Early 2013 may be pivotal for gold stocks. Many of the smaller gold mining stocks have seen heavy tax loss selling during the past 2-3 months. This development can be seen also from the chart of Market Vectors Junior Gold Miners (GDXJ).
I believe it is very likely that the trend reverses early next year. Also, the insiders of many of these small cap mining companies have been bargain hunting during the past two months. In this article I will feature three mining companies that have seen insider buying during the past 30 days.
1. Vista Gold (VGZ) is focused on the development of the Mt. Todd gold project in Northern Territory, Australia, to achieve its goal of becoming a mid-tier gold producer. Vista is advancing exploration on its Guadalupe de los Reyes gold/silver project in Mexico and has granted Invecture Group, S.A. de C.V. a right to earn a 62.5% interest in the Los Cardones (formerly named Concordia) gold project in Mexico. In addition, the company holds a ~28% interest in Midas Gold's (OTCQX:MDRPF) Golden Meadows Project in the Stibnite-Yellow Pine District in Idaho. Vista's other holdings include the Awak Mas gold project in Indonesia and the Long Valley gold project in California.
Sun Valley Gold purchased 1,272,000 shares and 636,000 warrants on December 21 pursuant to a public offering. Sun Valley Gold currently holds 12,084,310 shares or 14.8% of Vista Gold and 3,643,246 warrants of Vista Gold.
The company reported the third-quarter financial results on November 5 with the following highlights:
|Net income||$12.3 million|
Vista Gold announced on December 21 the closing of its previously announced public offering of 4,182,550 units, which includes 545,550 units issued pursuant to the full exercise of the underwriters' over-allotment option. The units were offered at a price to the public of $2.75 per unit. Each unit was comprised of one common share of the company and one-half of one common share purchase warrant, with each whole warrant exercisable to purchase one common share of the company's stock at a price of $3.30 for a period of 24 months from the closing of this offering.
The gross proceeds of the offering, before expenses, were $11,502,013. The company intends to use the net proceeds of the offering to advance its Mt. Todd gold project in Australia, including completing a bankable feasibility study, for corporate administration, to complete a preliminary economic assessment on Guadalupe de los Reyes gold/silver project in Mexico, and for working capital requirements and general corporate purposes.
The company has initiated a preliminary feasibility study of Mt. Todd gold project, with results expected early Q1 2013, to evaluate the two-phased development strategy and to accelerate the environmental permitting process.
The stock has a $1.75 price target from the Point and Figure chart. There has been one insider buying the shares and there have not been any insiders selling the shares during the past 6 months. The company has five projects containing a total of 12.5 million ounces of measured and indicated resources and 3.7 million ounces of inferred resources. The next major catalyst for the stock will be the preliminary feasibility study results of Mt. Todd gold project due early Q1 2013.
2. Veris Gold (YNGFD.PK) is a growing mid-tier North American gold producer in the business of developing and operating gold mines in geo-politically stable jurisdictions. The company's primary asset is the permitted and operating Jerritt Canyon gold mine located 50 miles north of Elko, Nevada, USA. The company also holds a diverse portfolio of precious metals properties in British Columbia and the Yukon Territory, Canada, including the former producing Ketza River mine. The company's focus has been on the re-development of the Jerritt Canyon mining and milling facility.
Randy Reichert purchased 50,000 shares on December 18-21 and currently holds 70,000 shares or less than 0.1% of the company. Randy Reichert is Co-Chief Executive Officer, Chief Operating Officer and Director of the company.
Shaun Heinrichs purchased 23,075 shares on December 18-21 and currently holds 145,075 shares or 0.1% of the company. Shaun Heinrichs is Co-Chief Executive Officer, Chief Financial Officer and Director of the company.
Graham Dickson purchased 1,100 shares on October 11 and currently holds 2,807,100 shares or 2.6% of the company. Graham Dickson is Senior Vice President Acquisitions & Corporate Development and Director of the company.
The company reported the third-quarter financial results on November 9 with the following highlights:
|Net income||$9.0 million|
|Gold production||35,524 ounces|
On December 18 Veris Gold announced that it had closed its previously announced offering of units of the company. The company sold 7,200,000 units at a price of $2.10 per unit representing aggregate gross proceeds of $15,120,000.
Expected 2012 gold production of 110,000 ozs.
Currently on 150,000 ozs/year run rate and ramping up to 180,000-200,000 ozs in 2013 (not including toll milling).
Cash costs declining from average of approximately $1,600/oz in H1 2012 to an estimated $1,015/oz Au in Q3 2012 and forecast $885/oz in Q4 2012, driven primarily by increased throughput.
There have been three different insiders buying and there have not been any insiders selling the shares during the last 6 months. The company's current gold reserves at Jerritt Canyon are 1.06 million ounces, Measured and Indicated resources are 1.26 million ounces, and Inferred resources are 748,000 ounces. The company has significant potential for resource expansion. There is a near-term opportunity to upgrade approximately 500,000 ounces of resources to reserves at the Mahala Basin. I have a bullish bias for the stock currently based on the solid fundamentals.
3. Kaminak Gold Corporation (OTCPK:KMKGF) is exploring the Coffee Gold Project, a high-grade oxidized gold project in the emerging White Gold District of the Yukon Territory, Canada. In 2010, Kaminak executed the first ever drill program at Coffee, and since then, 16 gold discoveries have been drilled to date demonstrating that Coffee is Canada's newest gold district. In less than 2.5 years, Kaminak has established a maiden National Instrument 43-101 Mineral Resource Estimate of ~3.2 million ounces of gold at Coffee.
All of the gold discoveries drilled at Coffee were made by drilling directly underneath gold-in-soil anomalies. Lack of glaciation over the Coffee property has allowed in-situ soil-sampling to be employed as a highly effective and low cost exploration tool. Presently, there are over 20km of untested soil anomalies on the property that warrant drill testing, and only 15% of the 150,000 acre property has experienced systematic grid soil sampling.
The company reported the second-quarter financial results on August 27 with the following highlights:
|Net loss||$2.4 million|
Kaminak Gold announced on October 11 that the company had closed the bought deal private placement financing announced on September 17, 2012 and that the over-allotment option was fully exercised. The company issued 4,810,000 Class A common shares at a price of $2.50 per share for aggregate gross proceeds of $12,025,000. The company intends to use the gross proceeds of the offering to conduct exploration activities on its Coffee project located in the White Gold District, Yukon.
Minimum $12,000,000 program (fully-funded) beginning in March
Drill discovery of additional oxide, near-surface gold zones
Extensive metallurgical testwork
Drill expansion and infill of known gold zones
Ultimate goal to deliver a PEA by the end of 2013
Board approved program and budget expected January 2013
The stock has a $0.5 price target from the Point and Figure chart. There have been two different insiders buying and there have not been any insiders selling the shares during the last 6 months. The stock has a 3.5% insider ownership and a 20% institutional ownership. The next major catalyst for the stock will be the Preliminary Economic Assessment for the Coffee Gold project due by the end of 2013. I have a neutral bias for the stock currently based on the early stage of the current project.