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.

Horizonte Minerals shares sank on Tuesday after the nickel miner said it was reducing mine construction activities as funding uncertainty mounts.

Horizonte Minerals’ funding calculations for the Araguaia nickel project in Brazil have forced the company to scale back construction while it seeks new funding sources.

The London-based developer said Tuesday it is running out of working capital and will have to halt most construction activities at Araguaia by mid-December unless it can secure additional financing.

Horizonte has slowed work to critical areas only as it holds talks with cornerstone shareholders and lenders on a new financing plan to cover remaining construction costs. The company needs the fresh capital injection to meet the conditions for an existing $131 million debt facility.

The company has $38m cash to see them through to mid-December.

Shareholders and lenders visited Araguaia last week to conduct due diligence for the potential investment. But Horizonte does not expect funding deals to be finalised until late in the first quarter 2024, pointing to significant delays in the commencement of production at the project.

The financing crunch has cast uncertainty over the development timeline and commercial viability of Araguaia, Horizonte’s flagship nickel project.

“Discussions with the Company’s major shareholders and lenders on funding the Project to completion are progressing.  While work on the funding solution continues, we have elected to focus capital and human resources on the critical work packages,” said Horizonte Minerals CEO Jeremy Martin.

“This work is planned is to ensure that we are well-positioned to resume full construction activities post receipt of the funding to benefit stakeholders and our community alike. Notwithstanding the expected increase in capital, the Araguaia project remains a Tier 1 nickel project that will produce a high grade, low cost, low impurity FeNi product over a 28-year mine life.”

Horizonte Minerals shares were down 38% at the time of writing on Tuesday.

Saietta Group (LON: SED) says that its 49.5% owned Indian joint venture has secured an order for complete eDrives from its main client for a second of its light commercial vehicles. The initial order is worth £106,000 over three months and the first full year of production could generate £12.7m. This is the first significant order for the new radial flux technology. The share price is 15.2% ahead at 22.75p.

Shantonu Kumar Chundur has taken a 5.06% stake in Global Petroleum (LON: GBP). The share price rose by one-fifth to 0.105p.

RUA Life Sciences (LON: RUA) revealed at the end of last week that Mark Bradshaw has a 3.61% shareholding. The share price recovered 22.2% to 16.5p.

Mobile services provider Mobile Tornado (LON: MBT) says that InTechnology, where non-exec director Peter Wilkinson is the controlling shareholder, has transferred its 58.4% stake to Holf Investments, which is wholly owned by Peter Wilkinson. The transfer price was 2.43p/share. Holf Investments has also taken on £11.2m of preference shares and debt in Mobile Tornado, which still owes InTechnology £190,000 in debt and accrued interest.  The share price improved 18.4% to 1.125p.

Brave Bison (LON: BBSN) has won new contracts and secured renewals worth a total of £4m. Media practice Brave Bison Performance secured a renewal with an electricals retailer worth £2m over two years and a new contract with a Finland-based homeware retailer worth £1m up until the end of 2024. Digital commerce practice Brave Bison Commerce has gained a £1m contract with a Netherlands-based car parts retailer. The contracts underpin expectations for a 2023 pre-tax profit of £3.1m. This pushed up the share price 16.4% to 1.775p.

FALLERS

Uncertainty about whether AMTE Power (LON: AMTE) can raise more cash before its funds run out later this month has hit the share price, which is down 25.9% to 0.5p. Discussions concerning the £2.5m subscription by an investor continue but will not be concluded by the end of November.

88 Energy (LON: 88E) has signed a deal to earn up to 45% of petroleum licence 93, onshore Namibia. There will be a progressive increase in the stake as certain milestones are achieved. The licence is in the Owambo Basin, which has a proven petroleum system. The share price has slipped 7.14% to 0.325p.

