Gold Stocks With Recent Insider Buying (And Selling)
There has been a decent number of insider transactions recently in the gold & silver mining sector following the recent dip in the metals.
Insider trading refers to when a company’s insiders, such as CEOs, directors and major shareholders, buy or sell the stock on the public market. While insiders may sell a stock for many reasons, insider buying typically means one thing: the insider believes its stock is underpriced and will rise.
I’ve pulled the latest insider trading information from SEDAR (the Canadian insider electronic filing system) and various insider tracking websites to spot any potential buying opportunities in the sector.
Screenshots of insider buying and selling are courtesy InsiderTracking.com.
1. Mako Mining Corp. (OTCQX:MAKOF)
Mako Mining is advancing a high-grade, low-capex open pit gold project in Nicaragua. With gold grades north of 8 g/t, the San Albino project has the potential to be one of the highest-grade open pit mines in the world.
Two insiders have been aggressively buying shares of Mako recently:
– Mako Mining’s CEO Akiba Leisman bought 100,000 shares at C$.38 on September 22, and 117,000 at $.375 on September 24, and he’s bought over 1 million shares this year alone. Leisman owns 10.97 million shares of the company, according to filings.
– Director Jesse Munoz bought 18,000 shares at prices ranging from $.35 to $.362 on August 14 and 17, bringing his holdings to 31,860 shares, according to filings.
– Management and directors hold 8.3% of the company, while Wexford Capital LP owns 51.8%, according to Mako’s most recent investor presentation.
A preliminary economic assessment released in 2015 demonstrated excellent economic potential, with estimated upfront capex of just $21.1 million and a post-tax net present value of $105.4 million. However, this was based on a $1,250/oz gold price and was based on its current resource, which will be updated in October.
(Mako’s PEA study highlights. Credit: Mako corporate presentation)
Mako Mining doesn’t look cheap here, and investors may be paying a premium for its future potential. But Mako is a few weeks away from releasing a new resource, which will include a maiden resource at the Las Conchitas area, where recent drilling returned 22.26 g/t gold over 4.30 meters and past results have returned gold grades as high as 376.49 g/t.
Mako is also a near-term producer that is expected to be highly profitable and with strong exploration upside, so I think the stock may be worth a speculative buy on its upside potential.
Investors looking for a less-risky play may want to check out Sailfish Royalty (OTCQX:SROYF) instead, as Sailfish owns a gold stream that’s equivalent to a 3% NSR royalty on San Albino, in addition to various other royalties in the Americas.
2. China Gold International Resources Corp. (OTCPK:JINFF)
China Gold International is one of the largest gold producers in China, as it operates two producing mines in China: the CSH Gold Mine in the Inner Mongolia region and the Jiama Copper-Polymetallic Mine in Tibet region.
In Q2 2020, the company produced 38,850 ounces of gold and 46.52 million pounds of copper. It reported a 28.2% rise in revenue to $209.2 million, with a 386% jump in mine operating earnings to $35.5 million, and net income of $18.5 million.
China Gold’s largest shareholder, China National Gold Group Hong Kong Limited, is presumably happy with the recent quarterly results, as it has been acquiring more shares:
– China Gold National Gold Group Hong Kong purchased over 1 million shares of stock at prices ranging from C$1.75 to C$1.85, according to filings. This is a state-owned Chinese gold corporation.
While China Gold International appears to have turned a corner with its latest quarterly results, this is still a very risky gold mining stock to own, as the company has $1.76 billion in debt compared to its $476 million market cap.
China is also considered one of the riskiest mining jurisdictions. It ranked No. 126 out of 162 jurisdictions on the Fraser Institute’s Human Freedom Index and was not ranked on the Fraser Institute’s 2019 Annual Survey of Mining Companies. (China ranked at the bottom in the 2018 survey.)
