Premier African Minerals shares were sharply lower on Tuesday after the lithium miner issued a disastrous update on operations at the Zulu project.

The Premier African Minerals share price had plunged 20% to 0.24p at the time of writing. Shares are down 47% over the past month.

Last week, the UK Investor Magazine published an article entitled ‘Premier African Minerals shares: proceed with caution’ detailing discrepancies in the company’s official regulatory news releases and social media posts made by the CEO of the Stark – the company contracted to construct Zulu’s lithium processing facilities.

In an RNS issued 3rd November, Premier African Minerals alluded to ‘ongoing commissioning and optimisation issues’ at Zulu resulting in ‘material flow challenges’.

These assertions were countered by a contradictory social media post on X by Stark CEO Geoffrey Madderson, who said, “Guys, relax. There is no issue on the plant.”

Geoffrey Madderson’s account now appears to have been deleted. It’s easy to see why.

There was an issue with the plant. Today, Premier African Minerals said that they would miss not only November’s 1,000 tonne production deadline but December’s as well.

This will mean $3m in penalty payments to offtake partner Canmax. Compounding the problem for Premier’s shareholders, the company does not seem to have the cash lying around after it was forced to dilute investors by paying Stark in newly issued shares for a plant that is not yet functional.

Under the terms of the renegotiated offtake deal agreed earlier this year, Canmax has the right to take penalty payments in the form of newly issued Premier African Minerals shares, promising further dilution for investors.

Investors will understandably be frustrated with RNS releases outlining issues at Zulu and contradictory media appearances by Premier African Minerals and Stark suggesting the situation was under control.

Premier African Minerals is now considering ceasing the operation of current plant facilities in order to build a fresh mill, imposing substantial delays to increasing production to the required levels. In addition, achieving the required production by the end of January is far from certain.

Premier African Minerals is also yet to confirm the grade of any lithium produced at Zulu.

The FTSE 100 reversed early losses on Tuesday after US CPI came in cooler than expected bringing forward expectations of when the Federal Reserve will cut rates.

As traders awaited highly anticipated US CPI data released at 13.30 GMT, Tuesday’s trading session had a quiet start after US stocks closed broadly flat on Monday night.

However, markets sprang back to life as soon as investors learned of the US’s cooler-than-expected October CPI reading, with US equity futures trading almost vertically higher and the FTSE 100 turned positive. US bond yields sank as investors started pricing lower interest rates along the curve.

US CPI fell to 3.2% in October from 3.7% in September. The lower-than-expected reading confirms a downtrend in inflation and moves headline and core inflation back towards the Federal Reserve’s 2% target.

Today’s reading validated market positioning by those who brushed off hawkish comments by Federal Officials suggesting there could be more interest rate hikes in the coming months.

Indeed, markets brought forward pricing of when the Federal Reserve will cut rates next year shortly after CPI was released.

Today’s reading does not entirely rule out another interest rate hike by the Federal Reserve, but it reduces the chances significantly. It also feeds the argument of a soft landing in the US economy.

Sentiment improved dramatically in the immediate wake of the announcement, and the FTSE 100 was trading 0.1% higher at the time of writing after residing in negative territory all morning.

FTSE 100 movers

Ocado leapt to the top of the FTSE 100 leaderboard on news of cooler US inflation as the food distribution technology company demonstrated its ‘tech stock’ attributes. US names such as Tesla, Meta and Netflix were higher in the premarket.

Vodafone was the biggest disappointment of the session after operating profits nearly halved in the most recent half-year period. The new CEO is struggling to deliver a turnaround strategy with weakness across many European countries, although there was minor positivity from Germany in the second quarter.

DCC was 12% higher after the industrial support services company said adjusted operating profit gained 12% in the six months to ended September.

Imperial Brands shares were marginally lower as the company tackled lower volumes with pricing strategies, leading to a 26% increase in operating profit. Strong performance in their vape business did a lot of the heavy lifting in terms of sales.

“Amid strengthening political and regulatory headwinds, one might think the tobacco and vaping industry is struggling. Imperial Brands’ results would suggest otherwise, as profits and dividends are growing,” said AJ Bell’s Russ Mould.

“While the industry might have over-estimated the speed by which smokers transition to vaping and other next-generation products, when you add up sales across the board companies like Imperial Brands are still making big money.”

