For its short six-week trading history on the OTC market Sierra Resource Group, Inc. (OTC:SIRG) stock has already experienced one acquisition, one 6:1 stock split and two magnificent moves of its price. Interestingly, as the events did not quite coincide, it seems that a new candidate for speculative profits is making its first steps on the penny stock market.After the first move on Tuesday, which was downwards, Sierra Resources’ weird stock chart was improved yesterday by another move, this time whole 46.34% upwards. The close at $0.60 was far below the previous freezing point, but the over 3.5 million shares traded could suggest that investors got suddenly convinced that the company with its history of 17 years without any revenues can become profitable.
Along with a new business plan and a new CEO, there was also a good stock promoter involved. That promoter’s name is “Best Damn Penny Stock” and yesterday the promotional disclosure said that $250,000 in cash have been paid by a third party, an investment company, for the investor relations services provided.
In order to have something to promote, Sierra Resource filed end of June new plans for its future. The company purchased 80% of the assets of a Florida-based limited liability company, those assets being known as the Chloride Copper Project, which is according to the filing “a former copper producer comprised of a mineral deposit and some infrastructure located near Kingston, Arizona”. The acquisition was paid with 12.75 million shares of the company’s common stock issued to the seller and a payment of $125,000 to a third party.
The share issuance was made possible after a six-for-one split at around the same time. The stock promotion could have been more expensive than Sierra’s new business, but copper mining sound now as a new opportunity, especially after some previous oil and gas related activities failed completely. The company was incorporated in 1992 and as of June this year has no revenues, limited operation history and no sources of liquidity to start mining operations or to pay its management and employees.
Thus, this was just the beginning of the massive dilution, as the only plan to find cash is through existing shareholders and private equity. Not minding the spelling and grammar mistakes, Sierra Resource states further in one of its official SEC filings: “We do not foresee engaging in any substantive commercial business in 2010; however our we intend to beging producing copper from our Chloride Copper mine in January 2011.”
