anonymous third-party allegations circulated in 2011.” The new reports will incorporate exploration and development work completed by Silvercorp over the last fiscal year, including 187,000 metres of underground and surface drilling.

Silvercorp has four silver-lead-zinc mines in the Ying mining district of China’s Henan province and recently acquired the nearby XBG and XHP silver-gold-lead-zinc mines. In Hunan province, production is underway at its BYP gold-lead-zinc project, and the company is building a mill and related facilities at its GC silver-lead-zinc project in Guangdong province. 

On Dec. 20, Silvercorp announced that Chinese law-enforcement agents opened a criminal case to investigate and find the “creators of false and fraudulent reports by anonymous parties – such as IFRA, Alfred Little and others – attacking Silvercorp and its Chinese subsidiaries.”

In September the company filed a lawsuit in New York County Supreme Court “charging defendants Chinastockwatch.com, Jerry Katz, Alfredlittle.com, Alfred Little, Simon Moore and several ‘John Doe’ defendants with spreading ‘false, defamatory and fraudulent’ information about Silvercorp on the Internet and in letters to the media and regulators.” It has filed two separate actions in B.C.

None of these allegations have been proven in court.

The KPMG report found that the cash and short-term investment balances Silvercorp reported on Dec. 31, 2010, and March 31, 2011, were both substantially correct, and that the mining company’s procedures did not support allegations of inflated revenues.