Pennon released a trading statement for the year ending 31st March on Monday, pointing to steady progress as the group make acquisitions designed to accelerate its push towards net zero.

Reference to the water company’s financial performance was brief, with the group saying, “Financial performance for the full year 2023/24 remains in line with management expectations.”

The focus of the release was the progress of its acquisition of SES Water and renewable energy sites. Pennon has acquired four renewable energy sites including one earmarked for solar power in Dunfermline.

The company said it has delivered £95m of customer support while keeping bills as low as possible.

“A short trading update revealed that everything’s flowing smoothly at Pennon. While no specific numbers were given today, management confirmed that the financial performance was in line with group expectations, with full-year results set to be released in May,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Pennon’s recent acquisition of Sutton and East Surrey Water (SES Water) is moving through the Competition & Markets Authority (CMA) review process as expected. The review is customary and there’s potential for it to clear phase 1 in summer 2024. The £89mn price tag looks attractive and helps Pennon increase its foothold across Southern England by bringing in more than 750,000 paying customers into the fold.

“Annual rainfall across the South West was up 50% in the second half of the year compared to long-term averages. Alongside 10 named storms since September and 12 yellow weather warnings for the region, managing all this extra water has proved challenging for the group. The significantly increased wastewater flows have led to increased use of storm overflows to help relieve the pressure, and that’s impacted some headline numbers. But on the whole, profit pipelines appear to be in robust shape.”

In the first of our weekly reviews, we will take a look at how the S&P 500 sits currently. The chart describes how price action has been in an extremely tight bullish trend since the lows in October last year. Ever since the Fed started to suggest thatthe rate hiking cycle had peaked and that rate cuts were looming, the market has seen steady and consistent buying.

On this chart we also throw up a Fibonacci retracement channel calculated from the October lows to the recent all time highs. This is not meant to be a forecast of where price action will fall to, but instead it is meant to highlight where the index could fall to.

After a strong move like this it is quite common for price action to retrace around 50% of the previous move. The 50% level currently is around 4,700.

Were this to happen in the coming months you will doubtless read many reports of “The S&P 500 is crashing”. In reality this would only be a fall of around 11% and the long term bullish trends would remain intact, so it would not be a major long-term concern. So

 investors and traders alike need to be aware that a simple relatively minor correction down towards the 4,700 could occur in the coming months, if the Fed for example was to push back hopes of future rate hike cuts.

There are wider concerns on the underlying state of the US economy, there is plenty of anecdotal evidence to suggest that the US consumer is starting to feel the pinch. However the top tier companies in the S&P 500 have so far been largely immune to this effect.

So, unless/until more evidence emerges the extremely strong bullish trend looks set to continue. In order to turn more cautious we would need to see price action drop out of this trend, currently around 5100. As this would be the first warning sign of a more meaningful correction.

As things stand though the short and medium term trends are strong, leading to a positive skew on the index and its constituents, and that on any future weakness a move towards 4,700 would seem to be a natural move.

After presenting at our Investor Conference at the London Stock Exchange (LSEG) 13th March, we explore Cornish Metals and its progress towards restarting tin production at the South Crofty tin mine.

Key facts CORNISH METALS (LON & TSX-V: CUSN)

Market capitalisation: £50.5m

Price: 9.35p

52-week high/low 16p / 8.90p

Analyst Valuation per share: 32p – 48p

Cornish Metals is a mineral exploration and development company, which holds extensive mineral rights in an underexplored region in the UK, is mainly focused on its South Crofty tin project in Cornwall.

As a group its flagship projects are the South Crofty tin project and the United Downs copper-tin project.

The United Downs copper-tin project area is located within the boundaries of, or adjacent to, four former copper, tin and zinc producing mines.

The company has recently made a new discovery at United Downs, which is a near surface, high-grade copper-tin discovery, some 5 miles to the east of South Crofty.

In addition, the company holds 15,000 hectares in exploration licenses.