Wentworth Resources (LON: WEN) says that it achieved record production levels of 105 mmscf/day in the first half. There was $44.6m in cash at the end of October 2023. However, revenues are lower because the way the production agreement is set up. The Tanzanian government is re-examining the historic cost pool audit for 2013-2015 and Wentworth’s maximum exposure is $14m. The bid by Etablissements Maurel & Prom is still awaiting regulatory approval because of complications over a potential first right of refusal for the acquisition of the main asset by another party. No dividend will be declared. The share price declined 6.67% to 24.5p.

Team Internet Group (LON: TIG) reported further growth in its business, but the weaker digital advertising market reduced the rate of growth for the online marketing division. It still grew 15% over nine months, while there was a strong performance by the domain names business. Group revenues were 16% ahead at $611.7m, while lower gross margin meant that EBITDA was 11% ahead at $68.8m. The share price has fallen 4.19% to 119p.

The FTSE 100 jumped on Monday as European stocks grabbed the tailcoats of a US rally later on Friday in which the NASDAQ and S&P 500 closed over 1.5% higher.

The FTSE 100 added 0.6% to trade at 7,404 shortly after midday in London.

UK equities are trading almost exclusively on improved sentiment inspired by a rally in US stocks at the end of last week, although a strong showing Phoenix Group helped matters.

Markets chose to discount concerns about the Federal Reserve hiking rates again in the near term, instead pricing risk assets for interest rates to stay on hold until they are eventually cut in the middle of next year.

Any economic news or commentary to the contrary could cause sharp swings in stocks.

“The FTSE 100 made strong progress on Monday morning, following on from gains on Wall Street on Friday,” said AJ Bell investment director Russ Mould.

“An easing in government bond yields supported the biggest one-day gain in the Nasdaq Composite index since May as investors remained confident in the idea of interest rates having peaked despite an attempt by Federal Reserve chair Jerome Powell to counter this narrative last week.

“US inflation numbers out tomorrow will tell their own story and a higher-than-expected reading could well prompt renewed jitters among investors.

“Also helping the positive mood were strong updates from UK property investor British Land, which also boosted its peer Land Securities, and insurance outfit Phoenix surged higher after lifting its cash generation target.”

Phoenix Group was the FTSE 100’s top riser with a gain of 5% after the wealth and insurance group upgraded their 2023-2025 cash generation target to £4.5 billion, up from £4.1 billion previously.

“The completion of the funds merger of the Standard Life and Phoenix Life businesses into Phoenix Life Limited, bringing together 8 million policies, is one of the largest UK insurance Part VII transfers ever completed,” said Phoenix Group CEO, Andy Briggs.

“This reaffirms Phoenix Group’s position as the UK’s leader at delivering cost and capital synergies and generating value for customers and shareholders. This funds merger enables us to materially upgrade our cash generation targets and creates further balance sheet optionality for the Group.”

BAE Systems carved out minor gains after reaffirming its guidance for the full year after strong order levels throughout the year, including £10bn since the beginning of the half year. BAE Systems were 0.6% higher at the time of writing.

BAE Systems upbeat release seemingly did more for peer Rolls Royce shares, which added 2.2%.

Diageo was again among the losers as investors continued to react to last week’s disappointing trading statement.

BAE Systems has experienced demand consistent with heightened geopolitical nervousness and is set to deliver ‘another year of good sales and earnings growth, together with strong cash flow generation.’

The group maintained revenue growth guidance at 5%-7% as customers in the West continued to bolster their defence capabilities.

The UK-based company said it had enjoyed orders of around £10bn since the beginning of the half year, including a UK submarine contract, Bradley tank awards and artillery orders. Orders for the full year stand in the region of £30bn.

In addition, BAE has built up a large order backlog that provides them with a base for future growth.

