China Shen Zhou Mining & Resources Inc. (SHZ) said it has
formed a special committee and hired a law firm to help determine
its course of response after an analyst report last week said the
company was misrepresenting its business and was overvalued by the
market.
The Chinese mining company also noted that, other than a typo it
acknowledged last week relating to the geographic coordinates of
one of its mines, the periodic reports it has filed with the
Securities and Exchange Commission are accurate, disputing the
investment firm's report.
Shares of China Shen Zhou recently were down 6.8% to $3.84 in
premarket trading. As of Friday's close, the stock had lost 51% of
its value so far this year.
China Shen Zhou said it had hired McKenna Long & Aldridge as
a special counsel in the U.S. to advise China Shen Zhou "with
respect to its concerns and rights arising out of the publication
of the report, and to assist in developing a program of responses
to the publication of and statements in the report."
Investment firm Absaroka Capital Management LLC, which recently
initiated coverage on the company, had said in a report that it
unearthed a "plethora of serious concerns about the validity of the
company" during its due-diligence process. It put a price target of
$1.25 on the stock. Shares plunged following the report.
In a letter to shareholders published Thursday, China Shen Zhou
went through many of the points Absaroka had raised, disputing the
firm's claims. Absaroka equity analyst Kevin Barnes, who prepared
the report, said on Friday that the firm stands behind its
conclusions. He wasn't immediately available for comment on
Monday.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com