It also maintains an interest in the Nickel King project, an exploration property which is prospective for nickel in the Northwest Territories in Canada, and the Sleitat project, an exploration property which is prospective for tin and tungsten in Alaska.

The company also holds a royalty on two non-producing tungsten assets located in the Northwest Territories and the Yukon, Canada.

Additionally, it owns interests in exploration properties prospective for tin in Alaska and nickel in the Northwest Territories, Canada.

Cornish Metals holds a free carried interest and royalty on lithium projects in Cornwall through Cornish Lithium.

The South Crofty Story

Cornish Metals is principally centred upon developing the considerable opportunities in developing the South Crofty tin mine in Cornwall.

Tin mining in that region can be traced back to 2,300 B.C.

Large-scale production first started at South Crofty in the mid-1600s, although the first documented production dated in 1592.

The mine was in operation intermittently from then until its closure in 1998, brought about by the prolonged period of depressed tin prices.

It has been identified that historical production between 1700 to 1998 totalled over 450,000 tonnes of tin from the Central Mining District of Cornwall, in which South Crofty is situated.

The mine went into serious decline after 1985 and eventually closed in 1998.

Several companies attempted to revive the mine between 2001 and 2013.

Significant advances were made, primarily the agreement to secure a site for future mill construction, and the grant of a mining permit which is valid until 2071, subject to certain planning conditions being met.

Unfortunately, the timing of the mine permit grant in 2013 coincided with very poor market conditions in the resource sector and the assets were put into administration in 2013.

The mine has seen production from near-surface copper mineralisation and deeper tin-only mineralisation.

The focus has been to evaluate the deeper tin-only mineralisation that occurs primarily from a depth of 400m below surface.

The project was acquired from Administration by Cornish Metals in 2016.

In 2017 the company completed a Preliminary Economic Assessment that demonstrated the economic viability of re-opening the mine.

The company gained its AIM listing in 2021 and secured a ‘cornerstone investment’ from Vision Blue Resources a year later.

Today the South Crofty tin project is a strategic asset for the long term – with planning permission to construct a new processing plant.

Mineral Resource Estimate

In 2023 the company received an updated Mineral Resource Estimate that increased its expected tonnes by 39% and contained tin by 32% in the Indicated category for its Lower Mine.

It is considered that there is the potential for the identification of further resource growth at South Crofty, while also evaluating its nearby Wide Formation structure interest over a 1.6km strike.

Preliminary Economic Assessment

The company is due to publish a Preliminary Economic Assessment within the next three months, with a Feasibility Study in this Summer.

Today the group is focused on advancing the South Crofty high-grade, underground tin Project through to a construction decision, as well as exploring its additional mineral rights, all located in Cornwall.

The South Crofty project is fully permitted, having underground permission through a mining licence valid until 2071, as well as planning permission to construct a new process plant and with a permit from the Environment Agency to dewater the mine.

Dewatering

Dewatering is an essential process of removing water from a location – virtually every mine site needs to account for dewatering at some point in time.

Most mine operations are susceptible to flooding – some more than others.

The geographic location and climate of the area play a major factor in dewatering needs.

Heavy rainfall, water tables, nearby rivers and lakes can lead to catastrophic flooding that shuts down operations with costly results.

As for underground mines, flooding is usually controlled because these types of mines are not directly influenced by surface waters, so the real concern is how to deal with underground water.

Usually, to keep flooding under control in underground mines, users need to consider:

· Removing potential water hazards

· Filling surfaces that might collapse during or after the flooding process

· Installing water diversion systems

· Installing, at both the surface and underground, a system to monitor hydrogeological and geotechnical aspects, and

· Projecting hydrological and hydrogeochemical development of mine waters

When a mine extends below the water table, due to gravity, the groundwater will infiltrate mine workings, the constant influx leads to flooding and the only way to stop the water is by reducing the water table or continually pumping out the water.

The Dewatering Process started at South Crofty in October 2023 and should be completed before April next year.

