Following today’s reclassification, Kenmare Resources’ (LON:KMR) shares will be eligible to join the FTSE UK index at the benchmark’s next quarterly review in September, according to JP Morgan Cazenove. In an analyst note to investors the major stockbroking firm said it has a “very positive impression” of the company as it has turned itself around over the past year.
According to the broker, index tracking funds could begin buying the stock once it is included in the index, and in aggregate, such funds generally account for approximately 10% ownership.
Notably the broker said it believes the company’s valuation remains compelling, with a P/NPV of 0.49x.
Kenmare operates the Moma titanium minerals mine on the coast of Mozambique.
JP Morgan Cavenove said that product shipments are running smoothly, a second transhipment vessel is expected to arrive in September, and the company is installing a second berth to increase capacity. “This should ease concerns that shipping could cause future bottlenecks in the operation.”
Furthermore, the stockbroker highlighted that Kenmare’s expansion projects are on track, with detailed engineering and mechanical construction being completed by the end of 2011, and mine commissioning set for 2012.