Silver Dragon Resources Inc (OTCMKTS:SDRG) Logs A Session Of Intense Trading
Yesterday Silver Dragon Resources Inc (OTCMKTS:SDRG) saw over 5.9 million of its shares being traded, while the monthly average for the ticker is less than 100 thousand shares. In fact, the last time the company registered such massive daily volume was way back in July 2014. Despite the sudden interest displayed by investors SDRG was actually falling down the chart reaching a low of $0.0143 right before the closing bell. In the very last minute of the session, however, the stock surged and closed at $0.0249 for a gain of over 15%.
As a whole the performance was quite shaky and there is no immediately obvious reason for the sudden spike in volume. The last PR issued by SDRG is nearly four months old. Some investors are anticipating a new announcements but jumping into the stock on nothing more than optimism may prove to be extremely dangerous. SDRG is in a dreadful financial state finishing the quarter ended June 30 with:
• $454 cash
• $19,863 total current assets
• $8.2 million total current liabilities
• ZERO revenues
• $1 million net loss
On August 6 the company did sell a $50 thousand convertible note but the proceeds hardly improved their balance sheet. Not to mention that taking on more convertible debt is far from a positive sign. SDRG has defaulted on a substantial part of its previous convertible notes. With the outstanding shares sitting at 293 million out of the 300 million authorized as of August 12 an increase of the authorized amount seems likely.
The lack of resources also caused SDRG‘s stake in their Foreign Co-operative Joint Venture in China, Sino-Top, to be reduced to 20%. On October 7, 2014, it was announced that Shengda Mining Co., Ltd., has signed an understanding for the acquisition of Sino-Top. A year later however that has still not happened.
The red flags surrounding SDRG are enormous. In the quarterly report it is stated that if the payoff date for the debt is not extended or any new finance deals are completed, “the Company may ultimately file for bankruptcy”. If you are determined to trade the stock take into account all of the risks before putting any money on the line.