Refurbishment, exploration and development work is accelerating at South Crofty with dewatering of the flooded historic mine workings now well underway and a Preliminary Economic Assessment for the resumption of production due to be presented later this year, ahead of a full feasibility study and formal investment decision for first production by the end of 2026.

Now Is The Time To Bend To The ‘Tin Cry’

Tin is a ‘Critical Mineral’, as defined by the UK, USA, and Canadian governments, with approximately two-thirds of the tin mined today coming from China, Myanmar and Indonesia.

It is important to note that there is no primary tin production in Europe or North America.

A little of it is present everywhere in ways that are essential to our quality of life.

Called the ‘glue’ of metals, it is used to bind things together.

Tin connects almost all electronic and electrical infrastructure, making it critical to the energy transition – responsible sourcing of critical minerals and security of supply are key factors in the energy transition and technology growth.

It is a critical component of high-tech hardware and electrical vehicles, and also robotics and renewables use the metal.

When a bar of tin is bent it emits a characteristic creaking, known as the ‘cry of tin’.

Over the next decade tin has many opportunities in lithium ion and other batteries, solar PV, thermoelectric materials, hydrogen-related applications and carbon capture.

South Crofty has the 4th highest grade tin Mineral Resource globally and benefits from existing mine infrastructure including multiple shafts that can be used for future operations.

The company is currently targeting the start of tin mining by the end of 2026.

The Price Of Tin

It has been predicted that the global tin market is projected to shift from a surplus of 6,000 tons in 2023 to a deficit of 5,000 tonnes this year.

On the demand side, rising sales in semiconductors and technology, especially in AI and automotive chips, are expected to bolster tin prices, supported by increased global demand for semiconductors.

In the last twenty years the price of tin has risen significantly from around $3,700 to over $28,000 per metric tonne, while forecasts exist for over $29,000 per metric tonne this time next year.

Shareholders

This group’s equity is listed on both the AIM and the TSX-V markets.

Shareholders include Vision Blue Resources with 25.95% of the group’s 535m shares in issue, other holders include Osisko Development (8.57%), Lansdowne Partners (6.23%), N Reed (5.50%) and finally Management and Directors (3.07%).

Analysts View

In a recent report earlier this month, analysts at Hannam & Partners concluded that the diluted target valuation for Cornish Metals is 32.3p per share.

At brokers SP Angel its analysts consider that Cornish Metals has made significant progress towards a reopening of the South Crofty tin mine and on exploration at the nearby United Downs project.

They note that the company is currently dewatering the South Crofty mine workings in preparation for the completion of a feasibility study later this year.

Management raised £40.5m in equity to fund the dewatering and feasibility study work.

The brokers suggest that South Crofty has the potential to produce approximately 4,000 tonnes pa of tin equivalent and to help the UK become increasingly self-sufficient in tin.

Furthermore, they report that a new discovery at the Wide Formation, Carn Brea has the potential to expand the mine at South Crofty, while work at United Downs could enable a second mine development in later years.

More positively, they conclude that the group’s shares have a valuation of 48p per share.

Following its recent appointment as Joint Broker with SP Angel, Cavendish Capital Markets can shortly be expected to publish its analyst’s views, with the Final Results for the year to end January 2024 being announced within the next month.

The FTSE 100 was closing in on record highs on Friday after another upbeat session took the index within 1% of all-time record highs.

It’s the FTSE 100’s time to shine. After weeks of wallowing in mediocracy as US, German and Japanese equity indices broke to fresh record highs, London’s leading index is now within touching distance of setting new records.

The record high of 8,012 was set over a year ago, in February 2023, and the index has traded as low as 7,257 since then.

“After a stunning session on Thursday, the FTSE 100 continued its ascent at the end of the trading week with a 0.6% rise to 7,930. Little by little it is edging back towards the 8,000 mark which was hit in February 2023,” said Russ Mould, investment director at AJ Bell.

The Bank of England Governor’s suggestions that interest rates would soon be cut ignited a bumper rally in UK stocks yesterday, spilling over into a second session.

