Director Deeds: Insider miners

Director Deeds is back and since we last peeped into insider activity in ASX listed companies, the ASX200 index has continued its strong performance, edging closer to its July 30 record high of 6845 points.

Geopolitical tensions have continued to shape the global economy and one of the beneficiaries of this has been the gold market, as investors have flocked to the safe haven commodity, driving its price up to record highs in the Australian currency earlier this year. This has had a direct impact on ASX-listed gold mining companies. It therefore seems appropriate to begin this instalment of Director Deeds with the mining sector.

Executive Chairman of gold-miner Northern Star Resources Bill Beament leads the charge having sold a touch over 500,000 direct shares earlier this month at a trade price of $8.989. That brings the Northern Star veteran over $4.5 million and follows his massive trade earlier this year for $22 million worth of shares at a price of $9.01 which was reportedly used as part of a Family Court settlement.

Beament’s latest cash-in reflects investor sentiment in Northern Star since it reached a record high share price of $14.06 in July this year. Since then the gold miner’s share price has tumbled 36 per cent to currently sit at $9.01 (at time of writing). This performance has been mirrored by the declining gold price which reached an all-time high in August this year as fears of Australia entering into a recession spiked.

More recently however, as murmurs of a potential trade deal between the US and China get louder, the gold price continues to drop. Whether this is the reason directors may be cashing in is speculative, but another significant trade, this time by Newcrest Mining’s CEO Sandeep Biswas on October 25^th, suggests the precious metal’s dream run might be coming to an abrupt end.

Similar to Northern Star, Newcrest’s share price hit an eight year high of $38.87 in August this year as the gold price peaked but has suffered similar misfortune having dropped 22 per cent to its current level of $30.19. Biswas got a slightly better price of $32.46 when he sold 35,545 shares for $1.15 million.

Interestingly, on the same day as Biswas cashed in, so did Newcrest’s CFO Gerard Bond who sold 11,728 direct shares at a slightly lower price than Biswas of $32.449, receiving $380,561. The move by both Bond and Biswas occurred the day after Newcrest released its latest quarterly report for the three months ended September 30. Perhaps this is a more plausible reason for these Director Deeds, given the gold giant executed several major maintenance shutdowns during the period, which sent gold and copper production down 23 and 14 per cent respectively compared to the previous quarter.

Moving commodities, and George Raymond Zage has gone big with a near $29.5 million investment in Whitehaven Coal through a mixture of direct and indirect shares. Perhaps a sign of good faith, Zage made the commitment after long-time backer Farallon Capital Management sold its 9.3 per cent stake in Whitehaven to investment bank UBS for $306 million earlier this month. Zage was the former head of Farallon Capital Asia and was influential in the firm’s decision to initially invest in Whitehaven, who he is a non-executive director of. While Zage’s investment highlights his loyalty, Farallon Capital’s divestment still raises eyebrows about the direction of Whitehaven, given they have been with the company since its early days and therefore, would have a deep understanding of its future prospects.

On the topic of mining, the services industry has begun to benefit off increased activity and a recent article for Eureka Report highlighted that majors within the mining services sector have significantly outperformed the market over the past five years. Perhaps the most noteworthy has been Orica, whose CEO Alberto Calderon was recently interviewed by Alan Kohler for Eureka Report about the company’s tech branding, which is significantly boosting their balance sheet. It’s one of the reasons Orica posted a net profit after tax for FY19 of $245 million, compared to their $48 million loss in FY18. Just three days after releasing the company’s annual report, Calderon bought a further 148,700 shares at a trade price of $23.649 — a $3.5 million investment! Two days later he proceeded to then sell 70,000 shares worth $1.65 million, which the company said were “required to be sold to cover Dr Calderon’s income tax liability on the FY2017 vested Performance Rights.” Did he get carried away, who knows? But the CEO still holds a healthy 221,208 ordinary shares in the company, which seems a pretty healthy vote of confidence.

Moving outside this edition’s mining theme, an interesting recent sell by regenerative medicine company Avita Medical’s CEO Mike Perry looks to be the goods, from his perspective at least. Perry sold $7.4 million worth of indirect shares just after Avita announced a placement of $120 million. Having been CEO at the company since 2017, where its share price was as low as 7 cents, Perry sold 23.4 million shares at a price of 59 cents, a fair chunk of his stake in Avita, leaving him with 12.7 million ordinary shares. Since the announcement of the institutional placement on November 13, the company’s share price has steadied and sits at 61 cents.