Silvercorp Notes Regulators Allege Fraud in Action against Short Seller Jon Carnes

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec 20, 2013) - Silvercorp Metals Inc. (TSX:SVM)(NYSE:SVM) ("Silvercorp" or the "Company") stated that it is pleased to see that the Executive Director of the British Columbia Securities Commission ("BCSC") has issued a notice of hearing alleging fraud on the part of Jon Richard Carnes, an individual who ran a hedge fund and operated the "Alfred Little" financial blog through which attacks were made on Silvercorp. The Company also received confirmation that the BCSC is stopping its investigation into Silvercorp.

The BCSC Notice alleges that beginning in 2010, Carnes began writing negative reports about issuers traded on a North American exchange with business operations in China. Carnes attempted to profit from his negative reports by shorting the issuer's securities before publishing the negative report, and then covering his short position after the issuer's share price dropped in response to his negative report.

BCSC staff contends that in about June 2011, Carnes targeted Silvercorp as the next issuer he would try to profit from by issuing a negative report. On August 15, 2011, Carnes began building a short position in Silvercorp's shares by purchasing put options that expired on September 17, 2011.

In the notice, BCSC staff alleges that Carnes attempted to find a mining expert to support his theory that Silvercorp's Chinese filings contradicted its North American regulatory filings for the Company's SGX mine, as the Chinese filings had lower production, quality and resource estimates. When two mining experts failed to support his theory and with his put options about to expire, staff maintains that Carnes wrote a false negative report about Silvercorp and published it anonymously on September 13, 2011 on Alfredlittle.com, a financial blog controlled by Carnes.

BCSC staff further allege that Carnes furthermore made numerous false claims about the second mining expert to support his theory, including that the expert had "serious concerns" about the reliability of Silvercorp's North American filings. In reality, the second mining expert did not note any "blatant obvious errors" or misleading information and had explained that the differences between the Chinese filings and the North American filings were due to different reporting standards and different legislated cut-off grades.

After Carnes published his report on AlfredLittle.com, Silvercorp's share price closed down 20% for the day, wiping out over $275 million in shareholder value. Carnes closed his short position in Silvercorp's shares by the next day, earning a gross profit of almost USD $2.8 million.

You may view the notice of hearing on the BCSC website at www.bcsc.bc.ca by typing Jon Richard Carnes or 2013 BCSECCOM 559 in the search box. These allegations have not been proven.

The Company has always maintained that it was attacked by a group of well-organized and well planned illegal short sellers trying to profit by manipulating Silvercorp's share price with false and selective statements, fabrications, and rumors. We are pleased to see that regulators in British Columbia are taking action to protect and promote the public interest by fostering a securities market that is fair and warrants public confidence.

About Silvercorp

Silvercorp is a low-cost silver-producing Canadian mining company with multiple mines in China. The Company is currently developing the GC project in southern China which it expects will become its next operating mine. The Company's vision is to deliver shareholder value by focusing on the acquisition of small-scale projects with resource potential and self-fund the growth of those assets. For more information, please visit our website at www.silvercorp.ca.

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