Silvercorp shares down on police probe
Shares in Silvercorp Metals (TSX/NYSE:SVM) were trading down 3.2% at $6.34 by lunchtime on Monday after a Canadian daily reported that Canada's federal police service is eyeing an investigation into the Toronto-listed Sino-Canadian miner.
Vancouver-based Silvercorp is alleged to have paid Chinese police to arrest a 35 year-old Canadian national Huang Kun, believed to be behind a short and distort scheme in the company's stock dating back to September last year. Huang has been in custody in China since July.
The Globe and Mail reports the case is being handled by the RCMP’s International Anti-Corruption Unit which "is responsible for investigating possible illegal actions by Canadian firms operating in foreign jurisdictions including cases of bribing foreign officials."
The share manipulation is also being investigated by another RCMP unit, the Integrated Market Enforcement Team (IMET) at the behest of the company.
The saga was kicked off by an anonymous letter alleging $1 billion fraud at the company over silver production and the revelation of a short position of 23 million shares or 13% of the outstanding stock.
The stock plunged on the news and over the following months it led to wild swings in the share price of Silvercorp as investors and investigators tried to make sense of events and the company attempted to set the record straight.
The company is now worth $1.08 billion on the Toronto bourse after a strong month that showed 20% gains in market value. Silvercorp is still down some 60% from highs reached April last year.
It operates four silver-lead-zinc mines in Henan province and is also advancing a silver project in northern British Columbia, Canada.