First Class Metals shares have had a pretty awful week, and investors seem unprepared to step into the stock, despite the company’s range of promising projects.

First Class Metals shares have cratered 30% in 2024 so far, and we’re not even at the end of January.

The stock is down 69% over the past year.

This week’s sharp decline resulted from major investors dumping their entire stake in the company.

The disposal announcement was made on Wednesday, and First Class Metal shares haven’t been able to catch a bid since.

Focused on Ontario, Canada, the company has an attractive portfolio of projects diversified across lithium, copper, gold, nickel and PGMs.

In December, First Class Metals said they had encountered lithium-bearing pegmatites in all nine targeted drill holes in a recent campaign at the lithium ZigZag project. This would have been welcome news for investors with the license sitting in close proximity to Green Technology Metals’ Seymour Lake Project and Battery Age Minerals Limited’s Falcon Lake Project.

In addition, the company recently secured exploration permits for its Hemlo and Esa licenses which have visible gold and promising historical studies. First Class has confirmed high-grade showings in the vicinity.

There is a lot to be excited about.

However, as with all early stage mining exploration companies, there are high risks attached to First Class Metals.

First Class Metals has been clear the next stage in their ‘Big Four’ projects’ development will be drill campaigns later this year. This will be a capital-intensive exercise.

The company raised £603,000 via a placing at 6p in November after raising £1m at 10p in June. Investors may fear the company will need to tap the markets again to fund the development of their projects with shares at depressed levels.

With the market cap now down to £4m, meaningful funding rounds could be highly dilutive for existing shareholders. If shares continue to slide, the next placing could well be beneath 3p.

Investors will hope that anticipated results from the recent activity at the ZigZag lithium project provide a catalyst to move the share price higher.

LVMH shares were sharply higher on Friday after the luxury goods group announced a very respectable increase in sales in 2023, helping to dispel fears about a broad decline in demand for luxury goods.

LVMH were 12% higher at the time of writing on Friday after announcing group sales grew 13% on an organic basis to €86.2bn in 2023.

The luxury sector has been under pressure due to concerns that the cost-of-living crisis is finally starting to drag on the wealthy’s propensity to splash out on big-ticket items.

Sales in LVMH’s Fashion & Leather Goods division rose 9% to €11.3bn, suggesting the concerns about a luxury slowdown were overblown, if only for LVMH’s brands.

Perfumes & Cosmetics sales rose 10%, and Wines & Spirits sales grew 4%. Watches & Jewelry sales growth was sluggish, rising just 3%. Watches of Switzerland recently warned of slow demand for high-end watches so this seems to be a sector-wide issue.

“The numbers, although broadly in line with sell-side estimates, are being well received by the market this morning. Concerns over a slowdown in the luxury goods market have weighed on LVMH shares over the last twelve months following a period of extremely strong growth, and the results show that while growth is naturally moderating, it remains at a healthy level, particularly in the all-important Fashion & Leather Goods division,” said Mark Nelson, Senior Equity Analyst at Killik & Co.

“We remain positive on the medium-term growth prospects for the luxury goods sector and on LVMH’s industry leading position. The shares trade on a price to December 2024 earnings ratio of 22.6x. (Buy)”

Active Energy announced Friday that recent discussions with Player Design (PDI) regarding the delayed construction of a biomass fuel production facility in Ashland, Maine have been unproductive.

PDI informed Active Energy that they could no longer commit to a future production date or volume target for the CoalSwitch fuel to be produced at the Ashland facility. Active Energy has contributed $1.1 million in cash and $1.5 million in equipment towards the project and is now seeking the return of these funds.

Investors baulked at the news and Active Energy shares were down over 70% at the time of writing on Friday.

While disappointed with the construction delays, Active Energy said they remained confident in market demand for its CoalSwitch biomass fuel and is evaluating options to commence production in North America or Southeast Asia using its proprietary technology.

This will be of little consolation for investors looking at 89% decline in the share price over the past year.

Michael Rowan, CEO of Active Energy, commented on the developments:

“The actions of PDI are as surprising as they are disappointing after a long journey toward the production of CoalSwitch® fuel, especially given the fact that Tyler Player is a shareholder of Active Energy. The Board is taking swift and decisive action in the interests of our shareholders to minimize the impact, and to actively investigate and pursue all available claims arising from Active Energy’s dealings with PDI over the last 3 years. Shareholders should be rest assured that we are taking all the necessary steps to protect Active Energy’s current and prospective interests.

“Based on the continuing strong product interest from potential customers, the Board is confident in the significant future commercial opportunities for CoalSwitch® fuel, notably both in North America and Vietnam, and is encouraged by the ongoing discussions and evaluations currently being undertaken by several alternate commercial production partners. The shareholders will be updated with these developments at the earliest opportunity.”

The FTSE 100 was heading into the weekend on a firmer footing as the index surged with most industry sectors participating in a broad rally.

The FTSE 100 was 1.25% higher at the time of writing.

This week has again demonstrated London’s leading index is swayed more by events happening overseas than in the UK, and even Europe.

Reports of Chinese stimulus this week fired up the FTSE 100’s miners on Thursday, which provided a base for a further rally on Friday driven by investors picking out favourites offering relative value.

The source of optimism on Friday was positive US economic data which dispelled fears of a damaging slowdown in the world’s biggest economy. 

“The big names of the UK stock market have been lifted higher in the final trading session of the week. Stocks have been given a boost from better-than-expected economic data in the US yesterday,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“Our friends across the pond are seeing economic growth outstrip expectations, while also enjoying the fact that inflation pressures are reducing, according to the personal consumption expenditures index.”

FTSE 100 stalwarts and multinational consumer companies were ahead of the pack in early trade and maintained their strength as the session progressed. Heavyweights AstraZeneca, Shell, HSBC and Unilever were all up over 1% and added a substantial number of points to the index.

Unloved Diageo was the top riser on Friday, gaining as much as 4%. The drinks company’s shares have been at the bottom of the bottle since announcing slowing sales in Latin America and the Caribbean, but today showed there was still interest in the stock.

“Diageo bounced back after a torrid spell on the market as investors took comfort from LVMH’s results, as well as some green shoots in Remy Cointreau’s results, that the luxury sector isn’t completely broken,” said Russ Mould, investment director at AJ Bell.

Improving sentiment around the luxury sector helped Burberry add 3%. Croda was up around 4% and had been the top riser earlier in the session.