The FTSE 100 was in full-blown wait-and-see mode on Wednesday as investors prepared for Nvidia earnings after the US bell.

Nvidia’s remarkable dominance in the chips supply to fuel the AI boom has made it the ultimate bellwether for the AI theme, which has been responsible for much of the US equity rally since the beginning of 2023.

For investors, the outcome of tonight’s earnings is almost binary. If Nvidia misses earnings expectations, or only just meets expectations, global equities are likely to come under significant pressure. A beat of earnings expectations will signal the AI trade is still intact and will likely send stocks higher.

Given the potential for large, unpredictable swings later today, its understandable investors held off making big bets on Wednesday and the FTSE 100 was down 0.1% at the time of writing.

“Naturally, NVDA earnings after the close hold the key to the near-term direction for global equities, and risk appetite, coming at a time when risks around the AI theme appear to become more equally-balanced and, of course, with the S&P just inches away from a fresh record high,” explained Michael Brown Senior Research Strategist at Pepperstone.

“Derivatives price a punchy +/- 9.7% swing in NVDA stock in the 24 hours following the quarterly report, equivalent to a staggering $280bln worth of market cap in either direction. As has been the case for the entirety of earnings season, strong guidance will need to accompany revenue and EPS beats in order to unlock significant after-market gains.”

Although the FTSE 100 has very little in the way of direct exposure to Generative AI, investor sentiment will be driven by this evenings results. However, as we’ve seen in recent weeks, London’s leading index may experience a smoother ride to the upside or downside due to the defensive composition of the index.

The index’s defensive nature has again been evident this week, with the FTSE 100 holding above 8,300, supported by oil stocks amid rising tensions in the Middle East. 

There was little in the way of standout movers on Wednesday. Prudential was a notable gainer after announcing half-year results. Shares in the Asia-focused company rose 1% on the announcment of rising new business profits, but falling operating profits.

“Prudential’s big pivot to Asia over the last decade, which culminated in the shedding of its US and European operations in 2021, isn’t playing out as the company would have hoped,” said Russ Mould, investment director at AJ Bell.

“The insurance giant went to less mature markets in the pursuit of growth, betting on an emergent middle class having increased appetite for financial products and services, but in key geographies like mainland China and Hong Kong, that growth is proving elusive. Zero-Covid policies didn’t help and the subsequent uncertain recovery in the Chinese economy has only compounded things.”

Despite slow progress in China, Prudential increased in dividend and said it has seen sales momentum pick up after June.

Only capitalised at just £48.3m, the shares of Condor Gold (LON:CNR and TSX:COG) could well be in for an early uplift in price. 

Analysts at its broker, SP Angel, currently have a valuation out on the group’s shares of 97p, which is some four times its 23.5p market price. 

The Business 

It is a gold exploration and development company with a focus on Nicaragua, where its principal asset is the La India Project, which is a large, highly prospective land package of 588 sq.km comprising of 12 contiguous and adjacent concessions. 

La India For Sale 

Almost two years ago, in late November 2022, the company announced that following a robust and economically attractive Feasibility Study on the La India open pit, it had appointed Hannam and Partners to seek a buyer for the assets of the company.  

In mid-May this year the company issued an Update on the Sale of its Assets. 

It stated that, as at 16^th May 2024, eight companies were under Non-Disclosure Agreements, five non-binding offers having been received and three site visits completed.  

The company went on to note that although none of the non-binding offers had progressed to firm proposals at that date, it was in advanced discussions with one gold producer, while two other parties were actively reviewing the company’s assets.  

A further Update on the potential was issued at the end of last month, with the company reporting that there were eleven companies under NDA’s, with it having received five non-binding offers, while three site visits had been completed.  

In addition, it had also received an additional formal expression of interest in July. 

Chairman and largest shareholder, with 26.1% of the group’s equity, Jim Mellon stated that: 

“There remains substantial interest from gold producers to acquire the Company’s assets.  

Wholly owned, fully permitted, construction ready gold mines with potential production of 150,000 oz gold per annum, in major Gold Districts, with the land and a new SAG Mill package purchased and a construction period of only 18 months are rare.  

There are currently eleven companies under NDAs, five non-binding offers received and three site visits completed.  

Whilst discussions have ceased with one gold producer previously referred to, the Company is now focused on active discussions with three other gold producers, one of which we consider the preferred bidder.  

