The Gold (NYSEARCA:GLD) price reached its 12th year of a record-breaking bull run that has increased the precious metal's value 517% since 2001, from $272 per ounce up to $1,676 per ounce. The average yearly gain has been 16.8% as shown in the table below.
|Date||Gold price||yearly change|
|December 31, 2000||$272|
|December 31, 2001||$278||+2.2%|
|December 31, 2002||$348||+25.2%|
|December 31, 2003||$415||+19.3%|
|December 31, 2004||$437||+5.3%|
|December 31, 2005||$517||+18.3%|
|December 31, 2006||$634||+22.6%|
|December 31, 2007||$833||+31.4%|
|December 31, 2008||$881||+5.8%|
|December 31, 2009||$1,097||+24.5%|
|December 31, 2010||$1,408||+28.4%|
|December 31, 2011||$1,566||+11.2%|
|December 31, 2012||$1,676||+7.0%|
Despite gold being up every single year for the past 12 years, the Gold Miners (NYSEARCA:GDX) have had a down year in 2011 and 2012 as seen from the chart below.
The Gold Miners-to-Gold ratio is currently the lowest it has been in more than decade as seen from the chart below.
Based on these observations, I believe now is a good time to buy gold stocks. In this article I will feature three mining companies that have seen insider buying during the past 30 days.
1. Lake Shore Gold (NYSEMKT:LSG) is a gold mining company that is positioned for rapid production growth at low operating costs. The company has three wholly owned, multi-million ounce gold complexes and two operating mines in the century-old Timmins Gold Camp.
- Alan Moon purchased 50,000 shares on December 18 and currently holds 238,700 shares or less than 0.1% of the company. Alan Moon is Chairman of the Board.
- Arnold Klassen purchased 30,200 shares on December 4 and currently holds 50,000 shares or less than 0.1% of the company. Arnold Klassen serves as a director of the company.
- Brian Buss purchased 1,200 shares on November 12 and currently holds 16,100 shares or less than 0.1% of the company. Brian Buss is Vice-President, Projects.
The company reported the third-quarter financial results on November 7 with the following highlights:
|Net loss||$10.8 million|
|Gold production||20,939 ounces|
Over the next six months, Lake Shore Gold is focused on completing extensive capital programs at the Timmins West Mine and its milling facility that will position the company for strong production growth in 2013. The company's 50% mill expansion is being completed in stages, with processing capacity on track to increase to 2,500 tonnes per day by later in November 2012 and then to 3,000 tonnes per day during the second quarter of 2013. The company continues to target full-year 2012 production of over 85,000 ounces poured. Cash cost per tonne in 2012 is tracking better than expected levels. Cash cost per ounce sold for the year is now expected to average over $875, largely reflecting lower than expected grades during the third quarter of the year.
Total capital spending for first nine months of 2012 totaled $124.2 million with an additional $7.6 million of spending on exploration. The company remains on track to complete its capital program in 2012 with total spending for the year estimated at $170-$175 million.
As of November 6, 2012, the company had cash and cash equivalents and gold bullion inventory of approximately $76 million as well as an additional $35.0 million of liquidity from the Sprott credit facility (through a standby line of credit). Based on its current liquidity position and anticipated cash flow to the end of the year, the company is positioned to finance the completion of the capital phase of the Timmins West Mine, including the Bell Creek Mill expansion.
The stock is currently trading very close to its 52-week lows. There have been three different insiders buying and there have not been any insiders selling the shares during the last 6 months. There is one analyst buy rating, 0 neutral ratings and 0 sell ratings with a average target price of $1.30. The company has 3.4 million ounces of Measured and Indicated gold resources and 3.7 million ounces Inferred. The company is expecting positive free cash flow from operations starting in 2013. The company is targeting approximately 50% production growth in 2013. The production is expected to reach greater than 150,000 ounces by 2014. Cash costs are expected to improve in 2013 and reach less than $700/oz in 2014. I have a long position in the stock currently.
