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:
- The stock is purchased by three or more insiders within one month.
- The stock is sold by no insiders in the month of intensive purchasing.
- 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.
Insider buying during the last 30 days
Here is a table of Teranga's insider-trading activity during the last 30 days by insider.
Name | Title | Trade Date | Shares Purchased | Current Ownership | Increase In Shares |
Alan Hill | Executive Chairman | Dec 17 | 500,000 | 1,195,000 shares | +71.9% |
David Savarie | VP | Dec 17 | 39,000 | 79,000 shares | +97.5% |
Katherine Sipos | VP | Dec 18 | 25,000 | 135,000 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.
Month | Insider buying / shares | Insider selling / shares |
December 2013 | 564,000 | 0 |
November 2013 | 0 | 0 |
October 2013 | 0 | 0 |
September 2013 | 40,000 | 0 |
August 2013 | 0 | 0 |
July 2013 | 0 | 0 |
June 2013 | 0 | 0 |
May 2013 | 0 | 0 |
April 2013 | 0 | 0 |
March 2013 | 0 | 0 |
February 2013 | 10,000 | 0 |
January 2013 | 0 | 0 |
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 |
Production | 36,874 ounces |
Total cash costs | $748 per ounce |
All-in sustaining costs | $1,289 per ounce |
(Source: November presentation)
Outlook
Teranga's 2013 full-year guidance is as follows:
Production | 190,000-210,000 ounces |
Total cash costs | $650-$700 per ounce |
All-in sustaining costs | $1,000-$1,100 per ounce |
(Source: November presentation)
Teranga's 2014-2016 guidance (without OJVG) is as follows:
Production | 210,000-240,000 ounces per annum |
All-in sustaining cash costs | ~$1,000 per ounce |
Free cash flow | $150-$200 million |
(Source: November presentation)
News
On December 12, Teranga and Franco-Nevada (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.
(Source: December presentation)
Upcoming milestones
Teranga's upcoming milestones include the following:
Milestone | Timing |
Combined mine plan | Q1/2014 |
File 43-101 technical report on a combined basis | Q1/2014 |
(Source: December presentation)
Competition
Teranga's competitors in Africa include Banro (BAA), and Golden Star Resources (GSS). Here is a table comparing these companies.
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Teranga has the lowest P/E ratio among these three companies.
Here is a table of these competitors' insider-trading activities this year.
Company | Insider buying / shares | Insider selling / shares |
BAA | 470,000 | 330,000 |
GSS | 62,000 | 0 |
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.
(Source: December presentation)
Disclosure: I am long 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. (More...)
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