Insider buying at NexGen Energy

NexGen Energy shares soared 91% during Wednesday’s trading session, settling at 43 cents on volume of 6+ million shares, after the company issued a news release heralding uranium mineralization in its first drill hole at Rook 1, adjacent to Fission Uranium’s Patterson Lake South property in the Athabasca Basin. As I told a friend late Wednesday, my enthusiasm was tempered by the fact NXE had shot up higher previously (60 cents, August) before crashing back down, but fuelled by the fact that the prior run-up was entirely speculative.

So I was pleasantly surprised to watch NXE finish in the green again Thursday, closing up 4 cents to 47 cents, on volume of 2.1 million shares. NexGen’s discovery is very early-stage, but the market likes what it sees so far. The company has a dominant land position in the Athabasca Basin, home to the world’s richest uranium grades. Its Radio project is adjacent to the Roughrider deposit, sold by Hathor Exploration to Rio Tinto for $650 million after a bidding war with Cameco, and Rook is adjacent to Fission Uranium’s Patterson Lake South project, which has been driving the area play in recent years. The NexGen team includes former Rio Tinto/Hathor executives. I bought shares in late June when the stock was at 25 cents and wrote about my reasons here.

I was also encouraged to see some of Wednesday’s trading volume came from an insider of the company. Sheldon Inwentash’s Pinetree Capital purchased 1 million shares at 43 cents, according to Canadian Insider, the latest in a series of purchases that give Inwentash’s Pinetree and Mega Uranium about 22% of outstanding shares. In November 2012, NexGen bought most of Mega Uranium’s Canadian properties – including Rook – for 16.4 million NXE shares. The resource bear market has not been kind to Pinetree, Inwentash’s resource investing vehicle, and the company seems to be selling some of its resource stocks into strength, according to this Mineweb piece. Except, that is, for NexGen, which has two Pinetree executives on its board.

Tommy Humphreys interviewed NexGen CEO Leigh Curyer Thursday and blogged about it over at CEO.ca. Curyer said the company has two drill rigs to explore Rook’s geology and is still drilling the first hole that turned up uranium mineralization. Curyer owns 1.45% of NexGen’s outstanding shares, which number 128 million, giving the company a market capitalization of about $60 million.

Disclosure: I own shares in NexGen Energy. This is not investment advice.

Related reading:

Rebalancing, Part 2: Signs of life | World of Mining

Uranium supply disruptions spell opportunity for investors, Dundee says | Streetwise Energy Report

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