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Strategies & Market Trends : Calls and Puts for Income
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To: Keith J who wrote (4952)9/16/2011 1:44:21 PM
From: The Vet1 Recommendation  Read Replies (1) of 5891
 
SVM - Thanks Keith, but I was aware of that. The allegations initially focused on accounting fraud, but simple math and easily provable bank records made it apparent that SVM had generated a great deal of profit. The cash in the bank and tax records alone were sufficient. Then the allegations focused on related party transactions but those had already been disclosed years ago in standard SEC filings so they were hardly news. Then the attack went on about the grade of the ore, supposedly from a couple of rocks that fell off a truck somewhere. Gee, if working out grades and reserves was that simple all of us could do it. Then they went on about counting trucks and how there was a shortfall in ore being delivered. The numbers were calculated by counting the number of trucks and assuming each was loaded to the nameplate capacity. Anyone who has travelled or done business in Asia knows full well that no truck passes that is loaded to the nameplate capacity; usually it is double that or more. SVM's ore is high in lead, which means that a 30 tonnes truck tray would be less that half full. SVM loads them to the top (and overflowing - evidenced by the fact that some rocks fall off onto the road) and the CEO in an interview stated that they regularly carry 45 tonnes a load.

In other words the whole story is was created by the short sellers piling on after the Sino Forest debacle. The logic being that because both were Chinese then both must be frauds. I never saw that sort of logic applied to US stocks after Enron or Worldcom... but then maybe I'm gullible.
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