Companies under NDAs have access to a virtual data room, which includes all drill data, technical studies to Feasibility Study level, details of permits to construct and operate a mine and financial models.  

While the sales process is taking longer than anticipated, new enquires continue to be received.  

Record gold prices of over US$2,400 oz gold in recent weeks compared to a US$1,600 oz gold price used in the Feasibility Study, materially improves project economics.  

The Board remains confident that a binding agreement can be reached and Investors will be updated in due course.  

Meanwhile, the entire Board, including the executive, will continue to give their full attention to obtaining the best outcome possible for all investors.” 

Analyst’s View 

At SP Angel, the company’s broker, a trio of its analysts – John Meyer, Simon Beardsmore and Sergey Raevskiy – note that the company is advancing the sale process for its advanced stage, 2.3m oz La India gold project in Nicaragua and the surrounding exploration areas.  

The 2022 feasibility study describes development of an open pit mine at La India as the first phase of development producing approximately 82,000oz pa of gold.   

Expansion through the subsequent development of already permitted satellite pits and of underground mining has the potential to increase output to around 150,000oz pa. 

 A completed feasibility study and in-place development permits provides a successful acquirer with an opportunity for rapid development of an advanced gold project with expansion potential and further exploration prospects.  

The analysts state that using SP Angel’s long-term gold price forecast of $2,450/oz, they estimate that the NPV10% of Condor Gold’s planned initial development of an open pit mine on the La India vein at around $287m, which would be equivalent to 97p a share. 

In My View 

The recent strong rise in the price of gold provides an excellent backdrop for investors to perceive the value of Condor Gold’s shares. 

The potential sale process has taken some time, but it does feel as though it is coming closer to a conclusion, which could really push upwards the group’s value. 

The shares were up to 37p on 7^th May this year, before drifting back and stabilising now at around the 23.5p level. 

With so many interested parties, combined with the yellow metal’s soaring value, I do feel it would be wrong to dismiss what could well be a dramatic potential uplift when any offers come to fruition. 

Helix Exploration has announced the successful completion of drilling operations at its Clink #1 well in the Ingomar Dome Project.

The drilling reached its Target Depth of 8,030 feet ahead of schedule and under budget. During the drilling process, the company encountered elevated levels of helium in the drilling muds throughout the entire sedimentary column.

This discovery provides strong evidence for the presence of helium across all targets, reinforcing the potential of the Ingomar Dome Project as a viable helium source.

Investors will be pleased to learn Helix Exploration detected significantly elevated hydrogen levels in the drilling muds, particularly within the Cambrian strata. Hydrogen concentrations reached as high as 103,000 parts per million (10.3% H2), indicating the presence of a substantial hydrogen system in these ancient rock layers.

The company is now preparing to commence wireline logging and extended flow testing to further assess the concentrations of both helium and hydrogen.

These upcoming appraisal activities will be crucial in determining the commercial viability of the discovered resources and could potentially position Helix Exploration at the forefront of both helium and hydrogen production in Montana.

“We are delighted to report the safe and successful completion of the drilling of our maiden exploration well at Clink #1 delivered ahead of time and below budget. Drill operations took 11 days from spud to Target Depth, completing well ahead of the 2-3 week guidance provided,” said Bo Sears, CEO of Helix Exploration.

“We are highly encouraged by anomalous helium identified in all target strata, indicating that we have elevated levels of helium throughout the sedimentary column. Additionally, the discovery of anomalously high hydrogen shows within Cambrian strata is a welcome development. A number of highly elevated readings up to 103,000ppm (10.3%) suggest a significant level of hydrogen in the lower part of the system. This will need to be fully investigated before any conclusions on economic potential can be drawn.

“We are now moving directly onto preparing the well for wireline logging and appraisal via extended flow testing and will keep the market updated as we learn more about the helium and hydrogen system identified in mud-shows at the Ingomar Dome Project.” 

Suspended Eurasia Mining is facing increasing financial difficulties, with its current working capital only sufficient to meet ongoing obligations until November 2024.

This limited financial runway has spurred Eurasia Mining to explore urgent funding options. The company said it is in advanced discussions with a lender regarding a trade finance loan facility. This potential facility aims to bridge any gap until the company can either sell its inventory of PGM concentrate or its assets.

Eurasia cautions that there is no guarantee this loan facility will be secured.

