Premier African Minerals shares sank in early trade on Tuesday as investors dumped their stock after a Zulu update and media appearance yesterday.

The Zimbabwe-focused miner issued an update on their Zulu lithium project yesterday before holding a Q&A session for investors. Neither have appeared to impress investors.

Premier African Minerals shares were trading down over 6% in early trading on Tuesday.

The company issued a statement yesterday outlining plans for further testing and optimisation at the Zulu plant. However, it requires production to be halted and operations are being suspended.

The statement effectively confirmed the company will not meet a number of upcoming production deadlines and will face penalty payments under their offtake agreement with offtake partner Canmax.

In addition, the statement did little to reassure investors the project had the capability to produce the required amount of lithium offtake at the required grade.

Premier said the plant had produced the required grade when the ore was processed to remove contaminants, but it requires further optimisation to do this at scale. This could take many months to achieve and lead to many more penalty payments.

Efforts by Premier African Minerals to reassure investors through a Q&A session yesterday evening appear to have failed to reinvigorate the bulls.

Management suggested the company needed to bring in more competent personnel in the future and went to great lengths to emphasise they hadn’t misled investors.

These are not the messages investors want to hear in the midst of a global race to establish lithium production to feed the burgeoning electric vehicle revolution.

We have written before explaining the deep value in Premier African Minerals’ resources may not be transferred to shareholder value as a result of poor management decisions.

Yesterday’s instalments did little to counter this view.

AO World has delivered a strong turnaround in profitability in the first half of 2023-24, upgrading its full-year profit guidance to £28-33 million.

AO World shares were over 4% in very early trade on Tuesday.

Revenue declined 12% to £482 million as the company removed unprofitable sales, but adjusted EBITDA surged over 200% to £27 million, achieving a 5.6% margin.

Key drivers of the profit surge were gross margin improvement to 23.5%, tight control of advertising, warehousing and admin costs, and overall operational efficiencies.

This enabled AO to move from a £12 million loss in the first half last year to a £13 million profit this time. The company also generated improved cash flow, reaching a net cash position of £16 million compared to prior-year net debt of £19 million.

AO’s profit strategy has focused on eliminating non-core, low-margin sales, right-sizing the cost base, and optimising margins. As the online segment continues growing across electrical categories like TVs and laptops, AO plans to deepen its presence by leveraging its customer base of over 290,000 new customers added in the first half.

Investors were pleased with the success of AO’s strategic pivot as it provides a platform to achieve its medium-term goals of 10-20% sales growth, 3-5% profit margins, and cash generation.

The FTSE 100 slipped on Monday as markets continued to consolidate after an almost euphoric rally inspired by interest rate hopes.

The downside in London’s leading index was driven by poor corporate updates from constituents, including Ashtead and Compass Group.

Ashtead warned profits would be lower than market expectations due to lower emergency response business after a quiet hurricane season and the ongoing reduction in the TV and film business amid the writers’ strike.

“It’s rare to see construction rental group Ashtead issue a profit warning so when one does come along, it’s natural for the share price to take a beating. That’s exactly what has happened today and why it has caused a considerable drag on the FTSE 100,” said Russ Mould, investment director at AJ Bell.

“Also weighing on the UK blue chip stock index was catering group Compass as its full year revenue and earnings per share were marginally below market expectations.”

The FTSE 100 was down 0.2% shortly before 3pm in London.

Mould looked forward to the rest of the week and events with the potential to cause fluctuations in the financial markets.

“Tomorrow’s session includes the latest minutes from the Federal Reserve regarding its decision to keep interest rates unchanged. That has the potential to move markets, so do results on the same day from chip specialist Nvidia which has been this year’s stock market darling. It’s been a major driver of US equity market performance in 2023 so the slightest bit of bad news from the company could send shockwaves across the market.”

NVIDIA opened up slightly higher as US trade got underway on Monday. The ‘Magnificent 7’ US technology shares have been responsible for a large proportion of global equity indices returns, and an upset could have broad-reaching implications for sentiment.

The S&P 500 was trading 0.17% higher at the time of writing.

Diploma

Speciality goods and support services company Diploma isn’t the raciest of FTSE 100 companies but it stole the show on Monday with a 10% gain after releasing a trading update.

Diploma produced organic revenue growth of 8% amid a 19% jump in total revenue as the company integrated new acquisitions into their business.

