Record Insider Buying Could Signal Junior Turnaround

Do insiders know something the rest of us don’t? The recent uptick in insider buying shows that some gold stocks are being snapped up at bargain prices, meaning the market bottom may have been reached.

Has the bottom been reached in the junior mining sector? That question has been asked repeatedly at big mining investing conferences like PDAC in March, and while no one knows the definitive answer, a clue that the sector does not have much further to fall can be teased out of statistics showing that insider buying on the TSX Venture Exchange is near a record high.

The Globe and Mail reported on April 30 that INK Research’s Venture indicator was at 715 percent, just 20 points shy of its record peak of 735 percent set on October 27, 2008. The indicator is based on insider transactions over the past 60 and 30 days. It means that there are more than seven stocks on the TSXV with insider buying for every one that shows insider selling.

The newspaper notes that the gold sector is driving much of the buying interest, with the INK Gold Stock Indicator over 1,000 percent, meaning that in junior gold mining right now there are currently more than 10 stocks with insider buying for every one with selling.

Resource Investing News took a look at the 30-day buying and selling chart published by INK Research to identify juniors that show the most insider trading. We then added some of our own information on these companies, including: the company’s market cap, its cash position, its year-to-date stock performance, any potential red flags and latest significant news.

Rusoro Mining (TSXV:RML): Rusoro Mining has two operating mines and two advanced-stage exploration projects in Venezuela. In March 2013, Rusoro filed a $3.03-billion claim against the Venezuelan government for expropriating its gold assets without compensation.

  • 1 million shares bought for a value of $35,000.
  • Market cap: $18.64 million.
  • YTD stock performance: -22.2 percent.
  • Cash as of September 30, 2012: $400,000.
  • Red flags: Rusoro is not able to produce gold until its claim with the Venezuelan government has been resolved. No financial statements since Q3 2012.

Mineral Mountain Resources (TSXV:MMV): Mineral Mountain Resources has three gold properties, two in Canada and one in South Dakota. On March 27, the company announced discovery of high-grade gold (over 4.46 g/t) over a 600-meter strike length at its Holy Terror project in South Dakota.

  • 428,000 shares bought for a value of $53,317.50.
  • Market cap: $10.33 million.
  • YTD stock performance: -67 percent.
  • Cash as of December 31, 2012: $3.656 million.
  • Red flag: No financial statements in 2013.

Ryan Gold (TSXV:RYG): Ryan Gold’s flagship project is the Ida Oro property in the Canadian Yukon territory. Drill results confirming a large mineralized system were released on October 31, 2012.

  • 340,000 shares bought for a value of $36,150.
  • Market cap: $15.81 million.
  • YTD stock performance: -34.1 percent.
  • Cash as of March 31, 2013: $23.361 million.

San Gold (TSX:SGR): San Gold produces gold from its Rice Lake underground mine in Manitoba, Canada and is also developing a second mining trend known as the Shoreline basalt mining unit. In March of this year, San Gold announced the closure of a $50-million bought-deal offering of convertible debentures that will trade on the TSX under the symbol SGR.DB. The debentures, which bear 8 percent interest annually, mature on March 31, 2018.

  • 320,000 shares bought for a value of $61,197.50.
  • Market cap: $51.96 million.
  • YTD stock performance: -13.8 percent.
  • Cash as of March 31, 2013: $0.
  • Red flag: Company is reporting a zero cash position currently, although it has $40.4 million in marketable securities.

Terraco Gold (TSXV:TEN): Terraco Gold has five gold and silver deposits, one of which, the Spring Valley gold project in Nevada, is a joint venture with Barrick Gold (TSX:ABX,NYSE:ABX) and Midway Gold (TSXV:MDW). On April 22, Terraco said the company and its Nevada subsidiary will receive $1 million and an option to acquire a net smelter royalty on part of the Spring Valley project.

  • 270,000 shares bought for a value of $27,702.50.
  • Market cap: $18.74 million.
  • YTD stock performance: -20 percent.
  • Cash as of January 31, 2013: $1.49 million.

Giyani Gold (TSXV:WDG): Giyani Gold has two gold properties, one in South Africa and the other in Ontario, Canada. In February 2013, the company discovered a new gold zone at its Klein Letaba property in South Africa.

  • 258,500 shares bought for a value of $166,649.85.
  • Market cap: $57.47 million.
  • YTD stock performance: +11.5 percent.
  • Cash as of September 30, 2012: $165,303.
  • Red flag: No financial statements in 2013.

 

Securities Disclosure: I, Andrew Topf, hold no investment interest in any of the companies mentioned. 

Related reading:

The TSX Venture is Broken. Here’s How to Fix It

canadanyse:abxjoint venturedrill resultsrusoro miningsilver depositsterraco gold
The Conversation (2)
Graham Turville-Ince
Graham Turville-Ince
16 May, 2013
a bold man woud suggest that any mining stock on the planet is in "recovery mode". The junior companies listed in Canada and Australia need a healthy clean out. Far too much "loose capital" has been thrown at these penny dreadful stocks. They are often referred to as "lifestyle stocks" since the greater percentage of funds going through the bank account are supporting excess in the management wallet and not going in the ground. Let's see low quality projects get closed for good, medium ones can possibly survive although the appetite from big companies like Barrick has turned (they are a seller of 3 peripheral mines in WA Australia). They are putting the broom through the portfolio in a big way. The cost per ounce ??? Many recent articles on this subject but coming from the "horses mouth" - CFO of ABX - at least $1300 per ounce and in some cases higher!!! Supply or the ability of companies to replace current rserves with new and hopefully better grades and therefore extend the business life appear difficult. Gold supply may be the finite driver of higher prices in the future. Fewer and more efficient miners are required that are capable of producing at lower cost whilst seeking new and viable sources of decent ore.
Graham Turville-Ince
Graham Turville-Ince
16 May, 2013
a bold man woud suggest that any mining stock on the planet is in "recovery mode". The junior companies listed in Canada and Australia need a healthy clean out. Far too much "loose capital" has been thrown at these penny dreadful stocks. They are often referred to as "lifestyle stocks" since the greater percentage of funds going through the bank account are supporting excess in the management wallet and not going in the ground. Let's see low quality projects get closed for good, medium ones can possibly survive although the appetite from big companies like Barrick has turned (they are a seller of 3 peripheral mines in WA Australia). They are putting the broom through the portfolio in a big way. The cost per ounce ??? Many recent articles on this subject but coming from the "horses mouth" - CFO of ABX - at least $1300 per ounce and in some cases higher!!! Supply or the ability of companies to replace current rserves with new and hopefully better grades and therefore extend the business life appear difficult. Gold supply may be the finite driver of higher prices in the future. Fewer and more efficient miners are required that are capable of producing at lower cost whilst seeking new and viable sources of decent ore.

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