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Statement
From Chairman
VANCOUVER, British
Columbia � October 25, 2011 � Silvercorp Metals
Inc. (�Silvercorp�
or the �Company�),
of Vancouver, Canada, provided additional comments from its Chairman, Dr. Rui Feng, following receipt of
the KPMG Forensic Inc. (�KPMG�)
report, commissioned by its Special Committee (the �KPMG Report�) which
was disclosed by Silvercorp yesterday.
Statement by Dr. Rui Feng, Chairman, and Chief
Executive Officer:
Immediately following the
receipt of an anonymous, threatening letter on September 1, 2011, Silvercorp provided comprehensive and detailed
information to refute the anonymous allegations and rumors contained in the
letter and subsequent electronic communications. These ill-founded
claims, made by admitted short sellers, were intended to manipulate Silvercorp�s share price and harm the Company and its
shareholders. The Company is of the view that the KPMG Report released
yesterday provides thorough, independent confirmation that the substance of
the anonymous allegations addressed in the KPMG Report has no merit (the
details of the KPMG Report were released by press release on October 24,
2011).
We have fought hard
against the anonymous short-sellers� scheme to malign our Company and profit
from their short positions. To reassure the market, our board formed a
Special Committee, who, among other things, retained the services of KPMG to
conduct an independent investigation into the matters addressed in the KPMG
Report. The forensic accounting investigation into the matters set out in the
KPMG Report was extensive and expensive. From September 6, 2011
when they were retained, until the final report was finished, KPMG expended
over 2000 man-hours on the forensic work carried out in Canada and
China. Total expenditures to date for fighting this manipulation scheme
are estimated at $2 million dollars which includes KPMG Forensics� fees, plus
bills for the Special Committee and its independent legal counsel, and other
costs.
In addition to monetary
costs, my focus and that of my entire management team has been almost
completely distracted from our normal business operations over the last two
months. Employees at every level of our operations have been concerned
and worried with what has happened to Silvercorp,
and what may happen to the Company in the face of such serious and nefarious
accusations. Fighting this battle has been exhausting! We have
demonstrated that there is no fraud at Silvercorp,
that we have been unfairly targeted, and that we are the victim of a classic
�short and distort� scheme.
We have gone above and
beyond all reasonable efforts to deal with this �short and distort�
manipulation scheme. The facts and data are available. Our books have been
properly audited, we have now been forensically examined as provided in the
KPMG Report, and all our transactions have been fully disclosed. There is
absolutely no substance to the anonymous allegations. Moving forward we
will refocus and concentrate on our business of mining, mine development, and
exploration, things that build value for our shareholders.
While we will focus on
building value for our shareholders going forward, many questions remain to
be answered. (1) Who are the anonymous short sellers behind this short
and distort scheme? (2) Who will compensate the Company for the substantial
monetary and non-monetary losses incurred to defend ourselves against these
non-recourse allegations and rumors? (3) Who will compensate
shareholders who were frightened into selling their shares at a loss? (4) How
will market integrity be protected from this kind of anonymous short and
distort scheme so that no other legitimate companies and their shareholders
will be hurt by a similar scheme again?
In closing, we are
grateful to our shareholders and employees who stood faithfully by Silvercorp through the last difficult two months. We are
also grateful for our Special Committee members whose normal lives and busy
schedules were interrupted to investigate the short sellers� anonymous
allegations in a timely manner.
About Silvercorp Metals
Inc.:
Silvercorp Metals Inc. is engaged in the
acquisition, exploration, development and mining of high-grade silver-related
mineral properties in China and Canada. Silvercorp
is the largest primary silver producer in China through the operation of the
four silver-lead-zinc mines at the Ying Mining Camp in the Henan Province of
China. The Company is developing its GC silver-lead-zinc mine in the
Guangdong Province and recently acquired the BYP gold-lead-zinc mine in Hunan
Province. In Canada, Silvercorp is preparing to
apply for a Small Mine Permit for the Silvertip high grade silver-lead-zinc
mine project in northern British Columbia to provide a further platform for
growth and geographic diversification. The Company�s shares are traded on the
New York Stock Exchange and Toronto Stock Exchange and are included as a
component of the S&P/TSX Composite and the S&P/TSX Global Mining
Indexes.
For further information:
SILVERCORP METALS INC. Rui Feng, Chairman/CEO
&Lorne Waldman, Corporate Secretary Phone:(604) 669-9397, Toll Free
Phone: 1-888-224-1881 Fax: (604) 669-9387, Email: info@silvercorp.ca, website: www.silvercorp.ca.
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