On a day when commodity prices crashed again, it’s encouraging to note that some junior miner CEOs and company executives continue to see value in their share prices.
I’m talking about purchases by insiders, which can be a positive indicator that a company’s stock is undervalued. Executives have multiple reasons to sell – for example braces for the kids, a family holiday, diversification – but usually only buy in the public market in order to make money.
It’s particularly interesting when said executives are not typically active in the market.
That describes William Lamb, chief executive of Lukas Lundin’s African gem play Lucara Diamond. As Lucara’s shares bump along near 52-week lows, the CEO has been buying. He purchased 20,000 shares last week at an average price of $1.47.
Lucara continues to pull very large diamonds from its 100% owned Karowe mine in Botswana, including a 336-carat diamond recovered last month. An assortment of diamonds including that gem and an 8-carat fancy pink stone will be part of an exceptional stone tender from Nov. 2-11 in Gaborone, Botswana.
The company’s vice-president of mineral resources, John Armstrong, also picked up 10,000 shares last week at $1.49.
Another executive with a knack for picking the bottom on the rare occasions when he purchases in the public market is Lion One Metals chairman and CEO Wally Berukoff. He already owns or controls more than 33% of shares, but picked up another 50,337 last week at 29 cents.
Lion One is looking for funding for its fully permitted Tuvatu high-grade gold project in Fiji. It released a PEA June 1 showing capital costs of only about $50 million for the small operation (it has existing infrastructure) and an after-tax IRR above 50%.
The last time Berukoff filed a public market purchase was in March when he picked up shares for 18 and 19 cents. The stock surged to above 50 cents in late spring, but has since slumped to the 30-cent level.
Berukoff has founded and sold off several mining companies, including Northern Orion (bought by Yamana for $1.1B), Miramar (bought by Newmont for $1.5B) and La Mancha, which was purchased by the Sawiris fund Weather II. La Mancha was in the news yesterday for its deal with Endeavour Mining that saw it take a 30% stake in Endeavour in exchange for cash payments and 55% ownership of the Ity gold mine in Ivory Coast.
Finally, there has been a bunch of insider buying at Sabina Gold & Silver, both as part of a recent $1.3-million flow-through financing that was subscribed to only by executives and employees and in the public market.
Sabina CEO Bruce McLeod has been leading the way, spending more than $140,000 on stock since February when he took the helm. Most recently, McLeod picked up 25,000 shares at 37 cents on Sept. 18.
On Sept. 14, Sabina released its “initial project” feasibility study for the Back River high-grade gold project in Nunavut. The company dramatically lowered capex costs by focusing on mostly open-pit mining to start. The project is highly scalable should gold prices pick up again.
Who did I miss? Share the insider buys you’ve been noticing and chat with other investors at chat.ceo.ca, the investment conference in your pocket. Get SEDI alerts there, too.
The author owns Sabina shares purchased in the public market, and both Sabina and Lion One are sponsors of the upcoming Subscriber Investment Summit, taking place Oct. 8 at the Pan Pacific in downtown Vancouver.