On 4/18/12 Silvercorp Metals (NYSE: SVM) President & COO Myles Gao made a presentation at the 2012 European Gold Forum in Zurich, Switzerland. I uploaded a recording of the webcast of Mr. Gao's presentation to my Vimeo site (here). The webcast was also archived by the European Gold Forum (here).
About four and a half minutes into the presentation, Mr. Gao reads from slide #6 that "Silvercorp's strategy is to focus on generating cash flows early on by developing high grade projects that may be too small for large companies and too large for junior companies."
Mr. Gao then paused from reading the slides and gave an example of SVM's strategy he recalled from his experience as SVM's Qualified Person on the Ying acquisition project in 2004:
For example, like you know, at the very beginning the Ying mine very small, only have about, uh, less than 20 millions, uh, 2 million ounces of silver, and so probably is too, you know, too [inaudible], too, too, too small for like, uh, the big companies, but, uh, for large [inaudible] for the uh small companies maybe you know, uh, it's probably too, too, you know, too hard to develop, so Silvercorp had that property and they fast developed it to a mine. [emphasis added]
Mr. Gao's recollection of the small size of the Ying silver resource is troubling. What did he mean when he said "less than 20 millions, uh, 2 million ounces of silver?" Personally, after listening to the recording many times I think he meant 2 million ounces of silver. Regardless, as I will show below either figure should be problematic for SVM investors.
On 4/26/04 SVM (then called "SKN Resources") issued a press release (archived here) announcing it had signed a final cooperative joint venture contract acquiring a 70% interest in the Ying project. In the press release, SVM disclosed for the first time the following table of Ying (or "SGX") silver resource estimates:
(click to enlarge)
Combining the indicated and inferred silver resources of 8,359,713 and 52,663,286 from the table results in 61,022,999 total ounces of silver.
So regardless of whether you believe Myles Gao meant 20 million or 2 million ounces of silver, both are a far cry from the 61 million ounces of silver first disclosed by SVM at the very beginning on 4/26/04.
There are, of course, a number of possible explanations for Myles Gao's questionable statement:
- Myles simply misspoke. He meant to say 61 million ounces of silver.
- Myles really meant 20 million ounces and the 61 million ounces originally reported was a 3x exaggeration.
- Myles really meant 2 million ounces and the 61 million ounces originally reported was a 30x exaggeration.
- Myles might explain that resource estimates are all really "apples and oranges" such that 61 million, 20 million, and 2 million are all somehow correct.
More than likely, SVM will simply advise investors to continue to ignore the "short and distort" conspiracy. Maybe SVM will announce the belated repurchase of a few more shares using the mountain of cash reported on its balance sheet. Or better yet, overpay for a few more acquisitions in China before the Ying mine is depleted.
Whatever SVM responds, it will not stop us from fulfilling our new mission (announced 12/19/11 here) to expose fraud, corruption and other crimes committed by a small group of U.S. listed Chinese companies whose management utilize threats, false arrests, violent force, kidnappings, corruption of foreign officials and abuse of the legal system to silence their critics and deprive them of their right of free speech and expression of their investment opinions.
Since 12/19/11, we have experienced great success in fulfilling our new mission and have received well deserved recognition for our past work exposing Chinese stock fraud:
1. On 12/20/11, a Freedom of Information Act ("FOIA") request for records on Deer Consumer Products (NASDAQ: DEER) and its management and directors was denied by the SEC because specific or contemplated law enforcement proceedings against DEER were either pending or prospective.
2. On 1/26/12 FBI agents raided the headquarters of DEER's former advisor Benjamin Wey (New York Times article can be found here). I first exposed the massive fraud conducted by DEER in report (here) published in March 2011.
4. On 4/23/12 the SEC charged SinoTech Energy (formerly NASDAQ: CTE) and its Chairman with fraud (link here). I was the first to blow the whistle exposing the massive fraud at CTE in an A*L report titled "SinoTech Energy: Enhanced Oil Recovery or Capital Extraction" (here) published on A*L on 8/16/11.
5. On 5/14/12 the SEC charged China Natural Gas (formerly NASDAQ: CHNG) and its Chairman Qinan Ji with fraud (link here). I was the first to blow the whistle on CHNG's fraud in a report (archived here).
6. Then on 5/21/12 the NASDAQ halted trading of SinoClean Energy (SCEI). I first blew the whistle on SCEI's fraud in a report (here) published on A*L on 4/28/11. I explained the reason NASDAQ halted SCEI in a report (here) published on A*L on 5/22/12.
I am confident that my chain of success will only grow stronger as I continue to speak the truth and seek justice on behalf of investors (both long and short) harmed by U.S. listed Chinese companies that try to silence their critics.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.