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Inveting.com -- Shares of Chemring (LON:CHG) rose on Thursday after the company said a joint feasibility study with the Norwegian Government had moved into a second phase, advancing plans for a new explosives production facility.
The study, launched in October 2024, is led by Chemring Nobel, the company’s Norwegian unit, and is co-funded by both parties.
It is aimed at assessing the viability of expanding production of military-grade explosives used in NATO missile and munitions systems.
The first phase focused on identifying a suitable location, infrastructure requirements and environmental considerations. Chemring said the study will now enter its concept selection phase, which will determine the facility’s size and commercial arrangements. The company expects this phase to be completed in 2026.
“We are delighted that the Norwegian Government has confirmed that this important study will continue to the next phase,” chief executive Michael Ord said in a statement.
“This decision is a further indicator of the critical need to rapidly increase capacity across the European defence industrial base.”
Chemring did not provide financial figures or production targets related to the potential facility.
However, the company said the study supports its broader strategy of pursuing growth through internal investment and targeted acquisitions in defense and national security markets.
RBC Capital Markets in a note called the development “positive” and said it increases the likelihood of a new site in Norway.
The brokerage estimates the value of a capacity expansion at about 50p per share, with potential upside to 70p under more optimistic assumptions. RBC also noted Chemring is exploring additional capacity expansions in the U.K. and Germany.