1. The Company
One mineral exploration company 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 increase their holdings by more than 10%.
Arianne Phosphate (DRRSF, Financial) primarily focuses on the development of the Lac Ă Paul phosphate-titanium deposit located in the Saguenay-Lac-Saint-Jean region of Quebec, Canada.
| Shares outstanding (May 31, 2014) | 87,087,755 |
| Warrants | 5,217,500 |
| Options | 6,142,909 |
| Share price | $0.92 |
| Market cap | $80.1 million |
| Enterprise value | $86.1 million |
| Tickers | DRRSF,TSXV:DAN |
1.1 History
- The company was founded in 1997 under the name Arianne Resources.
- Arianne was listed on the Toronto Stock Exchange in 2003.
- In May 2013, the company changed its name to Arianne Phosphate.
1.2 Business model
The company is focused on developing its Lac Ă Paul resource into a major mine.
1.3 Assets
Arianne’s main asset, the Lac à Paul project, is located approximately 200 km north of the town of Saguenay in the Saguenay-Lac-St-Jean region of Québec, Canada.
(Source: Investor presentation)
Arianne announced the feasibility study results for its Lac Ă Paul phosphate rock project in October 2013 with the following highlights.
(Source: Investor presentation)
2. Management
The CEO Brian Kenny has over 30 years engineering and large project development experience. Brian Kenny has been CEO since July 2013. Collectively, Arianne’s management team and board have over 240 years of industry experience.
(Source: Investor presentation)
2.1 Insider ownership
Here is a table of Arianne’s insider activity during the last 30 days.
| Name | Title | Trade Date | Shares Purchased | Prospectus | Current Ownership | Increase InShares |
| Dominique Bouchard | Vice-Chairman | Aug 1 | 20,000 | Yes | 36,700 shares | +119.8% |
| James Cowley | VP | Aug 1 | 30,000 | Yes | 103,788 shares | +40.7% |
| David Debiasio | Director | Aug 1 | 5,000 | Yes | 30,000 shares | +20.0% |
| Pierre Fitzgibbon | Chairman | Aug 1 | 75,000 | Yes | 150,555 shares | +99.3% |
| Marco Gagnon | Director | Aug 1 | 11,000 | Yes | 50,000 shares | +28.2% |
| Brian Ostroff | Director | July 31 | 10,000 | Yes | 321,100 shares | +3.2% |
| Siva Pillay | Director | Aug 1 | 10,000 | Yes | 10,000 shares | from 0 to 10,000 |
| Steven Pinney | Director | Aug 1 | 25,000 | Yes | 25,000 shares | from 0 to 25,000 |
There have been 186,000 shares purchased by insiders during the last 30 days. Seven of these eight insiders increased their holdings by more than 10%.
Here is a table of Arianne’s insider activity by calendar month.
| Ă‚ | Insider buying / shares | Insider selling / shares |
| August 2014 | 176,000 | 0 |
| July 2014 | 10,000 | 0 |
| June 2014 | 0 | 0 |
| May 2014 | 0 | 0 |
| April 2014 | 23,500 | 0 |
| March 2014 | 0 | 0 |
| February 2014 | 0 | 0 |
| January 2014 | 0 | 0 |
| December 2013 | 145,366 | 0 |
| November 2013 | 0 | 0 |
| October 2013 | 20,000 | 0 |
| September 2013 | 0 | 0 |
| August 2013 | 0 | 0 |
| July 2013 | 54,000 | 0 |
| June 2013 | 0 | 0 |
| May 2013 | 0 | 0 |
| April 2013 | 0 | 0 |
| March 2013 | 0 | 0 |
| February 2013 | 0 | 0 |
| January 2013 | 0 | 0 |
(Note: The table doesn’t include shares acquired or disposed under a purchase/ownership plan. There have been 21,307 shares acquired pursuant to a purchase/ownership plan since January 2013.)
There have been 428,866 shares purchased, and there have been zero shares sold by insiders since January 2013. The month of August 2014 has seen the most insider buying.
2.2 Compensation
Here is a table of the management’s compensation during the last three years.
(Source: Management Proxy Circular)
The management’s total compensation was highest in 2011.
3. Financial Summary
3.1 Current situation
Arianne reported the first-quarter financial results on May 29 with the following highlights:
| Revenue | $0 |
| Net loss | C1.4 million |
| Cash | C$5.3 million |
| Debt | C$11.8 million |
On July 31, Arianne closed a C$5.6 million financing.
3.2 Historical Developments
Here is a table of Arianne’s revenue and earnings since 2004.
| Year | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 |
| Revenue (C$ in millions) | 0 | 0 | 0 | 0.05 | 0.03 | 0 | 0 | 0 | 0 | 0 |
| Net loss (C$ in millions) | 0.3 | 0.5 | 0.3 | 0.7 | 1.5 | 1.3 | 2.9 | 3.4 | 5.4 | 6.4 |
| EPS (diluted) | -0.12 | -0.09 | -0.04 | -0.05 | -0.09 | -0.06 | -0.10 | -0.06 | -0.08 | -0.08 |
(Note: Arianne had a 5-for-1 reverse split in July 2009. The EPS numbers have been adjusted accordingly.)
In 2007 and 2008, Arianne’s revenue was only interest income.
4. Shares
Here is a table of Arianne’s number of shares since 2004.
| Year | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 |
| Number of shares (millions) | 2.0 | 5.2 | 10.7 | 15.7 | 17.0 | 21.1 | 29.1 | 61.3 | 68.5 | 78.0 |
(Note: Arianne had a 5-for-1 reverse split in July 2009. The number of shares have been adjusted accordingly.)
Arianne’s number of shares have grown 3,800% since 2004.
5. Outlook
Arianne’s goal is to move the Lac à Paul project into production by 2018.
(Source: Investor presentation)
6. Competition
Arianne's production cost is equivalent to $60/t when adjusted for 32% P2O5 concentrate, which puts Arianne around the middle of the cost curve.
(Source: Investor presentation)
7. Risks
The main risks are no revenues, negative earnings, and the price of phosphate rock. The price of phosphate rock peaked in 2008.
(Source: Investor presentation)
Arianne is also a penny stock.
8. Conclusion
There have been eight different insiders buying Arianne and there have not been any insiders selling Arianne during the last 30 days. The eight insiders purchased their shares at $0.91 (C$1.00). I believe Arianne could be a good pick below $0.91 based on the intensive insider buying.
(Source: Investor presentation)
Disclosure: The author has no positions in any stocks mentioned.
