Insiders Are Buying MAG Silver

Nov. 2.13 | About: MAG Silver (MVG)

In this article, I will feature one mining company that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

MAG Silver Corp. (NYSEMKT:MVG) engages in the acquisition, exploration, and development of mineral properties in the Mexican silver belt.

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Insider buying during the last 30 days

Here is a table of MAG Silver's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Purchased Current Ownership Increase In Shares
Mason Hill Advisors 10% Owner Oct 1 56,600 6,315,770 shares +0.9%
George Paspalas CEO Nov 1 5,000 10,000 shares +100%
Larry Taddei CFO Oct 31 700 6,200 shares +12.7%
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There have been 62,300 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

Here is a table of MAG Silver's insider-trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
November 2013 5,000 0
October 2013 57,300 0
September 2013 163,646 25,000
August 2013 0 15,000
July 2013 267,750 0
June 2013 351,425 0
May 2013 0 0
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There have been 845,121 shares purchased and there have been 40,000 shares sold by insiders during the last six months.

Financials

MAG Silver reported the second-quarter financial results on August 15 with the following highlights:

Revenue $52,630
Net loss $10.2 million
Cash $33.4 million
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Given the prevailing market conditions and the desire to focus on and preserve cash for its core projects, MAG Silver's management determined that some of the company's non-core assets should be abandoned, and exploration and evaluation assets totaling $8,422,283 were written off in the quarter ended June 30, 2013.

Outlook

MAG Silver currently has sufficient working capital to maintain all of its properties and currently planned programs extending beyond the next 12 months.

Upcoming milestones

MAG Silver's main asset, the Minera Juanicipio project, is expected to reach production in 2017/2018.

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Competition

MAG Silver's competitors in Mexico include First Majestic Silver (NYSE:AG), and Silver Wheaton (NYSE:SLW).

Here is a table of these competitors' insider-trading activities during the last six months.

Company Insider buying / shares Insider selling / shares
AG 10,000 244,900
SLW 0 129,020
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Only MAG Silver has seen intensive insider buying during the past 30 days.

Conclusion

There have been three different insiders buying MAG Silver and there have not been any insiders selling MAG Silver during the past 30 days. Two of these three insiders increased their holdings by more than 10%. MAG Silver's management owns 3.6% of the company.

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MAG Silver's main asset, Juanicipio, will be in production in 2017/2018. The Juanicipio mine has a Net Present Value of $542 million (MAG Silver's 44% interest) at $23.39 silver price. MAG Silver's current market cap is $315 million.

I believe the stock could be a good pick at the current price level based on the intensive insider buying.

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Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MVG over 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.