By James Kwantes
Resource Opportunities

Published first at Patreon.com/jameskwantes. Updated

On George Orwell’s satirical Animal Farm, all animals were equal but some were more equal than others. The pigs enjoyed the finest cuts and positions of power; other creatures fought for scraps or their very survival.

The junior mining sector is less a farm, more a slaughterhouse these days as capital flows out amid a punishing bear market. Yet a similar kind of dynamic holds true, as junior exploration companies chase dollars and investors amid the carnage. Only a few of them have the financial means and the experienced teams to navigate a market where the default setting is death by a thousand cuts. Some execs have been adding to their stakes as prices grind lower.

Not all insider buying is created equal, either. Sometimes insiders are buying at a discount, spending their money to exercise stock options granted at much lower prices. There is also alphabet soup in the form of financial instruments including RSUs (restricted share units), DSUs (deferred share units) or RDSUs (rights deferred share units).

The most meaningful purchases by insiders occur when they buy stock at market prices alongside retail investors. Insiders know more about company prospects than anybody else. They tend to have strong hands and staying power. And while there can be many reasons for sales by insiders – a new house, a tax bill, their daughter’s university education – there is typically only one reason they buy. That’s to make money.

Insider trades are filed with SEDI – the System for Electronic Disclosure by Insiders – but the antiquated SEDI.ca website is a terrible place to track insider activity. Two of the more popular free websites for following insider moves are CEO.ca and Canadian Insider (whose parent company INK Research has a more extensive paid service). On Twitter, @MinerDeck tracks weekly insider buying as well as top gold and silver intercepts.

An important caveat: insiders tend to be early. That’s certainly been the case in this junior mining bear market, with many insiders plunging in to scoop up stock as equity prices continue to drop. Here are a few of the more active players in the junior resource space, with public-market purchase tallies for 2022 and price range. In almost each case, the stock is trading at lower prices than where these insiders bought:

  • Larry Childress, 10% holder, Fireweed Metals $FWZ: $590,000 at 59c. Owns 9,872,190 shares, a 10.7% stake. (Zinc/tungsten)
  • Dave Lotan, chairman, Aurion Resources $AU: $521,000 at 56c to $1.01. Owns 11,053,582 shares, a 9.4% stake. (Gold)
  • Doug Ramshaw, president, Minera Alamos $MAI: $335,000 at 49c to 64c. (Also, $522,500 into a recent 55c/share placement). Owns 7,608,700 shares, a 1.7% stake. (Gold)
  • Bradford Cooke, chairman, Aztec Minerals $AZT: $83,600 at 24c to 26c. Owns 5,729,020 shares, a 7.1% stake. (Gold-copper)
  • Dale Wallster, CEO, Southern Empire Resources $SMP: $57,275 at 7c to 17c. Owns 5,886,000 shares, a 9.3% stake. (Gold)

The pending sale of Great Bear Royalties $GBRR to Nasdaq-listed Royal Gold $RGLD, announced July 11, illustrates how tracking insider activity can be profitable. Great Bear Royalties owns a 2% net smelter royalty (NSR) on Kinross’s Great Bear/Dixie property in Red Lake, Ontario, which Kinross purchased for $1.8 billion late last year. GBRR was spun out of the parent company in 2020, with each Great Bear Resources shareholder receiving 1 GBRR share for each 4 GBR shares held. GBRR shares came out of the gate on April 5, 2021 at $2.50; Royal Gold is offering $6.65 cash per share ($200 million) for the company.

From the time GBRR shares began trading, Great Bear Royalties chairman John Robins spent more than $1.475 million loading up on GBRR shares at prices ranging from $2.89 to $4.72. Robins is a veteran geologist and co-founder of the Discovery Group of companies (Great Bear Resources, Kaminak Gold and others). Many of his trades were in the first few months of trading, including $686,650 worth of purchases at $3.10 on GBRR’s first day of trading and another $524,710 on the second day (at $2.85 to $3.20). Robins owns 1,693,856 GBRR shares and 500,000 options, worth about $14.6 million based on Royal Gold’s takeover offer.

And when it comes to insider purchases, having deep pockets helps. Mining royalty tycoon Pierre Lassonde, a founder of the original Franco-Nevada and the current iteration ( $FNV, market cap $31 billion), has been plowing money into earlier-stage mining plays. Lassonde has spent $1.93 million this year buying shares of Chilean-focused copper-gold explorer ATEX Resources $ATX-, at prices ranging from 55 cents to 74 cents. The stock currently trades at 47 cents. In April, Lassonde spent more than $2.7 million buying shares of Mexican precious metals play Prime Mining $PRYM at $3.65 a share. By June the stock had dropped to $2.40 and he added another $2.4 million worth at that price. PRYM shares currently trade at $1.34, after hitting $5 in late 2021.

Canadian multi-billionaire Jimmy Pattison has also been adding to his resource-related holdings. Pattison, the owner of privately held Jim Pattison Group, has been making large purchases of west coast coal export play Westshore Terminals $WTE. He has spent more than $62.7 million this year on Westshore stock, at prices ranging from $31.43 to $36.34. The company sports a market capitalization of $2 billion and Pattison owns more than 40% of Westshore shares, directly and indirectly. Pattison is one of Canada’s richest people, with a net worth of about $8.24 billion according to Bloomberg.

James Kwantes is the editor and publisher of Resource Opportunities and his work is supported by subscribers and patrons. He owns shares of Aurion Resources and Fireweed Metals.