While Eurasia Mining expects to have additional sources of working capital, primarily from its stored inventory of PGM concentrates, the board of directors is prioritising the potential sale of the company’s assets as a solution to its financial challenges.

Fortunately for investors, Eurasia shares remain suspended pending the posting of the annual report, so any downside in shares resulting from the news will be avoided.

However, the company faces the risk of being delisted from AIM if the suspension continues for six months, as per AIM Rules.

The FTSE 100 started the bank holiday-shortened week on the front foot, with strength observed in the mining and commodity sectors, helping London’s leading index outperform Europe. 

After being closed on Monday, Tuesday is the first full session London has had to react to last week’s Jackson Hole Symposium and the confirmation that the Federal Reserve will begin cutting rates.

“The FTSE 100 got off to a strong post-Bank Holiday start, lifted by its healthy contingent of resources companies,” said AJ Bell investment director Russ Mould.

“Index heavyweights BP and Shell were higher as heightened tensions between Israel and Lebanese militant group Hezbollah, along with outages in Libya, saw oil prices surge back above $80 per barrel. Commodities traders will be watching closely to see if the apparent step back from the brink by both parties holds for now.

“This week is likely to be dominated by Nvidia results and a second estimate of US second-quarter GDP. Federal Reserve chair Jerome Powell’s virtual confirmation there will be a rate cut at the next meeting in September means the debate now is whether it will be a 25-basis point or 50-basis point cut.”

Notwithstanding anticipation around Nvidia’s results tomorrow, knowing the Fed will begin to ease borrowing costs has helped lift investor sentiment, and if we were to strip out tension around what Nvidia’s number may be, it’s likely the FTSE 100 would be higher on Tuesday.

Bunzl

Bunzl was the FTSE 100’s best performer, with a gain of 7% after the logistics group hiked its dividend by 10 amid steady profit growth.

“Distribution services may not be the most exciting sector that investors are initially drawn to but Bunzl seems to be making a habit of turning a profit and growing its dividend, which investors definitely do like to see,” said Adam Vettese, Market Analyst at investment platform eToro.

“The firm’s strategy of focusing on acquisitions continues to pay off with a profit upgrade after strong H1 performance this year. Bunzl manages to keep cash flow strong enough so that leverage is still under control when self-funding their acquisitions in order to add value to the business.”

Although Easyjet has been earmarked for a demotion to the FTSE 250, shares in the airliner rose 6% on Tuesday and were the second top riser.

JD Sports was the top faller as investors banked profits after a strong rally in recent weeks.

Tekcapital portfolio company Belluscura is now producing significant revenues with an attractive growth rate. Investors are evidently thrilled at the news, and shares in oxygen-concentrator producer Belluscura rose over 30% on Tuesday.

In addition to record revenues of $708k in July, Belluscura is on track to become EBITDA positive for Q1 FY2.

“Belluscura achieved record sales for the month of July with revenues of $708,000. This follows the previous monthly high set in June of $521,000. The Company expects strong sales to continue with the broader market acceptance of the X-PLOR® and the upcoming full release of its new patented DISCOV-R™ device,” the Belluscura Chairman said in its AGM statement.

The group said the early stages of its soft launch in the United States have been a big success, with every unit manufactured being sold. Belluscura said in a statement that they plan to push forward with the full US launch in mid-Q4.

Belluscura’s management team is evidently confident of the company’s growth prospects as they set revenue targets of $8 to $10 million for 2024 – major milestone for the company. In 2023, just $825,409 in revenue was generated.

In addition to remarkably strong revenue guidance for 2024, the company believes it will be at an annualised revenue run rate of $14 million to $16 million by the end of the year.

Belluscura announced game-changing approvals, contracts and orders last year. The revenue from these contracts is starting to be recognised in revenues and profits, and judging by the market reaction, some investors are convinced this will lead to shareholder value creation.

Belluscura was founded and listed on AIM by technology incubator and venture capitalist Tekcapital, which retains a stake in Belluscura. Should Belluscura meet its revenue forecasts, it will be a major validation of Tekapital’s ability to select technologies with a substantial market and commercial opportunity, and the potential to improve the lives of many people.

Tekcapital is the team was also behind one of AIM’s most successful IPOs of 2024, low-sodium food technology company MicroSalt. MicroSalt shares tripled in value after listing in London, before easing back.