What Really Happened to Silvercorp's Lorne Waldman?

Since 2007, Lorne Waldman was a key member of the Silvercorp Metals Inc. (SVM) management team, responsible for the regulatory and compliance affairs of the company, and managed investor relations.  For over 4 years Lorne signed off on SVM’s SEC filings, appeared as a contact point on SVM’s press releases and made impassioned investor presentations such as this one defending SVM from short seller criticism.   SVM disclosed it paid Lorne total compensation of $545,399 for his services in the year ending 3/31/12.

Then suddenly with no explanation in May 2012 Lorne stopped signing his name on SVM’s SEC filings.  Beginning with SVM’s 5/28/12 disclosure of a disruption of production at its key Ying (“SGX”) mine, CFO Maria Tang began signing off on SEC filings.   The very next week, Ms. Tang signed off on SVM’s 6/5/12 6-K filing disclosing dramatically lower “Inferred” and total silver resources for its key SGX mine, validating my key concerns regarding SVM.

By the beginning of July 2012, SVM went one step further and stopped listing Lorne as the investor contact on its press releases.  When questioned by phone at the time, SVM’s receptionist replied that Lorne was on vacation.  When questioned again, the receptionist replied that the vacation was a “sabbatical” that would last through year-end.  Since late July, SVM listed Jonathan Hackshaw, a new hire, as the company’s investor relations director on all press releases.

On 11/8/12, SVM announced the “management appointments” of Shaoyang Shen, Jonathan Hackshaw, and Peter Torn, each of whom already worked for SVM.  The highly material news of Lorne’s resignation “to pursue other interests” was only briefly mentioned at the end of the 3^rd paragraph of the press release.  SVM did not mention whether Lorne’s departure resulted from any dispute.  SVM did not attach a copy of Lorne’s resignation letter.

What really happened to Lorne?  Why did one of SVM’s most ardent defenders quietly depart amidst major negative material developments for SVM? 

The events since SVM lost its multi-million dollar New York Supreme Court defamation lawsuit to silence its critics portend a very limited future for SVM as a publicly traded company:

1.     On 8/24/12, I showed how SVM management intentionally tried to mask dramatically lower grades and resources for its key SGX mine.

2.     On 9/8/12 The Globe & Mail published a special report that independently confirmed evidence that SVM’s Chinese subsidiary, Henan Found, paid for the costs of a corrupt local police investigation leading to the unlawful detention of my research analyst Kun Huang, a Canadian citizen.  The Chinese police have never charged Kun with a crime.  Kun has been jailed in utterly inhumane conditions in the town nearest SVM’s key Ying (SGX) mine since 7/21/12.

3.     Subsequent to Kun’s arrest, the Royal Canadian Mounted Police commenced a criminal investigation of SVM’s payments to Chinese police.  SVM has failed to disclose and declined to comment on the existence of this criminal investigation.

For all these reasons, I strongly suspect that Lorne Waldman resigned because he is an honest, well-intentioned individual who could no longer tolerate Rui Feng’s completely unjustifiable quest for revenge.  No longer willing to serve as Rui Feng’s mouthpiece and right-hand man, Lorne Waldman has wisely abandoned a sinking ship.

Disclosure: I am short SVM stock.