“We’ve had an excellent year with strong, volume-led organic growth; great margin progression; and continued double-digit EPS growth, all at strong returns,” said Johnny Thomson, Diploma’s Chief Executive.

“We continue to diversify end-market exposures, penetrate core geographies; and expand addressable markets through product extension to drive organic growth. We welcomed 12 quality new businesses to the Group. And, we carefully develop our businesses for scale.”

ECR Minerals has announced significant early-stage results suggesting an extension of the gold footprint at its Lolworth Project in North Queensland, Australia.

Pan concentrate sampling south of Reedy Creek into Butterfly Creek indicates a likely gold source extending further south. Visible gold continues to be seen.

Peak soil sampling results at Gorge Creek West correlate along strike to a mapped quartz vein. Further investigations are planned.

Results from Flaggy Creek and Reedy Creek West soil sampling are due soon. Operations have been paused to evaluate the work plan.

Follow-up investigations into targeting other niobium and rare earth element stream anomalies are also in progress.

The Lolworth Project consists of three exploration permits operated by ECR’s wholly-owned subsidiary LUX Exploration. Numerous gold, niobium and REE anomalies have been identified.

“I am pleased to report good grades from pan concentrate sampling, which indicate that additional sources of gold could exist within the headwaters of Butterfly Creek and extend the region’s prospectivity some 2km further south of Reedy Creek,” said ECR Technical Director Adam Jones commented.

“Local landholders have reported to us that good sizeable gold discoveries were made in this watershed by early prospectors and the evidence of our work to date supports these theories. In addition to this, the field team are steadily building a picture of extended gold mineralisation in the headwaters of Gorge Creek West resulting from on-going results from soil sampling and outcrop mapping.”

Helium One shares sank on Monday as the company announced further downbeat developments in their Tanzanian drill campaign.

The helium explorer has faced ongoing challenges this year with issues securing the appropriate equipment for their planned drill campaign. Today, the company announced an unfavourable outcome in the evaluation of the Tai-3 well.

Although Helium One successfully recovered downhole fluid samples confirming the presence of helium at its Tai-3 well, the company was unable to obtain basement samples as tools could not run past 1,430 meters due to washouts. The well has now been suspended for future deeper drilling into the basement target.

Investors will be encouraged by the presence of helium at the prospect, but challenges during the drill campaign ultimately left shareholders disappointed.

Helium One shares were down around 30% at the time of writing.

Samples yielded helium concentrations up to 8,320 parts per million (ppm), significantly above normal background levels of around 5ppm.

Wireline logs and petrophysical analysis demonstrated good quality reservoir sands in the Upper and Lower Karoo Group, interbedded with shales. No zones of interest were found in the Lake Beds or Nsungwe Formation.

A new location on the Itumbula prospect has been identified for the next well.

Helium One has been dogged by issues with rigs and drilling equipment this year, and today’s update revealed additional repairs are required before the drilling campaign can continue. Upon completing repairs, Helium One plans to continue its drilling campaign at the Itumbula prospect.

Ondo Insurtech shares fell in early trade on Monday as the insurance technology company failed to inspire investors with tepid revenue growth in their recent half-year period.

The UK-based provider of property claim prevention technology, announced revenue of £1.2 million for the six-month period ended 30th September 2023, a 24% increase compared to £0.9 million in the same period last year. Recurring revenue from software and services grew 50% to £0.7 million.

Ondo shares were down 13% to 26p at the time of writing on Monday.

The company reported an operating loss of £1.6 million and an adjusted loss before tax of £1.9 million.

Ondo shipped 18,927 LeakBot units during the period, a 61% increase versus 11,752 units last year. Total registered customers grew 77% to 84,000.

The company signed new US deals with Mutual of Enumclaw and Pure Insurance to roll out in Washington and New York states. It also agreed to a 5-year rollout with Sweden’s largest home insurer Länsförsäkringar.

After the reporting period, Ondo signed with Nationwide, a top 10 US home insurer, to make LeakBot part of their Smart Home program. Addressable households under contract increased 394% to 2.5 million, and rises further to 5 million with the Nationwide deal.

The increase in addressable households was largely priced in last week after the announcement of the Nationwide deal, and today’s numbers serve as a reminder the company is trading at relatively punchy sales and earnings multiples.