approximately 59% and its traded volume hit over 1 million shares. A really shocking price jump, considering the recent negative price changes of the stock.The most probable reason for the Friday gain appeared to be the latest news by Silver Dragon. At the end of the week, the company reported it has closed a convertible financing agreement for $2.5 million with Tonaquint Inc. The funds will be raised through a Purchase Agreement, in which SDRG issued to Tonaquint 50,000 shares of common stock. Tonaquint has also received a warrant to purchase 8.6 million common shares of Silver Dragon at an exercise price of $0.50 per share, exercisable at any time within three years after the date of issuance.
Apparently, the new Purchase Agreement gave investors hopes for a brighter future and pushed up SDRG stock price at once. Now, the only question is whether the up move will continue.
Silver Dragon Resources Inc. is a mining company focused on the exploration, acquisition, development and operation of silver mines globally. A month ago, White hot stock received six hundred and fifty thousand restricted shares to promote SDRG and it started to climb up immediately. However, the stock was back down shortly and since then its chart position has not been much stable.[BANNER]
According to its quarterly report, as of September 30, 2010 Silver Dragon has more total assets than liabilities in its balance, however, the deficit accumulated during the exploration stage period exceeds $33 million. Apart from these facts, the company has not yet achieved profitable operations and incurred much expenses accompanied with a huge net loss.
Due to the capital deficiency and the significant accumulated losses since inception, the continuation of Silver Dragon has been placed under a substantial doubt. Presently, the company relies upon the recently signed Purchase Agreement, however, having in mind the lack of revenues and the expected further losses, the future of SDRG remains questionable.
