TORONTO (Reuters) - Embattled miner Silvercorp (SVM.TO), caught in a storm of anonymous fraud allegations, said on Thursday its shares are undervalued and it is pushing ahead with its share repurchase plan.
Silvercorp, which has shed more than $1.5 billion in market value in the last five months, said it has bought nearly 4 million of its outstanding shares since June 17, when its board authorized a buyback of up to 10 million shares.
The company said it is purchasing the shares because the market is undervaluing them relative to its assets. It has spent a total of C$31.3 million, or C$7.97 a share on average, in the buy-back program so far.
The Vancouver-based company, which operates silver mines in China, is the latest China-focused and North American-listed company to fall into the cross-hairs of short-sellers who have published scathing fraud allegations.
Silvercorp denies the allegations, which are similar to those that felled Sino-Forest TRE.TO, long ago the largest Canadian-listed forestry company. Sino-Forest and many other China-focused companies are now at the center of regulatory investigations and lawsuits.
Silvercorp, which operates silver mines in China, on Wednesday issued a raft of figures on its tax payments, assay results and other details that it says disprove the short-seller allegations against it. Chief Executive Rui Feng on Wednesday dismissed allegations of fraud, and accused short-sellers of using a “short and distort” scheme.
“We need new regulations to go after these people, who short a company and then put out a false statement,” Feng said in an interview with Reuters.
Feng, is putting his money where his mouth is. Recent regulatory filings indicate he bought 100,000 Silvercorp shares in the open market last week at an average price of $7.87 a share.
Simon Moore, managing editor of the alfredlittle.com website that posted the allegations against the company, said he had no comment at this time on the rebuttal.
Moore said in an e-mail that he has passed the rebuttal on to the analysts in China who worked on the report and they would need additional time to respond.
Silvercorp has said the U.S. and Canadian regulatory authorities and law enforcement bodies are investigating both the allegations against the company and the people behind the allegations.
However, Moore said that none of the groups investigating the matter have so far been in touch with him.
BMO analyst Andrew Kaip commended the company’s rebuttal of the allegations and reiterated BMO’s “outperform” rating on Silvercorp shares, but noted that the share price is likely to remain volatile for now.
“BMO Research views the company’s proactive approach toward disclosure to repudiate the short-seller’s allegations as a positive step,” Kaip said in a note to clients.
Kaip’s comments also reflect the sentiments of analysts at UBS and Raymond James, who have questioned the veracity of the short-seller allegations.
Silvercorp shares rose 7.8 percent to C$6.93 on the Toronto Stock Exchange by Thursday afternoon, while its New York-listed shares were up 8.3 percent at $7.02. The stock touched at an all-time high of C$15.60 in April.
Reporting by Euan Rocha; editing by Janet Guttsman