Silvercorp Metals (SVM) Slammed As Serious Questions Raised

Shares of Silvercorp Metals Inc. (NYSE: SVM) are under heavy pressure Tuesday after a blog raised serious questions about the company.

In a post at Alfredlittle.com, questions about customers, geologists, production, quality and related party transactions were raised.

The report showed that:

• Henan Provincial Land & Resource Bureau mining reports contradict the production, quality and resource estimates of SVM’s key SGX (Ying) mine as shown in its 40-F and independent NI 43-101 reports that rely heavily upon data provided by management. No independent geologists have visited SVM’s SGX mine since 2008.
  
  
• Outside Tests of Ore Obtained from the SGX Mine Reveal Low Silver Content
  
  
• 98% of Henan Found’s Sales Growth in 2010 came from Two Questionable Customers. Management Failed to Disclose SVM’s Largest Customer is a Related Party.
  
  
• Recent Auction Sale of 5% of Henan Found Values it at a 90% Discount to SVM’s Market Value
  
  
• SVM Acquired Yangtze Gold from Chairman Rui Feng’s Relative Giving Him a 1500% Gain in Six Months

A full report can be found here.

Adding fuel to the fire was the fact that Muddy Waters LLC, a firm that has correctly pointed out fraud at a number of China-based companies, said they are short the stock. If you don't remember, Muddy Waters' latest target was Sino-Forrest (OTC: SNOFF), which has seen its shares plunge and is now indefinitely halted for trading.

Shares of Silvercorp Metal are down 10 percent in mid-day action.

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