I posted about Dragon Mountain Gold (DMG) two months ago regarding the sale of their Chinese assets. When the posting was made the stock had closed at $0.41 and since then the stock price has gradually increased and hovered around $0.45.
A week ago the company confirmed that all approvals have been received and the transaction was completed. The company are due to receive approximately $150 million as a result which equates to a cash backing of $0.62 per share. This has seen liquidity in the share price improve substantially and a greater interest in the stock.
Unfortunately I haven't been posting too much in the last few months as the small cap speculative end of the market has been very tough in light of the overall market and worries about Europe's sovereign debt. It is these kind of trades or investments which are a good target as they almost have a built in floor or protect on the downside.
I recommend setting a news alert on this stock to be able to monitor any announcement made on what the company will be doing with the funds. From the announcement made on 07/11 we only know the following thus far:
"The proceeds of the sale would allow the Company to actively pursue other investment opportunities in the resources industry. The directors will also consider other capital management alternatives with
respect to the proceeds."
DMG shares last traded at $0.495.
Showing posts with label Dragon Mountain Gold (DMG). Show all posts
Showing posts with label Dragon Mountain Gold (DMG). Show all posts
Friday, January 6, 2012
Tuesday, November 8, 2011
Dragon Mountain Gold - Return of Capital?
Dragon Mountain Gold (DMG) today made an announcement that they were selling off their only asset, the Lixian Gold Project for a consideration of $175 million. Whilst Dragon Mountain Gold does not own 100% of the project being sold they estimate that of the $175 million that their share of the proceeds will be $150 million. DMG currently has a market capitilisation of about $93 million. It makes you left wondering, what's the catch? Investment opportunities like this do exist even, this one to the tune of $57 million.
Following the news the share price opened at $0.47 before racing to an intraday high of $0.495. Surprisingly, the stock only finished up $0.02 to $0.41. I think that this can be explained by the fact that there was a few insiders on this one that have made a quick buck and sold into the early strength today to take profits. After all, the stock has increased from about $0.29 late last month.
Whilst there is a few hurdles that remain such as approval from shareholders, Chinese government and Australian FIRB (a little strange considering the asset is in China) these hurdles seem like a formality.
DMG has hinted at completing a return of capital to shareholders. Superannuation Funds will be hoping it is a tax effective structure whereby a chunk of the return of capital is a fully franked dividend.
I expect the share price to appreciate as we lead up to the key dates.
Following the news the share price opened at $0.47 before racing to an intraday high of $0.495. Surprisingly, the stock only finished up $0.02 to $0.41. I think that this can be explained by the fact that there was a few insiders on this one that have made a quick buck and sold into the early strength today to take profits. After all, the stock has increased from about $0.29 late last month.
Whilst there is a few hurdles that remain such as approval from shareholders, Chinese government and Australian FIRB (a little strange considering the asset is in China) these hurdles seem like a formality.
DMG has hinted at completing a return of capital to shareholders. Superannuation Funds will be hoping it is a tax effective structure whereby a chunk of the return of capital is a fully franked dividend.
I expect the share price to appreciate as we lead up to the key dates.
Subscribe to:
Posts (Atom)