Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

Gold (GLD) prices have made their highest monthly gains during the winter months (November - February) and the slowest growth have occurred in the Spring/Summer months (March - August) since 2002.

Based on this observation I screened for gold mining companies with insider buying during the month of November. Here is a look at four companies that I found.

1. Barrick (ABX) is the gold industry leader in production, reserves and market capitalization. The company operates globally, with a portfolio of 27 operating mines and advanced exploration and development projects located across the world, and large land positions on some of the most prolific and prospective mineral trends.

As of December 31, 2011, Barrick's proven and probable mineral reserves were 139.9 million ounces of gold, 1.07 billion ounces of silver contained within gold reserves and 12.7 billion pounds of copper. In 2011, Barrick produced 7.7 million ounces of gold at total cash costs of $460 per ounce or net cash costs of $339 per ounce and produced 451 million pounds of copper at total cash costs of $1.75 per pound.

(click to enlarge)

Insider buys

  • Ammar Al-Joundi purchased 5,000 shares on November 5. Ammar Al-Joundi was appointed Executive Vice President and Chief Financial Officer on July 10, 2012.
  • Jamie Sokalsky purchased 50,000 shares on August 3. Jamie Sokalsky was appointed President and Chief Executive Officer of Barrick Gold Corporation on June 6, 2012. He is also a member of the company's Board of Directors.
  • C. William Birchall purchased 50,000 shares on August 1, 25,000 shares on July 31 and 35,000 shares on July 30. Mr. Birchall has been a Director of Barrick since 1984.

Financials

The company reported the third-quarter financial results on November 1 with the following highlights:

Revenue$3.4 billion
Net income$0.62 billion
Cash$2.5 billion
Gold production1.78 million ounces

Outlook

The company expects 2012 gold production of 7.3-7.5 million ounces, within the original guidance range of 7.3-7.8 million ounces. Total cash costs for gold are anticipated to be $575-$585 per ounce, compared to the previous guidance of $550-$575 per ounce, primarily due to higher cash costs from Australia Pacific and African Barrick Gold. Net cash costs are anticipated to be $480-$500 per ounce, within the previous guidance of $460-$500 per ounce.

Competition

Barrick Gold's main competitors are Newmont Mining (NEM), Goldcorp (GG) and AngloGold Ashanti (AU). Here is a table comparing these companies.

CompanyABXNEMGGAU
Market Cap$35.9B$23.5B$35.2B12.8B
P/E10.71119.2723.7410.05
Forward P/E6.9928.7414.786.97
Gold production Q3/2012 (million ounces)1.781.240.591.03
Gold production outlook for 2012 (million ounces)7.3-7.55.0-5.12.35-2.45-

Barrick Gold is currently trading below the industry average P/E ratio of 14.58.

My analysis

The stock has a $20 price target from the Point and Figure chart. There have been five insider buy transactions and one insider sell transaction during the past six months. There are three analyst buy ratings, nine neutral ratings and 0 sell ratings with a average target price of $59.10. The stock is trading at a P/E ratio of 10.71 and a forward P/E ratio of 6.99. The stock has a 2.23% dividend yield. The company has a book value of $25.15 per share. I have a bullish bias for the stock currently.

2. Taseko (TGB) is the owner (75%) and operator of the Gibraltar Mine, the second largest open pit copper-molybdenum mine in Canada. Taseko's New Prosperity Project, which is currently in the Environmental Assessment process, is one of the largest undeveloped gold-copper deposits in the world. In addition, the Aley Niobium and Harmony Gold projects are two longer term development opportunities that provide Taseko with a diverse project pipeline.

(click to enlarge)

Insider buys

Financials

The company reported the third-quarter financial results on October 31 with the following highlights:

Revenue$61.0 million
Net loss$3.9 million
Cash$200.8 million

Outlook

Russell Hallbauer, President and CEO of Taseko, commented on October 31:

"With the ramp up of GDP2 effectively behind us and commissioning of GDP3 expected to commence later this quarter, we are in an enviable position heading into next year. 2013 will be a year of significant growth with the potential to nearly double our revenue with a commensurate increase in free cash flow and earnings. At the same time, exploration and evaluation expenditures will be approximately one half of 2012 levels as the majority of our project work is complete. This reduction in project expenditures will translate into near-term earnings improvements."