The FTSE 100 was up 0.5% at 7,929 at the time of writing after hitting highs of 7,960 earlier in the session.

“Upbeat statements in the UK and US helped heave the FTSE 100 up to the next level in Thursday’s trading, with the index closing at six-month highs. Positive momentum has continued with further gains squeezed out at the open,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“The overall mood remains better than at the start of the week, as Andrew Bailey suggested markets are right to expect more than one interest rate cut this year. His comments included a positive update on the latest inflationary markers, which showed things are remaining less sticky than feared.”

The gains were broad on Friday, with most industry sectors gaining on the day. Cyclical stocks were in favour, and strength was evident in banks and housebuilders. Miners missed out on the rally and were among the few stocks trading in the red.

Phoenix Group was the FTSE 100’s top gainer, surging over 8% after revamping its dividend policy as cash generation rose to over £2bn in 2023.

“Life insurer Phoenix is incredibly popular with retirees thanks to its generous dividends, and shareholders will be celebrating a near-8% rise in the share price after better-than-expected results and a positive outlook for cash generation and debt reduction,” Russ Mould said.

JD Sports was the biggest faller after UK retail sales declined in February. Next and Frasers Group also suffered.

Good Energy is scheduled to release full results on 26th March, and investors can look forward to another year of growth supported by increased customer numbers and the delivery of its strategy to make Good Energy an end-to-end energy services company.

Good Energy supplies its customers with 100% renewable energy generated from a base of around 2,000 UK-based clean energy generators. However, Good Energy is far from just an energy supplier.

Having identified consumer demand for the full suite of energy services and taking steps to divest its generation assets, the company has established a vertically integrated business model that services households through all stages of energy consumption.

Vertically integrated household energy services

In addition to supplying energy, the company provides environmentally conscious households with heat pumps, EV chargers, smart meters, and home batteries to store electricity generated from solar power. Good Energy also installs solar panels and facilitates the sale of excess energy back to the grid through the company’s smart export tariffs.

Vertical integration of household clean energy services affords Good Energy a competitive advantage that is integral to winning customers and creating shareholder value. As part of its strategy to become an end-to-end supplier of energy services, Good Energy has recently acquired one heat pump company and two solar installation companies to bolster the rollout to new customers.

Providing customers with solutions that help them generate, store, and even supply energy back to the grid has made Good Energy a one-stop shop that will, over time, help the shares command a higher valuation. Recent acquisitions in the sector and the value attributed to organisations with a diversified energy supply and storage model demonstrate this.

Increasing customer base

Good Energy has successfully grown its customer base, and new customer numbers will be in focus in the group’s upcoming results. The company has identified a total addressable market of 900,000 households it plans to target over the next two years which equates to up to a £10 billion market opportunity.

After recently launching Smart Export and Solar Savings propositions to 40,000 customers as of the end June 2023, the company said it expects to increase this to 75,000 by the end of the year. Should this be achieved, Good Energy will be a major player in the space. This is a major focus for Good Energy in the coming years.

The UK challenger energy company sector is certainly exciting, and Good Energy is one of the most exciting companies in it, both in terms of growth prospects and the opportunity for investors.

The group’s revenue jumped 45.6% to £156.1m in the first half of 2023 and profit after tax soared to £12.0m. EBITDA was £14.9m.

Anecdotal evidence of customer satisfaction from review sites and recognition by the industry press should not be overlooked. The company has a 4.8 Trust Pilot rating which significantly exceeds most of its competitors, by some margin. Good Energy has been ranked at the top of Which’s green energy rankings for three years in a row.

In a trading statement released last year, the company said trading head been ahead of expectations in the ten months to the end of October.

Should the company achieve a similar level of EBITDA growth in the second half as it did in the first half, it will trade at an attractive valuation given its current £57m market cap. Good Energy’s full-year results are set to value the company on an EV/EBITDA basis significantly below that of recent transactions in the space.

Good Energy shares have rallied this week, arguably in anticipation of a strong set of full-year results.