Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Shareholders who held onto their Silvercorp Metals stock during the rollercoaster ride that started on September 2 when the company had to disclose fraud allegations and a massive short position in its stock, had something to show for their loyalty on Friday.
Silvercorp, China’s biggest silver miner, is now worth more than it was before the FBI, RCMP, SEC and others joined the hunt for the share manipulators. You had to have nerves of steel though – volumes sky-rocketed, intra-day swings reached 22% and at one point shell-shocked owners were down a net 30%. And what is most remarkable: Silvercorp’s gains are into the teeth of a silver price that has dropped 27% this month and a sector slaughtered along with it.
Silvercorp (TSE:SVM) was changing hands for $8.47, up 4.5%, in noon trade on Friday building on solid gains Thursday. It closed at $8.23 September 1, the day before the announcement of an anonymous letter alleging $1 billion fraud at the company and the revelation of a short position of 23 million shares or 13% of the outstanding stock.
The recovery started last week Friday when the firm said it found the alleged short-sellers behind an effort to drive down the company’s stock price and is suing two New York-based websites – Chinastockwatch.com and Alfredlittle.com – for spreading false information and is seeking punitive and compensatory damages.
One of the most dramatic days was Wednesday September 14 when more than 10 million shares were traded against an average of less than 1 million before the whole debacle: the share bounced between a low of $5.81 and a high of $7.42. This was the day after it lost 21% on volumes of 9.7 million shares. The Vancouver company has 175 million shares outstanding and is now worth $1.5 billion on the Toronto bourse.
With the silver price struggling to stay above $30/oz on Friday from $42/oz at the start of the month other companies in the sector have been hammered. Bellwether Silver Wheaton (TSE:SLW) has skidded 18% since September 2 for instance. It is now worth $11.5 billion
2 Comments
Ed233
I hope that Silvercorp pursues this action and puts all of them out of business. These thieves always hide in the dark trying to dupe the public in any manner they see fit.
Jail is the proper place for those people. Disclosure: I am long Silvercorp and have been for some time. LOL Looking after your money.
sailormac
Shocking. Unless of course the allegations prove to be true. There is nothing legally or morally wrong about publishing true facts about a company, even if your goal is to profit from the result