Silver Dragon Resources Inc (OTC:SDRG) should be out of the exploration stage now. On Jul. 12 the company issued a press release that claims production has commenced at the Erbahuo silver mine.
It seems it took some time for the news to affect the market. Both on the 12th and the 13th there were increases in the price, but it was only yesterday the volume really picked up too. With 1.2 million shares traded, SDRG surged 30.77% and closed at $0.17.
SDRG has a 70% interest in the Erbahuo mine through its subsidiary Chifeng Silver. The PR claims the company expects to produce approximately 160 thousand ounces of silver by the end of 2011.[BANNER]
Although SDRG secured some $3 million in financing back in April, a producing mine could certainly help the company move on to the next stage in its development. If the information in the PR has something to do with the reality.
However, even if the expected amount of silver is produced, it wouldn’t be enough to cover the company’s expenses and turn the company profitable at their current spending rate.
Back in mid June, Marc Hazout, CEO and President of SDRG, sold about a million shares that he indirectly owned through Travellers International Inc.
Funny enough, if you take a look at this article at safehaven.com, you will see Silver Dragon announced the “pouring of the first silver bars at the Erbaohuo mine in Northern China.” And that was in November 2006.
Assuming those are two different mines with very similar names still leaves the question what happened with the one from 2006. Before traders decide what to do with this one, they should do some serious research.
