₪ David Pescod's Late Edition March 7, 2007
AURORA ENERGY (T-AXU) $15.12 +0.14
FAR WEST MINING (T-FWM) $3.55 n/c
Much is made of insider selling and sometimes it might be just a little bit too much. Concern of course is that insiders have access to insider information about how well financially or sales wise any company might be doing. And if all of a sudden insiders are selling and selling big time obviously a shareholder should be worried.
On examining the junior resource market though that same principal may apply but one must remember that particularly in the junior mining market those who run some of these junior mining companies aren’t particularly well paid. Their pay off is the stock that is involved with a significant play and suddenly those officers and directors of the company have a little bit of a pay off …..options.
The oil and gas sector sees much better paid principals than in mining but once again, if suddenly they all decide to bail that is not a good sign.
The underlying fact is that no matter what business with many officers they have the same considerations you and I do…there is tuition to be paid, a mortgage to be retired, about to buy maybe a condo in PV. Everyone has these bills to retire once in awhile. But still it’s always interesting to read the piece in the Canaccord’s Junior Mining Weekly that is done by Ink Spots, and examines insider trading of many of the resource companies.
Maybe the ideal example of the perfect world Aurora Energy, where the stock has done nicely over the last year so both investors and speculators have done well, and insiders have done very well. In the last twelve months according to Ink Spots insiders have purchased $3.3 million in equity and sold $9.9 million worth. They have done well, and so have investors.
Maybe an example of the other side is Far West Mining, and the chart shows you that this stock has done sweet-tweet however, in the past twelve months insiders have purchased a mere $480,000 in equity but have sold $2.8 million worth of equity. Not a good sign and since February 20th insiders have purchased 100,000 shares at cost between $0.35 and $1.05 (obviously options) and sold 320,000 plus at prices between $3.65 and $3.69. Investors haven’t done that well. Insiders apparently have.
Another interesting case has been Forsys Metals where over the last twelve months insiders have purchased $3 million worth of equity but only sold roughly $2 million worth, obviously they are believers in their own story. And then there is Shore Gold the diamond experience in Saskatchewan and over the last twelve months insiders have purchased a mere $265,000 in equity but have sold more than 10 times that totaling $3,040,169 in equity.
RALLY ENERGY (T-RAL) $5.45 +0.21
CONNACHER OIL & GAS (T-CLL) $3.78 +0.08
Is this not one of the prettiest charts we’ve seen in a long time? There is an awful lot of oil and gas stocks that peaked when oil did earlier last year that haven’t been nearly as pretty as this one. But Rally Energy under the leadership of Abby Badwi has been one of the success stories of the last 18 months.
He was brought in to use some of the new technology available for heavy oil development common to some areas of North America and apply the same technologies in Egypt and they have since become significant producers as the charts shows.
Over the next few months some of the interest of Rally shareholders is probably going to be shifting a bit to Pakistan where their other interests lie. Yesterday Rally announced a combination of an agreement to increase their interest in the Safed Koh Concession in Pakistan to 30% by paying $8.5 million U.S. plus 1.3 million shares of Rally. Before one gets too excited remember that this is Pakistan where prices are controlled and it looks like one isn’t sure yet that they will be getting $3.47/mcf gas production on their concession.
Production is expected to start around the end of March at the rate of 15 to 20 mmcf a day (net 4.5 to 6 mmcf to Rally) that is expected to get up to 60 mmcf a day or 18 mmcf a day to Rally by July of this year when further development wells are drilled. And that development well is also expected to test the deeper sandstone which on news announcements yesterday, suggested it could double the reserves of the field.
For those that crave excitement, this year in July Rally drills two high impact wells into the Afiband and the Zindapir structures according to announcements they have the four way seismically defined closure of previous successes and should this drilling be successful could add two trillion cubic feet of reserves to Rally’s portfolio.
Meanwhile Abby has got to be having a lot of fun and sometimes we are still surprised that he hasn’t been able to or wanted to sell the company. Formerly successfully retired, one can only image how beaten up his poor old body has got to be with the time he has to spend on the road for a guy based in Calgary but with operations in Egypt and Pakistan.
Maybe he is just packing in all these frequent traveler’s miles to be used when he finally does decide to sell the company and start using the frequent traveling miles, when he retires yet again.
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