3. Monarch Gold Corp. (OTCQX:MRQRF)
Monarch Gold is advancing a portfolio of gold projects in the Abitibi mining camp in Quebec, Canada. Its flagship Wasamac property has a 2.6 million ounce resource and a 1.8 million ounce reserve base.
According to its 2018 feasibility study, the Wasamac project has a pre-tax value of more than C$1 billion using spot metals prices (5% discount rate). It is estimated to produce 142,000 ounces of gold per year at $630/oz AISC over a 11-year mine life, with reasonable upfront capex expense (C$464 million).
Monarch shares also trade at an attractive valuation compared to some of its peers, as they trades at approximately $40 per ounce of gold, much lower than Marathon Gold (MGDPF) ($118/oz), Probe Mines (PROBF) ($72/oz) and Bonterra (BONXF) ($62/oz), according to the company’s corporate presentation (slide 20).
– On September 23, senior officer Mathieu Séguin purchased 100,000 shares of Monarch in the public market, at a price of C$.45 per share. He also bought 100,000 shares on September 27 at C$.40. Séguin now holds 2.7 million shares of the company, according to filings.
– Monarch Gold recently closed on a bought deal private placement to raise proceeds of C$13 million. Several insiders participated in the financing, according to the company, and officers and directors of the Corporation have subscribed in the offering for an aggregate of 170,000 National FT “flow-through” units. Monarch issued 9.03 million shares at C$.72 per share and 11.4 million units at C$.57 per share, both higher than its current stock price.
While management only owns 3% of the company, Monarch’s mining partners own 34%. Its shareholders include Alamos Gold (AGI) (16% owner), Yamana Gold (AUY) (6%), Hecla Mining (HL) (4%) and Agnico Eagle (AEM) (3%).
– Alamos Gold most recently bought 3 million shares at C$.24 on June 10, bringing its stake to 43.38 million shares.
– Yamana Gold invested $4.2 million in Monarch Gold on June 11.
Monarch is well-funded, with $25 million in cash and short-term investments following the recent financing. It has a strong pipeline of gold projects in a top-tier mining jurisdiction, and will likely see strong takeover interest in the future.
4. First Majestic Silver Corp. (AG)
First Majestic Silver owns a portfolio of producing gold & silver mines and projects in Mexico. The company’s updated 2020 guidance estimates production of between 21.4 and 22.9 million silver equivalent ounces, at all-in sustaining costs between $12.29 and $13.45/oz.
The company’s best asset is its San Dimas mine, which it acquired from Primero Mining Corp. in 2018 at a bargain price of $320 million. San Dimas is producing up to 14.4 million SEOs this year at all-in costs between $7/oz and $8/oz.
The deposit hosts proven and probable reserves of 52.9 million silver ounces and 591,000 gold ounces, with more than 100 million silver ounces and 1.4+ million gold ounces in resources.
(Credit: First Majestic Silver)
First Majestic is arguably the best way to gain leverage to silver prices in the mining sector, as most of its revenue comes from silver.
Insiders have been buying shares recently:
– Between August 11 and September 23, Todd Anthony, senior officer, purchased 16,000 shares at prices between C$13.39 and C$15.78, bringing his total stake to 67,500 shares, according to filings.
– Billionaire investor Eric Sprott recently acquired 5 million shares via a bought deal placement, at a price of C$15.60 per share, giving First Majestic C$78 million in cash. The company has C$195 million in cash following the investment, and $140 million in convertible debt at 1.875%, according to its corporate presentation.
– Major shareholders include VanEck (9.5%), Wheaton Precious Metals (WPM), which owns 8.6% of the company, Eric Sprott (2.3%), and President and CEO Keith Neumeyer (1.7%).
First Majestic stock price has been under pressure lately with metals prices falling and the company reporting no progress on its ongoing tax dispute with the Mexican tax authority.
Despite its recent issues and weak share price, I think the stock is looking attractively priced here and might be worth a buy, especially since its shares are trading well below the price paid by Sprott.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.