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Editors' Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

In this article, I will feature one gold miner 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 increased their holdings by more than 10%.

Teranga Gold Corporation (OTC:TGCDF) engages in the exploration, development, and production of gold in West Africa.

(click to enlarge)

Insider buying during the last 30 days

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

NameTitleTrade DateShares PurchasedCurrent OwnershipIncrease In Shares
Alan HillExecutive ChairmanDec 17500,0001,195,000 shares+71.9%
David SavarieVPDec 1739,00079,000 shares+97.5%
Katherine SiposVPDec 1825,000135,000 shares+22.7%

There have been 564,000 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

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

MonthInsider buying / sharesInsider selling / shares
December 2013564,0000
November 201300
October 201300
September 201340,0000
August 201300
July 201300
June 201300
May 201300
April 201300
March 201300
February 201310,0000
January 201300

There have been 614,000 shares purchased and there have been zero shares sold by insiders this year. The month of December has seen the most insider buying.

Financials

Teranga reported the third-quarter financial results on November 6 with the following highlights:

Revenue$50.6 million
Net loss$0.4 million
Cash$36.2 million
Debt$76.4 million
Production36,874 ounces
Total cash costs$748 per ounce
All-in sustaining costs$1,289 per ounce

(click to enlarge)

(Source: November presentation)

Outlook

Teranga's 2013 full-year guidance is as follows:

Production190,000-210,000 ounces
Total cash costs$650-$700 per ounce
All-in sustaining costs$1,000-$1,100 per ounce

(click to enlarge)

(Source: November presentation)

Teranga's 2014-2016 guidance (without OJVG) is as follows:

Production210,000-240,000 ounces per annum
All-in sustaining cash costs~$1,000 per ounce
Free cash flow$150-$200 million

(click to enlarge)

(Source: November presentation)

News

On December 12, Teranga and Franco-Nevada (NYSE:FNV) announced that they have agreed to enter into a $135 million stream transaction that has allowed Teranga to enter into definitive share purchase agreements with Bendon International Ltd. and Badr Investment & Finance Company to acquire the balance of the OJVG that Teranga does not already own and to retire $30 million of Teranga's $60 million debt facility with Macquarie Bank Limited.

(click to enlarge)

(Source: December presentation)

Upcoming milestones

Teranga's upcoming milestones include the following:

MilestoneTiming
Combined mine planQ1/2014
File 43-101 technical report on a combined basisQ1/2014

(click to enlarge)

(Source: December presentation)

Competition

Teranga's competitors in Africa include Banro (NYSEMKT:BAA), and Golden Star Resources (NYSEMKT:GSS). Here is a table comparing these companies.

CompanyTGCDFBAAGSS
Market Cap:139.86M108.66M102.06M
Employees:N/A2,0742,000
Qtrly Rev Growth (yoy):-0.522.12-0.12
Revenue:362.60M118.72M521.47M
Gross Margin:N/A0.450.18
EBITDA:200.71M37.32M72.36M
Operating Margin:0.360.10-0.03
Net Income:93.29M5.42M-119.66M
EPS:0.370.02-0.46
P/E:1.3017.96N/A
PEG (5 yr expected):N/AN/A-0.33
P/S:0.391.000.21
P/B:0.310.240.51

Teranga has the lowest P/E ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
BAA470,000330,000
GSS62,0000

Only Teranga has seen intensive insider buying during the last 30 days.

Conclusion

There have been three different insiders buying Teranga and there have not been any insiders selling Teranga during the last 30 days. All three of these insiders increased their holdings by more than 10%.

Teranga is trading at a P/E ratio of 1.30 and the company has a book value of $1.52 per share. I believe the stock could be a good pick below the book value based on the intensive insider buying.

(click to enlarge)

(Source: December presentation)

Source: Teranga Gold: 3 Different Insiders Have Purchased Shares This Month