Silvercorp Metals Inc (SVM)

[ChuckD-MSB]

New PR its is very long and contains mass documents, here are the first 2 pages

http://silvercorpmetals.com/_resources/news/PR_and_schedule_1_to_4.pdf


PRESS RELEASE
Trading Symbol: TSX: SVM September 14, 2011
NYSE: SVM
SILVERCORP RESPONDS TO SECOND ANONYMOUS ALLEGATION AND PROVIDES
GOVERNMENT CERTIFICATION OF TAXES PAID
VANCOUVER, British Columbia – September 14, 2011 – Silvercorp Metals Inc. (“Silvercorp”
or the “Company”) advises that a second set of anonymous allegations against the Company has
been made, which was published on the internet (the “2nd Anonymous Report”). The Company
refutes the substance of all allegations in the 2nd Anonymous Report, and believes it has been
published in furtherance of concerted efforts by a group of short sellers to drive down the
Company’s share price through false, selective or ignorant statements and rumors. Investigations
are ongoing by the RCMP, the BC Securities Commission, the SEC and the FBI to determine the
identity of the anonymous authors.
The Independent Committee, in keeping with its duty, has retained independent legal counsel to
examine the anonymous allegations. In addition, KPMG Forensic Inc. was engaged on September
6th by legal counsel to the Independent Committee to assist the Independent Committee by
completing a report on certain aspects of revenue, cash balances and income tax and VAT
payments in China, and to perform certain reconciliations of the Company’s filings in China with
those filed with North American regulators. The Independent Committee will report further on
its findings and respond to the allegations in the 2nd Anonymous Report in due course.
Dr. Rui Feng, Chairman stated, “Over the course of the last five years, Silvercorp has developed
and commenced profitable mining from its Ying Mining Camp. Revenues from operations have
resulted in Silvercorp’s operating subsidiaries having paid over US$116.6 million in taxes to the
Chinese government, as evidenced by the Tax Certificates issued by Chinese government, and
total dividends of US$152 million to its shareholders. These reflect a total revenue stream that is
in accordance with the mine production and sales revenues reported by the Company during that
period. I ask shareholders to exercise common sense in assessing whether these allegations of
“fraud” against the Company have any merit whatsoever in the face of very significant revenues,
tax payments and dividends, and particularly when the accusations are made anonymously by
parties whose only interest is in depressing the Company’s share price. I invite the authors of the
anonymous allegations to come out of the shadow and participate with the regulators in their
investigations, if their concerns truly extend beyond the profitability of their short positions.”
While Silvercorp is working with the regulators we will not comment further on any rumor or
fabrication on the Company published by anonymous letters or blogs, however we wish to
broadly address two of the concerns raised in the 2nd Anonymous Report respecting (1) the

disparity between grades and production numbers reported in China and North America, and (2)
the sales to the related party:
(1) The Henan L&R Bureau Report or “Dynamic Reconnaissance Report on the SGX Mine” is
solely based on a detailed exploration report on the SGX property prepared a Chinese firm for the
mining permit application in June 2005. The report is based on limited exploration results before
May 2005, just a few months after Silvercorp acquires the SGX property. Alfredlittle should
know that this type of report was not reviewed and checked by an independent qualified person
defined by NI 43-101 so it is not NI43-101 compliant and cannot be relied on. According to
Chinese regulations, once the detailed exploration report for mining permit application was
completed, its resource calculation does not have to be updated every year, and is only updated
when preparing to renew the mining permit. The SGX mining permit expires September 2014 so
an updated exploration and resource estimates report is not required t by the L&R Bureau until a
couple months before September 2014.
(2) It is inferred that significant sales of concentrate to a major customer, Luoyang Yongning
Smelting Co. Ltd. are somehow improper, or not properly reported. The Company’s 15%
ownership interest in the smelter have always been publicly disclosed, most recently in the June
30, 2011 quarterly financial filings available on SEDAR. Neither Canadian GAAP, nor IFRS
standards consider this interest to constitute a “related party” transaction. In fact, sales to the
smelter, in keeping with the profitable concept of vertical integration, are preferred as the
Company obtains an interest in the smelting profit as well. Concentrate sales contracts the Henan
Found signed with all its customer require cash payment first before concentrates are shipped.
The Henan Found has received all funds in relation to its concentrate sales to the Yongning.
Government Verification Certificate of Revenues and Corresponding Taxes Paid
The Company has already taken the unparalleled step of publishing internal financial records in
its news release of September 2, 2011 to demonstrate transparency in its business operations, and
is cooperating fully with securities regulators to assist them in their investigations.
To provide shareholders further comfort on Silvercorp’s China operations, the following
additional information and explanation of Chinese tax procedures is provided:
The Company has obtained Verification Certificates issued by the State Tax Bureau of Luoyang
City of Henan Province (“Tax Certificates”) on September 13, 2011 for two of Silvercorp’s
revenue generating subsidiaries: Henan Found Mining Co. Ltd. (“Henan Found”) and Henan
Huawei Mining Co. Ltd. (“Henan Huawei”). In the Tax Certificates, it certifies the sales
revenues, corresponding value-added tax (“VAT”) and corporate income tax (“CIT”) filed Henan
Found (Table 1 and Schedule 1) and Henan Huawei (Table 2 and Schedule 2).
From Table 1 (Schedule 1), the Tax Certificates certifies that since calendar 2006 and up to June
2011 (5.5 year), Silvercorp’s 77.5% owned subsidiary, Henan Found has generated sales revenue
of RMB3.68 billion (US$521 million), paid VAT of RMB486.85 million (US$69 million), and
paid CIT of RMB250.48 million (US$37 million) for a total of RMB737.33 million (US$106
million). In addition, as a result of repatriating dividends, Henan Found has also paid
withholding taxes of RMB35.65 million Yuan (US$5.3 million) on behalf of Victor Mining Ltd.
In total, the tax paid by Henan Found during the 5.5 year period since its operations began in2006
is US$111.3 million