Gediminas Jasionis

Dana Resources (OTCBB: DANR) Evaluating Possible Acquisitions

by Gediminas Jasionis February 17, 2010
Dana resources logoDana Resources (OTCBB: DANR) demonstrated a surprise rally after the company disclosed their intentions to evaluate possible acquisitions of producing silver mines in Peru. Discussed properties include a small mine with silver-lead-zinc output, which would require further investments to get the mining capacity up from 50 tons to 250 tons of ore per day.

Even with the lowest output the company would be looking to $6 million gross profit for the year operating this mine, and expectations are to increase the output five times within 12 months of acquisition. But that's just a prospect at the moment.

Other properties include Huachocolpa mine, which has already been operational for 50 years, and Juliacani mine, which holds approximately 30 million ounces of silver. Due diligence is ongoing and final decisions to engage in either of these properties will depend on the results to come.

Investors should be aware the company currently holds no cash and will likely be paying the acquisition price in stock or obtain funds from equity or debt sale. Further, their rights to other properties they "own" are still disputed by ligitation as the company failed to make monthly royalty payments to retain full rights.

With no sales and recurring losses Dana should be viewed as potentially dangerous and speculative investment even with the announced plans to acquire more properties. Until exploitation of those properties can begin we might very well see the company become penniless underway.

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