Scotsman says BUY
IN THE old days, it was not unusual for mining stocks, and particularly gold mining companies, to throw off a very substantial income yield.
This was effectively an annuity on the shortening life of the mine's commercial viability. The rise in the gold price almost from the day that Gordon Brown sold half of our reserves has now seen their life expectancy increase dramatically, with the consequential falling away of the yield.
However, there is one mining company at least which offers a substantial income return.
Tanzanite is a blue/violet gemstone which is attracting increasing attention from the world's well-heeled; Tom Cruise gave his inamorata, Katie Holmes, a tanzanite ring, a more tangible example of his affection than jumping up and down on Oprah Winfrey's sofa.
Last year was difficult for the company. The group took a near $3 million (1.5m) hit, writing down jewellery stocks following the sale of its wholesale jewellery business and a near $2m write-off on intangible assets.
This year has started much better, with good demand, while the group has confirmed that it is on target to produce five million carats of tanzanite a year, against 1.23 million carats last year.
TanzaniteOne is no widows' and orphans' stock. The company's success will depend on fashion as tanzanite has few other commercial applications.
Moreover, of course, there is the political dimension of any involvement in an African state.
Still, down from a twelve-month peak of 220p and yielding nearly 10 per cent, the shares look as appealing, and uncertain as love itself.
• The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.