impressive gains by trading over 1 million shares per day.The sudden volume spike must have a reasonable explanation. This time that’s some news regarding Silver Dragon Resources. Yesterday, the company announced it has signed a definitive agreement with Guangxi Hongteng Mining, Ltd. for commencing production at the Erbahuo silver mine in China. After signing the agreement, Mr. Marc Hazout, President and CEO of SDRG, stated the team was confident the project would be successful and this immediately attracted investors. The only question is will Silver Dragon continue the bullish trend?
Silver Dragon Resources Inc. is a mining company focused on the exploration, acquisition, development and operation of silver mines globally. Last month, the company had another huge gain based again on positive announcements and now it is happening again – another portion of good news fuels up the stock price, while the final results are still projections.[BANNER]
Meanwhile, the 10-K of Silver Dragon doesn’t look much inspiring. Apart from the fact the company has issued a huge amount of common stock, by end-December 2010 SDRG has incurred an accumulated deficit of over $36 million, while its cash on hand totaled around $96 thousand. That is the reason the company’s management claims it is dependent on the issuance of common stock and loans to pay the expenses. Another option is achieving profitability or additional financing, though none of these can be guaranteed.
Based on these facts, it seems that lately Silver Dragon has been more into issuing of common stock than into getting profitable.
