SDRG's Biggest Issue
Seems like we have been waiting for today's news release for quite some time. All things considered, the news in itself seems real good. Significant financing in place - a key strategic partner that one would think considerably reduces the Dragon's China political risk - share dilution really not all that bad considering the hand that Marc had to play plus new shares can't be sold for 3 years, potential cash flow from promised production in the short term. What's wrong with the picture ?
What's wrong is the share price reaction to the news. Granted, the PM sector got slaughtered today, so a muted reaction might be expected. But a one cent rise ? Perhap's we'll see a delayed reaction and the real action comes tomorrow - I sure hope so but I'll believe it when I see it. It's not clear to me where the new investor's are coming from. Dragon shareholder's have really gotten crushed over the past year.How many of you are ready to put new dollars into this issue? I'llbet not too many. Where are the new investors going to come from?Hong Kong? China? How about a token investment from China's SovereignWealth Fund?
Price action to me suggests that this issue has been accumulated by someone over the past several months. If so, they should have jumped on this news hit the asks and give this puppy a goose to get the ball rolling - but they didn't - at least not yet. Real disappointing to say the least.
Think it all goes back to Marc's credibility issue. Mineshack brings up a good point about the Dragon's cash flow burn rate. Given the price of the stock - what's in the till - and what needs to be accomplished - Marc needs to take steps to redirect the cash flow toward turning this company into a viable cash flow positive enterprise. Period. Still maintain that the most leveraged action he could take would be to re-allocate his compensation such that his benefit is tightly tied to share price appreciation. New dollars - at least from North American investors - just aren't going to flow in until he takes concrete steps to eliminate the appearance that he is "milking the cow". Otherwise, I'm afraid its same ole -same ole. That is, unless he can hook some of the big fish mentioned earlier on his line, in which case he deserves every penny he gets.
Really hope this thing starts to move but I'm frankly not holding my breath after today's action ....