Arafura Rare Earths Ltd (ASX: ARU) shares have been on fire in recent sessions.
For example, since this time last week, the rare earths developer's shares have risen over 30%.
That's despite them trading 5% lower in afternoon trade on Tuesday.
The catalyst for this rise has been some huge news in respect to the development of the Nolans Neodymium-Praseodymium (NdPr) Project in the Northern Territory.
That announcement revealed that the Federal Government has conditionally approved a US$533 million debt finance package to support Arafura's flagship project.
This includes a US$125 million limited-recourse senior debt facility which was made available through the Government's A$4 billion Critical Minerals Facility. In addition, there is A$150 million in limited-recourse senior debt facilities from the Northern Australia Infrastructure Facility (NAIF).
Insider buys Arafura Rare Earths shares
If you thought it was too late to pick up shares after this recent rally, then you might be wrong judging by what an insider is doing.
According to a change of director's interest notice, the company's non-executive chairman, Mark Southey, was buying Arafura shares on-market on Monday.
The notice reveals that Southey picked up 100,000 shares for an average of 21 cents per share. This represents a total consideration of $21,000.
This purchase boosts Southey's holding to a total of 332,140 shares owned directly and 580,760 shares owned by his super fund.
It seems that this chair still sees significant value in Arafura shares. Especially given that they remain down 60% on a 12-month basis despite the recent rebound.
Is this a buy signal?
Insider buying is often regarded as a bullish indicator. This is because few people know a company and its intrinsic value better than its own directors.
If they are buying, it suggests that they are confident in the direction the company is heading.
After all, you wouldn't be buying if you thought your company's shares were overvalued or if things weren't going well.
However, it is worth remembering that insiders don't always get it right. So, investors should do their own due diligence before jumping in feet first.