My analysis

The stock has a $8 price target from the Point and Figure chart. There have been 36 insider buy transactions and 10 insider sell transactions during the past six months. There are 0 analyst buy ratings, two neutral ratings and two sell ratings. The stock is trading at a P/E ratio of 41.29 and a forward P/E ratio of 6.88. The company has a Net Asset Value of $17.41 per share. I have a bullish bias for the stock currently.

3. Dalradian Resources (OTCPK:DRLDF) is a TSX-listed, Canadian based exploration company engaged in the acquisition, exploration and development of gold, base metals and other precious metals projects. With a European focus, the company's most advanced property is in Northern Ireland and focuses on and around the high-grade mesothermal gold deposit, Curraghinalt.

The company's wholly owned subsidiary, Dalradian Gold Limited, holds a 100% interest, subject to certain royalties, in mineral prospecting licences and mining lease option agreements in counties Tyrone and Londonderry, Northern Ireland. The Department of Enterprise, Trade and Investment [DETI] and the Crown Estate Commissioners [CEC] have together granted to Dalradian base and precious metal mineral exploration rights to four contiguous areas collectively known as the Tyrone Project.

Dalradian's flagship deposit, Curraghinalt hosts an NI 43-101 compliant measured mineral resource of 0.02 MT grading 21.51 g/t gold for 10,000 contained ounces, indicated mineral resource of 1.11 MT grading 12.84 g/t gold for 460,000 contained ounces and inferred mineral resource of 5.45 MT grading 12.74 g/t for 2,230,000 contained ounces. Dalradian's recently completed Preliminary Economic Assessment reported positive results for a proposed underground mine at Curraghinalt including an after-tax IRR of 41.9% and NPV of $467 million based on an 8% discount rate.

(click to enlarge)

Insider buys

Rosseau Asset Management Ltd. purchased 100,000 shares on November 1, 600,000 shares on October 31 and 967,000 shares on July 25.

Financials

The company reported the second-quarter financial results on August 10 with the following highlights:

Revenue$0
Net loss$1.9 million
Cash$32.7 million

My analysis

The stock is currently trading above its 200 day moving average. There have been three insider buy transactions and there have not been any insider sell transactions during the past six months. I have a cautiously bullish bias for the stock currently.

4. Mirasol Resources (OTCPK:MRZLF) is a junior resource company focused on new precious metals exploration, discovery and development in the Americas.

The company holds a large portfolio of wholly-owned precious metals prospects in the Patagonia region of Southern Argentina, and a strategic copper-gold property presence in northern Chile. The flagship Joaquin silver project, which Coeur d'Alene Mines (CDE) is joint venturing into, contains potential for both high grade silver-gold structures and bulk tonnage material, and is undergoing active exploration. In late 2009, company geologists discovered the Virginia zone, a cluster of high grade silver veins that warrants significant follow up to assess the potential for economic mineralization.

(click to enlarge)

Insider buys

John Tognetti purchased 6,000 shares on November 5-6, 45,800 shares on October 2-23, 52,600 shares on September 4-27, 125,200 shares on August 14-31, 128,300 shares on June 1-15 and 240,700 shares on May 17-31.

Financials

The company reported the full fiscal year 2012, which ended June 30, financial results on October 26 with the following highlights:

Revenue$0
Net loss$16.1 million
Cash$7.8 million

News

On September 21, Mirasol announced that the second National Instrument 43-101 Technical Report resource estimate has been filed on Sedar for the Joaquin Silver-Gold Project, Santa Cruz Province, Argentina, as prepared by an independent consultant for Mirasol's joint venture partner, Coeur d'Alene Mines, and published on August 7, 2012. The resource estimate is an in-pit Whittle Pit resource for the La Negra and La Morocha deposits, and includes 38.4 million ounces of silver in the Measured and Indicated categories, and 31.3 million ounces of silver in the Inferred category. The Joaquin Project is a joint venture between Mirasol and Coeur, the project operator, who has vested at a 51% interest level in the project.

My analysis

The stock is currently trading below its 200 day moving average. There have been 42 insider buy transactions and 24 insider sell transactions during the past six months. I have a neutral bias for the stock currently.

Source: 4 Gold Miners With Recent Insider Buying