TORONTO (miningweekly.com) – Silvercorp Metals, which is suing the anonymous short sellers that accused it of fraud last year, on Wednesday reported a 26% year-on-year drop in proft for the quarter ended December 31, to $27-million, owing to lower production and a higher tax bill at its main Chinese operation.

Revenue for the quarter rose to $61.9-million, compared with the $51.8-million figure for the same period in 2010.

The company attributed the lower profit "in part to the company's management and employees being distracted by the 'short and distort' attack", referring to the anonymous reports that emerged in September, accusing it of fraud, which it fervently denied.

Silvercorp also blamed an income tax rate hike, from 12.5% to 25%, at its main operating subsidiary, Henan Found Mining, for eating into profits, as well as costs incurred in fighting its anonymous detractors.

In late September, the Toronto- and New York-listed company hired heavyweight US law firm K & L Gates to lodge a suit in the State of New York seeking damages from the companies and individuals behind the fraud allegations.

Silvercorp said it ended the quarter with $168.8-million in cash and short-term investments.

The company announced its results after market close, but its stock ended the day slightly weaker on the TSX at C$7.97 apiece.

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