Is the reward worth the risk with Avanti Communications Group plc and Amur Minerals Corporation?

Are Avanti Communications Group plc (LON: AVN) and Amur Minerals Corporation (LON: AMC) worth buying at current levels?

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Shares in Avanti Communications (LSE: AVN) are heading higher today after the company announced that revenue for the quarter to the end of March was up 15% year-on-year at $19.5m on a constant currency basis. Moreover, the company also reported today that it had won some sizeable contracts during the last quarter. These new contracts included a deal to provide connectivity to 4G base stations in the UK with EE Ltd, the mobile operator recently acquired by BT. Having such a big player in the telecoms industry on board is a huge vote of confidence in Avanti and the company’s management.

Avanti’s management also announced today that demand for its High Throughput Ka band satellite capacity in Europe, the Middle East, and Africa has been strong, particularly in the large telecommunications and government sectors. With demand for its services robust, Avanti is confident that it will be able to hit its revenue growth target of 50% year-on-year for the year to the end of June, some much-needed good news for the company’s shareholders.

Rocky period 

Over the past 12 months, Avanti’s investors have been taken on a wild ride as the company’s share price has collapsed by around 60% since mid-May last year. And year-to-date, shares in Avanti have lost around 50% of their value as investors have become concerned about the company’s financial position and its ability to hit growth targets. Indeed, City analysts expect the company to report substantial losses for the next two years, and it remains to be seen if Avanti can survive long enough to book a profit eventually. 

Analysts expect the company to report a pre-tax loss of £51m for the year ending 30 June and a pre-tax loss of £33m for the following year.

Speculative pick 

Shares in Amur Minerals (LSE: AMC) had a rough start to the year but have begun to make back some of their losses in recent trading days. Year-to-date the company’s shares have lost around 36% of their value and since the beginning of June last year, the shares have lost a staggering 90% of their value. However, in the last week, the company’s shares have started to recover some lost ground and are up around 16% since Monday.

Amur is still in the early stages of exploring its flagship Kun Manie nickel copper sulphide project located in the far east of Russia and it will be several years before this asset starts production and generates a return for shareholders. 

With this being the case, Amur is a high-risk opportunity. The company still has a whole mine to build and finance. If you’re going to buy into Amur’s nickel copper sulphide project, it’s best to do so as part of a well-diversified portfolio so if the company fails, you don’t lose your shirt.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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