Slide 1: The Premier Primary Silver Producer in China Today… A Global Producer Tomorrow
NYSE: SVM The Premier Primary Silver Producer in China Today… A Global Producer Tomorrow. Fighting the “Short & Distort” October 13, 2011
Slide 2: Capital Structure & Financial Highlights
NYSE: SVM Capital Structure & Financial Highlights Capital Structure Financial Highlights2 Fiscal Year NYSE: SVM; TSX: SVM Q1 FY2012 2011 Revenue US$69.7 M US$167.3 M 52-Week Hi/Low: US$16.32/$5.86 Net Income US$25.6 M US$68.8 M Shares Outstanding1: 175.1 Million Operating Cash Flow US$33.9 M US$104
Slide 3: 12 Month Share Price vs. Short Position
NYSE: SVM 12 Month Share Price vs. Short Position *Short data info provided by Dataexplorer 2
Slide 4: Well Planned and Organized “Short and Distort”
NYSE: SVM Well Planned and Organized “Short and Distort” In September, Silvercorp was attacked by a group of well-organized and well-planned illegal short sellers, who tried to profit by manipulating Silvercorp's share price with false and selective statements, fabrications and rumours. Sept. 1, 201
Slide 5: Well Planned and Organized “Short and Distort” (continued)
NYSE: SVM Well Planned and Organized “Short and Distort” Sept. 14, 2011: the anonymous letter V1 writers posted a much shorter and toned- downed version on the Chinastockwatch.com (anonymous letter V2) Sept. 19, 2011: a twisted version of Alfred Little anonymous allegations were posted Sept. 19, 201
Slide 6: Who are the Anonymous Writers and Alfred Little?
NYSE: SVM Who are the Anonymous Writers and Alfred Little? Alfred Little and the Anonymous Shorters have not been identified. As such, they avoid legal responsibility for the rumours and fabrications that have been circulated. Who is the International Financial Research & Analysis Group (IFRA), hire
Slide 7: Short Attack Results have been mixed
NYSE: SVM Short Attack Results have been mixed In case of Spreadtrum Communications Inc., Muddy Waters shorted Spreadtrum first, then issued reports and drove down the share price to $9. But they were proved wrong as the stock is now at $20. In case of Harbin Electric Inc., short sellers spread rumo
Slide 8: Short Attack’s Tactics
NYSE: SVM Short Attack’s Tactics Fabrication: For example, the main accusation against us alleges our Chinese subsidiaries’ SAIC filings for calendar 2010 show a loss of US$0.5 million. Our lawyer’s enquiry finds that the calendar 2010 financial statements are not available for any company from SAIC
Slide 9: Short Attack’s Strategies
NYSE: SVM Short Attack’s Strategies Mixed concepts: Financial Reporting: Simply comparing public company reporting (under US GAAP or Canadian GAAP) with private Chinese subsidiary in China reporting (as Income Tax-return type of financial Statement at SAIC site) Technical Reporting: Simply comparing
Slide 10: Rules and Regulation Silvercorp Follows
NYSE: SVM Rules and Regulation Silvercorp Follows: Technical reporting for mining companies listed in Canada is governed by National Instrument 43-101 or NI 43-101. According to NI 43-101, only a Qualified Person (“QP”) can issue technical results. NI43-101, Standards of Disclosure for Mineral Proje
Slide 11: Source of Information for Anonymous Shorters and Alfred Little
NYSE: SVM Source of Information for Anonymous Shorters and Alfred Little: What is the accuracy and reliability of the Anonymous Shorters and Alfred Little's data? Alfred Little and the Anonymous Shorters claim: all Chinese Companies’ data is not reliable as they are from China, but their own dat
Slide 12: Source of Information for Anonymous Shorters and Alfred Little
NYSE: SVM Source of Information for Anonymous Shorters and Alfred Little: One thing we may give Alfred Little credit: When The Globe and Mail interviewed one of their authors, Mr. Huang, he said that, "We never said in the report that the company was a scam, or cooked its books." This directly contr
Slide 13: What Silvercorp has done
NYSE: SVM What Silvercorp has done: An independent committee formed on Sept. 6, 2011 Legal advisors and independent accountants, KPMG Forensics Inc. ("KPMG"), have also been retained to investigate. Working with securities regulators to investigate the source and nature of the allegations. W
Slide 14: The Anonymous Letter V1
NYSE: SVM The Anonymous Letter V1 Dated: Aug 29 Rec’d by SVM: Sep 1 Re: Potential $1.3 Billion Accounting Fraud at Silvercorp (NYSE:SVM, TSX:SVM) 13
Slide 15: The Anonymous Letter V1
NYSE: SVM The Anonymous Letter V1 Proof Silvercorp, (NYSE: SVM, TSX:SVM.CN) Is Just Another China Fraud 14
Slide 16: The TONED-DOWN Version of Anonymous Letter V1
NYSE: SVM The TONED-DOWN Version of Anonymous Letter V1 Dated and Posted on Internet: Sep 14 Our Questions About Silvercorp, (NYSE:SVM, TSX:SVM.CN) No Fraud accusation any more! Why? Paddling away from their original positions? Or are they not sure now? 15
Slide 17: Differences in Tone – Example #1 SAIC Filings
NYSE: SVM Differences in Tone – Example #1 SAIC Filings Main Accusation in the Anonymous Letter V1(PAGE 1) “…it appears that financial statements for Henan Found TONE-DOWN Version of Anonymous Letter V1 (PAGE 8) have been changed.” “This [second report] summary data appears to match the Henan Fo
Slide 18: Differences in Tone – Example #2 Cash Position
NYSE: SVM Differences in Tone – Example #2 Cash Position Another Major Accusation in the ORIGINAL Anonymous Letter V1 “we have no reason to dispute the company’s statement that it holds TONED-DOWN Version of 1st Anonymous Letter US$87 million of cash outside China.” They obtained their source
Slide 19: Differences in Tone – Example #3 43-101 Resource Report
NYSE: SVM Differences in Tone – Example #3 43-101 Resource Report Another Major Accusation in the ORIGINAL Anonymous Letter V1 TONED-DOWN Version of Anonymous Letter V1 18
Slide 20: The Globe and Mail – September 14 Article
NYSE: SVM The Globe and Mail – September 14 Article “An analyst behind the report said the hedge fund was curious about the Vancouver-based company’s high grade and low cost as compared to its peers. ‘They wanted us to look into this,’ Dino Huang, a Shanghai-based analyst with International Financia
Slide 21: Other Victims Similar to Silvercorp – Spreadtrum Communication Inc.
NYSE: SVM Other Victims Similar to Silvercorp – Spreadtrum Communication Inc. 20
Slide 22: Other Victims Similar to Silvercorp – Harbin Electricity, Inc
NYSE: SVM Other Victims Similar to Silvercorp – Harbin Electricity, Inc 21
Slide 23: What is next: We are waiting for KPMG result
NYSE: SVM What is next: We are waiting for KPMG result We call on regulators and authorities to protect legitimate company like us, and our shareholders from this type of reverse “Pump and Dump, that is “short and distort” 22