Tuesday January 17, 2012
by Brien Lundin, editor Gold Newsletter
Silvercorp Metals (SVM) has mounted a vigorous defense against a massive "short and distort" scheme directed at the company.
These efforts appear to be paying dividends and the company has continued to conduct business as usual.
In the past few months, the firm has released impressive second quarter numbers, a 25% increase in the company dividend, a key acquisition and an update on drilling on its various properties.
In the company's second quarter of its 2012 fiscal year, it produced 1.4 million ounces of silver at a cash cost of negative $4.55 an ounce.
Those negative cash costs come courtesy of the substantial lead and zinc credits at its flagship Ying Mine in Henan Province, China. They also place Silvercorp at the head of its class in terms of low-cost silver producers.
The company has a cash hoard of $176.7 million and no debt. It is thus perfectly positioned to take advantage of the current market volatility with more key acquisitions.
The money also gave the company the flexibility to raise its dividend from C$0.02 per share to C$0.025 per share in the second quarter.
This is not behavior that is indicative of a company engaged in some sort of accounting fraud. The money to pay those dividends does not come out of thin air; it comes from a combination of hard work and good fortune.
The Ying Mine is one of the world's richest silver mines, and it has been able to kick out cash at a prodigious rate.
Not content with just being a highly profitable silver producer, Silvercorp is intent on growing through both acquisitions and exploration.
A recent update on its exploration programs for fiscal year 2012 show the company engaged in a staggeringly-large, 244,000-meter surface and underground drilling campaign on its various projects in China and Canada.
Now that the carnage in the company's share price appears to have come and gone, and with silver itself recovering strongly, the company's growth prospects look bright.
With silver poised for a spring rally, smart investors will look for ways to play this cycle for potentially exceptional profits.
Silvercorp -- which has already traded for over $16 over the past year -- is one of the best ways to do it.
Learn more about this financial newsletter at Brien Lundin's Gold Newsletter.