By Maximilian Clarke
Graham Spooner, investment research analyst at The Share Centre, explains why Kenmare Resources (LSE: KMR) is his share of the week.
“After a poor autumn we have seen an increase in the miner’s share price on the back of expectations the group will move into a pre-tax profit in 2012. Although the company is making a loss at the moment, it expects to move into profit as contracts expire and new ones reflect the significant rise in the price of titanium.
“Growth seeking investors will be pleased to hear the group has an ongoing expansion programme, which is hoping to lead to a production increase of 50% during 2012.
“Kenmare Resources is however a high risk investment. Although the Moma mine is viewed as a world class asset with a long life span, it is situated in Mozambique, a country that has a past history of political turbulence, despite it currently going through a more stable period. Last year there was a two day strike and news that Mozambique may change mining laws that could lead to the state taking a share in its mineral resource.
“There could be more attention focused on Kenmare Resources in the next year and we recommend the stock as a ‘buy’ for those seeking growth and willing to accept a high degree of risk. Recent news of new contracts at a higher price for mineral sands from a similar company could help underpin profit projections for 2012/13. Investors should also note a director has been buying shares.”
Join us on