February 8, 2012 / 10:58 PM / 6 years ago

UPDATE 2-Silvercorp profit falls on lower Ying output

* Revenue up 19 pct to $61.9 million (Adds details; In U.S. dollars unless noted)

TORONTO, Feb 8 (Reuters) - Silvercorp Metals reported a 31 percent drop in quarterly profit on Wednesday as production eased at its Ying mine in China and the company incurred costs related to fraud allegations made against it.

Silvercorp, a Vancouver-based company focused on mining in China, said net income for its third quarter ended Dec. 31 fell to $20.0 million, or 12 cents a share, from $29.1 million, or 17 cents, a year earlier.

Last year, Silvercorp was one of many high-profile China-focused companies to be mired in fraud allegations leveled by short-sellers, who stand to benefit from declines in a company’s stock price. In October, an independent investigation by KPMG cleared the company of any wrongdoing.

Last month, Silvercorp named and sued the individuals that it believes were behind the allegations.

Income from operations rose to $35 million from $34.3 million in the year-earlier quarter.

Revenue rose 19 percent to $61.9 million, mainly boosted by higher silver and gold prices.

Overall silver production rose to 1.55 million ounces from 1.52 million ounces, while gold production jumped 256 percent to 2,879 ounces.

Ore production at Silvercorp’s flagship Ying mine fell 12 percent to 75,710 tonnes. The lower production was blamed on labor shortages and the distraction caused by what the company called the “short and distort” attack.

Reporting By Euan Rocha and Julie Gordon

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