JOHANNESBURG (miningweekly.com) – TSX- and NYSE-listed Silvercorp Metals on Friday slammed the allegedly false allegations used against the company in a class action lawsuit in New York.

The low-cost silver-producing Canadian mining company said in a statement that two people, representing about 7 000 company shares, initiated a class action suit based on what Silvercorp was identifying as a “short and distort” scheme.

In 2011, a series of anonymous, damaging letters were released, accusing the company of a $1.3-billion accounting fraud, alleging disparities between the group’s resource grades and production and warning of quarterly revenue misses, besides others.

The accusations stirred concern among investors and employees, as well within as the financial markets, and led to a fall in the share price, reputational damage and shareholder losses.

The company believed the allegations were intended to manipulate the market so that profits could be made from short selling and filed a defamation case against the writers in the New York Supreme Court.

However, the court ruled that the allegations made by a blog site were opinion pieces protected under freedom of speech. Silvercorp filed an appeal in August.

“ … there is no merit to the allegations set out in the class action lawsuits since they are based on previously made false accusations and, as such, represent nothing new and are a non-event; the company will defend itself accordingly,” Silvercorp stated.

Silvercorp commented that a KPMG forensic report verified that the Canadian company fairly presented its financial results and a subsequent full audit for the year ended March 2012 had been completed by Ernst & Young.

It added that AMC Mining Consultants reconfirmed Silvercorp’s resources and reserves, as well as verified that its properties were viable economic resources.

Silvercorp pointed out that a report for the Ying Mining District, in China, concluded that assets there had a net present value of $890-million.

The KMPG report, as well as the two technical reports were reviewed by regulatory authorities, the company concluded.