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When a company is on its heels due to unfortunate events, insider buying by corporate officers and directors can go a long way toward boosting shareholder confidence. Sometimes, however, the timing of that insider buying can raise eyebrows.

Take the case of Vancouver mining firm New Gold Inc., which had its Cerro San Pedro mine in Mexico shut down by authorities on Nov. 18 after its "Environmental Impact Statement" (EIS) was nullified.

The company quickly launched an appeal process and sought an injunction to restart the mine while the matter was sorted out. Nonetheless, the stock got whacked as some investors fretted it could be months before the mine was restarted.

On Dec. 10, New Gold was in a Mexican court making arguments for the injunction. The judge heard the company's arguments and promised to issue a decision shortly.

The next day, with the judge's decision pending, company director Vahan Kololian purchased 500,000 New Gold warrants for 15 cents each accord to a filing with securities regulators. The warrants gave Mr. Kololian the right to buy the same number of New Gold shares for $9 each until Nov. 28, 2012.

On Monday, Dec. 14, the judge issued a decision, granting New Gold an injunction that would allow it to run the mine while the EIS appeal process played out. The stock rallied. Investors will be following the EIS appeal process, and the stock could gain further if it works out in the miner's favour.

According to New Gold officials and Mr. Kololian himself, New Gold's in-house legal counsel cleared him to execute the trades as all material information had been publicly disclosed at the time. The directors were not "blacked out" from trading until the morning of Dec. 14, when New Gold knew a decision was imminent. "Prior to that there was no [trading]blackout," Mr. Kololian said in a brief interview.

With New Gold's shares currently trading at just $3.69 each, Mr. Kololian's warrants are still well out of the money. But with the Mexican mine back in business, they are a lot closer to paying off than they were before the judge's decision.

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