China stainless steel mogul fights to avoid a second collapse
A debt crisis is threatening the future of one of the world’s top stainless steel producers, Jiangsu Delong Nickel Industry.
Silvercorp Metals, China’s biggest silver miner, was changing hands for $9.72 in Toronto on heavy volumes shortly after the open Monday, up almost 19% after a report by the forensic accounting arm of KPMG showed no truth to allegations of $1 billion in accounting fraud at the company.
Shareholders who held onto their Silvercorp stock during the rollercoaster ride that started on September 2 when the company had to go public with the accusations, believed to be the work of shortsellers that had built up a massive position in the stock, are now able to show a handsome profit for their loyalty. The company is suing two New York-based websites – Chinastockwatch.com and Alfredlittle.com – for spreading false information and is seeking punitive and compensatory damages.
The counter closed at $8.23 September 1, the day before the announcement of an anonymous letter alleging the fraud and the revelation of a short position of 23 million shares or 13% of the outstanding stock. During September trade volumes rocketed, intra-day swings reached 22% and at one point shell-shocked owners were down a net 30%.
Silvercorp’s gains were also into the teeth of a silver price that dropped 27% during the month and a sector slaughtered along with it. Silver futures were priced at $31/oz on Monday from $42/oz at the start of September.
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