China Shen Zhou Hires Law Firm After Report,Says SEC Filings Accurate

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; [e-mail]