Imperial Brands predicted a rise in revenue and profit for the upcoming year, yet announced on Tuesday that the growth in the first half would be slower due to this year’s price increases and investments in alternatives to tobacco.

Imperial Brands shares are down 0.96% at the time of writing.

Imperial’s Finance Chief Lukas Paravicini explained to journalists that slower growth in the first half of a year was predicted due to the tough comparison with a robust previous year, during which Imperial implemented substantial price hikes.

The company posted a 3.9% increase in adjusted operating profit for the 12 months ending 30th September, excluding the effects of foreign exchange and Imperial’s withdrawal from Russia. This surpassed the average analyst estimates of 3.5%.

CEO Stefan Bomhard stated that Imperial’s strategy, focused on reclaiming market share in five crucial tobacco markets, is yielding positive outcomes.

Imperial Brands forecasts low single-digit revenue growth in 2024, with adjusted operating profit expected to fall within the middle of its mid-single-digit range.

According to investment director at AJ Bell, Russ Mould, “Parts of the market remain doubtful nonetheless. When you have headlines about governments in different countries clamping down on smoking and trying to stop young people from vaping, it’s no wonder that sentiment remains poor towards shares in the sector.”

He added, however, that “consumers are increasingly paying more attention to health and wellness, and owning shares in this sector may not sit well with their moral conscience. But there will be others who see the opportunity to buy growing companies at cheap valuations. At the moment, the balance seems to be in favour of the former.”

Vodafone shares dropped on Tuesday after the telecoms group reported a half-year revenue decline of 4.3% to €21.9 billion as several disposals and adverse currency swings hit sales.

Vodafone shares had slipped by 2.4% at the time of writing after rising 1.3% in early trading.

The group’s shares have declined 27% over the past year.

According to Aarin Chierkie, equity analyst at Hargreaves Lansdown, “revenue and operating profits are heading in the wrong direction for Vodafone, reflecting recent disposals and the structural challenges at hand.”

He states that a lot of Vodafone’s financial resources have been invested in expanding fibre networks and acquiring portions of the 5G spectrum, which is putting pressure on cash flows.

Germany – accounting for 31% of Vodadfone’s service revenue – was a bright spot, reporting quarterly revenue growth of 4.2%, although service revenue for the half year fell.

While Vodafone’s Chief Executive, Margherita Della Valle, stated that the company delivered improved quarterly results in nearly all of its markets, there was weakness in Italy and Spain.

Sales in Spain and Italy continue to fall behind, following Vodafone’s announcement last month of the sale of their Spanish business, Zegona.

Operating profit for the half-year period fell 44.2%.

The company maintained its dividend for the period at 4.5c. Vodafone’s current dividend yield stands at 10%.

However, Chierkie warned this yield may be under threat if the current mediocre performance continues.

“Typically, when companies in this industry have dividend yields above 7%, there is downward pressure on the dividend. Historically, exceptions to the rule have been few and far between, and Vodafone is unlikely to be one of them,” pointed out Aarin Chierkie.

Vodafone’s net debt stands at €36.2 billion, showing a rise of €2.9 billion compared to the first half.

Kodal Minerals shares made minor gains on Tuesday after the company announced a significant increase in the mineral resource at their flagship lithium project.

Kodal Minerals has announced a 40% increase in the mineral resource at its Bougouni lithium project in Mali, Africa. Kodal reported a new resource estimate of 31.9 million tonnes at 1.06% lithium oxide for Bougouni, making the project one of the largest in the world.

Investors may be disappointed with the subdued market reaction, given the revised size of the resources.

The upgrade comes after recent drilling programs expanded resources at the project’s Ngoualana and Boumou deposits, which Kodal aims to develop in two stages.

The company plans first production from Ngoualana through a dense media separation plant, with a later expansion to process ore from Boumou and Sogola-Baoule using a flotation method.

Kodal said the increased resource at Ngoualana has improved confidence in the deposit ahead of initial mine development, with optimisation and design work now underway.

More drilling is imminent to expand resources further and advance additional targets at Bougouni.

Kodal Minerals shares were up only 7% at the time of writing on Tuesday despite a substantial increase in the resource, which will feed through to better project economics.

Kodal recently announced the completion of the funding package with their Chinese partners to develop the project.