True Gold: 8 Different Insiders Have Purchased Shares This Month

Feb.22.14 | About: True Gold (RVREF)

Editor’s Note: This article covers stocks 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 stock 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%.

True Gold Mining (OTCQX:RVREF) engages in the acquisition, exploration, and development of mineral resource properties in Burkina Faso, West Africa.

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Insider buying during the last 30 days

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

Name Title Trade Date Shares Purchased Current Ownership Increase In Shares
Rick Bailes Director Feb 18 200,000 1,429,000 shares +16.3%
Scott Heffernan VP Feb 18 50,000 50,000 shares from 0 to 50,000
Dwayne Melrose CEO Feb 18 50,000 397,500 shares +14.4%
Robin Merrifield Director Feb 18 100,000 220,000 shares +83.3%
Mark O'Dea Executive Chairman Feb 18 500,000 9,592,597 shares +5.5%
Rodrigo Romo Corporate Secretary Feb 18 20,000 20,000 shares from 0 to 20,000
Teck Resources (NYSE:TCK) 10% Owner Feb 18 13,493,417 45,546,447 shares +42.1%
Liberty Metals & Mining Holdings 10% Owner Feb 18 24,769,394 77,524,642 shares +47.0%
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There have been 39,182,811 shares purchased by insiders during the last 30 days. All these shares were purchased pursuant to a bought deal offering.

Insider buying by calendar month

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

Month

Insider buying / shares

Insider selling / shares

February 2014 39,182,811 0
January 2014 142,000 87,000
December 2013 118,000 0
November 2013 0 0
October 2013 0 0
September 2013 101,000 0
August 2013 200,000 0
July 2013 52,755,248 0
June 2013 0 0

May 2013

20,000

0

April 2013

447,803

0

March 2013

2,000

0

February 2013

0

36,500

January 2013

0

0

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There have been 92,968,862 shares purchased, and there have been 123,500 shares sold by insiders since January 2013.

Financials

True Gold reported the third-quarter financial results on November 25 with the following highlights:

Revenue $0
Net loss $7.8 million
Cash $30.7 million
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On February 18, True Gold closed a $51.9 million financing.

Upcoming milestones

True Gold's upcoming milestones include the following.

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(Source: Investor presentation)

Competition

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

Company RVREF BAA GSS
Market Cap: 130.48M 154.03M 201.22M
Employees: N/A 2,074 2,000
Qtrly Rev Growth (yoy): N/A 2.12 -0.12
Revenue: N/A 118.72M 521.47M
Gross Margin: N/A 0.45 0.18
EBITDA: -5.97M 37.32M 72.36M
Operating Margin: N/A 0.10 -0.03
Net Income: -13.10M 5.42M -119.66M
EPS: -0.11 0.02 -0.46
P/E: N/A 25.46 N/A
PEG (5 yr expected): N/A N/A -1.60
P/S: N/A 1.30 0.40
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True Gold doesn't have any revenues yet. True Gold's market cap has been adjusted to the February offering. True Gold sold 105,110,000 shares at the offering. As of February 22, True Gold had 372,800,834 shares outstanding, which gives the company a market cap of $130.48 million.

Here is a table of these competitors' insider-trading activities since January 2013.

Company Insider buying / shares Insider selling / shares
BAA 470,000 330,000
GSS 62,000 0
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Only True Gold has seen intensive insider buying during the last 30 days.

Conclusion

There have been eight different insiders buying True Gold, and there have not been any insiders selling True Gold during the last 30 days. Seven of these eight insiders increased their holdings by more than 10%.

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(Source: Investor presentation)

The insiders purchased their shares at $0.35 (C$0.39) in the February offering. I believe the stock could be a good pick at $0.35 based on the intensive insider buying.

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(Source: Investor presentation)

Disclosure: I am long RVREF, BAA, GSS. 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.