2. Giyani Gold Corp. (OTC:CATPF) is an international pure play gold exploration company based in Canada with a portfolio of under explored yet proven gold projects. Giyani Gold's exploration projects are focused on prolific greenstone belts with the Giyani Gold Project located in South Africa (containing 5 past producing goldmines) and the Abbie Lake-Keating Gold Project located in the White River region of Ontario.
- Duane Parnham purchased 88,000 shares on December 31 and 246,300 shares on September 14 - October 23. Duane Parnham currently holds 5,251,907 shares or 12.7% of the company. Duane Parnham is Executive Chairman of the company.
- Roger Laine purchased 26,250 shares on August 15 - October 23 and currently holds 305,250 shares or 0.7% of the company. Roger Laine serves as a director of the company.
The company reported the third-quarter financial results on November 19 with the following highlights:
|Net loss||$2.0 million|
On October 29 Giyani Gold announced the closing of the escrowed portion of its $9 million non-brokered private placement.
The successful completion of the private placements completed in December 2011, January 2012, and October 2012 should provide the necessary funding that positions Giyani's South African gold projects and Northern Ontario projects toward the next stages of development.
The company's primary objectives for 2012 include the following:
- Complete a drilling program on the Giyani Gold properties in South Africa.
- Complete an exploration program and drilling program on the Northern Ontario properties.
- Actively seek transactions which would allow the company to realize maximum value from its non-core shareholdings in uranium exploration in Saskatchewan and gold exploration in Ontario or discontinue property if no Joint Venture partner is found.
- Evaluate prospective exploration properties in South Africa to support the company's strategic focus on South Africa.
- Close the Madonsi, and the Kavhagari and Siyandani transactions.
The stock is trading close to its 52 -week lows. There have been two different insiders buying and there have not been any insiders selling the shares during the last 6 months. I believe the next major catalysts for the stock will be the drilling results from the Giyani Gold properties and from the Northern Ontario properties. I have a cautiously bullish bias for the stock based on the early stage of the projects.
3. Integra Gold Corp's (KALRF.PK) main asset is the Lamaque gold property in Val d'Or, Québec, Canada, located in the 'Valley of Gold'. The gold project is directly adjacent to the currently producing Sigma Mine and the Lamaque Mine which is now closed. These two mines have produced approximately 9 million ounces of gold and reported approximately 3 million ounces of resources and reserves. Complete mining support and mill infrastructure is located within one kilometer of the company gold project.
- Herve Thiboutot purchased 15,000 shares on December 27 and currently holds 102,500 shares or 0.1% of the company. Herve Thiboutot is Senior Vice President, Exploration.
- John de Jong purchased 30,000 shares on December 20 pursuant to a private placement and 80,000 shares on August 20 pursuant to a private placement. John de Jong currently holds 272,800 shares or 0.4% of the company. John de Jong serves as a director of the company.
- Stephen de Jong purchased 14,000 shares on December 6, 55,000 shares on August 20 pursuant to a private placement and 10,000 shares on August 9. Stephen de Jong currently holds 119,000 shares or 0.1% of the company. Stephen de Jong is President, Chief Executive Officer and Director of the company.
- Maxwell Munday purchased 630,000 shares on September 12 pursuant to a private placement and 2,200,000 shares on August 20 pursuant to a private placement. Maxwell Munday currently controls 15,470,000 shares or 20.4% of the company.
The company reported the first quarter fiscal 2013 financial results on August 31 with the following highlights:
|Net loss||$0.3 million|
The stock is trading at its 52 -week lows. There have been four different insiders buying and there have not been any insiders selling the shares during the last 6 months. The stock has a 34% insider ownership and institutions own 12% of the company. The company's resource base is 681,000 high-grade ounces of gold with more drilling results pending. I have a cautiously bullish bias for the stock currently based on the early stage of the company's main project.
Disclosure: I am long GLD. 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. I am long LSG.