“BAE occupies a key space in the defence market, and another promising update proves why the group’s so highly regarded in the defence space. With some of its biggest buyers, the UK, US and Europe, all expected to continue raising defence budgets over the coming years, the sky really is the limit for this jet-maker,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

“Given the elevated threat environment, demand for BAE’s products and services has remained strong with around £10bn of order intakes since the half-year mark. That takes the year-to-date figure up to around £30bn, and because these are typically long-cycle orders, with payments spread over several years, it gives BAE multi-year revenue visibility. That’s given management the confidence to reiterate all recently upgraded full-year guidance, which is something of a novelty for most businesses in the current uncertain environment.”

When Russia invaded Ukraine early last year, BAE Systems shares soared and have since comfortably settled into trading ranges above 1,000p.

BAE Systems shares ticked 0.8% higher in early trade on Monday to trade at 1,111p.

BAE Systems will release preliminary results for the full year 21st February.

Mineral Resource Estimate update, a speculative investment, and the high-risk end of FTSE AIM trading. Take your position.

The FTSE AIM market is not the FTSE 100.

With the UK’s premier index, the popular strategy is to buy an index tracking ETF, and then sit back and relish the passive income dividends.

In the small cap market, this strategy is rarely a good idea. The AIM market is down by 26.8% over the past five years — and yet within that time, certain specific companies have seen genuinely extraordinary returns. For example, Novacyt shares rose by 18,000% between October 2019 and October 2020, spurred on by pandemic-era demand.

In a depressed market — albeit one showing signs of green shoots — the chance of picking an AIM stock which can deliver outsized returns is larger. Add in the fact that interest rates may now be at their peak, and adding some risk assets into your portfolio may be a good idea.

With the standard caveats surrounding financial resilience and diversification.

Three AIM shares to watch this week

1. Greatland Gold

Greatland Gold is on the verge of updating investors regarding the results of more than 80,000 metres of drilling that’s been ongoing since March 2022. For context, flagship Havieron’s current Mineral Resource Estimate stands at 6.5Moz @ 2.2g/t AuEq, but this was already more than 50% of the original maiden resource estimate from December 2020.

This updated MRE estimate has been delayed for some time, but significant financial confidence in Greatland can be found in both its banking syndicate and backer Wyloo, which suggests the upgrade will be significant — and perhaps might even start with a 9.

Analysts — and likely even Newmont itself — remain conflicted over whether the new titanic hybrid will want to retain Telfer and Havieron. Positive comments made by management about the jurisdiction last week point one way, but the fact remains that the value proposition at the current MRE simply does not meet Newmont’s objective criteria.

Of course, there’s always a little fudging room. And a huge MRE update will drastically change the economics.

2. ECR Minerals

Beaten down AIM shares are often where the best value can be found — and if nothing else, ECR is beaten down, even if it remains a higher risk proposition. The company’s shares surged in mid-September when it announced that Nick Tulloch was joining as Managing Director and Mike Whitlow as Chief Operating Officer — though have since fallen back to what appears to be an attractive entry point.

It’s worth noting that ECR also raised £580,000 at the time to fund operations across its Australian assets — where good news seemed to have stalled for much of 2023.

However, there are some green shoots to consider, including some decent results at Lolworth — where ECR discovered gold bearing quartz veins that Whitlow described as being ‘cause for optimism’ even if it is ‘still early days.’

Some perspective is important here; ECR has a market capitalisation of just £3.5 million. This is unlikely to be attractive as a main portfolio share like Greatland — but a small stake could be rewarding.

3. Horizonte Minerals

If Greatland is an exceptional long-term opportunity and ECR Minerals is a speculative investment, then Horizonte is probably closer to a gamble — but a gamble with a decent risk/reward ratio.

Horizonte Minerals told investors that capex costs at its flagship Araguaia nickel mine in South America would need to increase by at least 35% in early October. Predictably, the share price has fallen sharply, though the depth of the fall is perhaps an overreaction.

Reta Engenharia has been contracted to calculate exact excess costs; but in timeline terms, the company is expecting a six month delay to production to H2 2024. How these costs are met is the key question and will determine whether shareholders see a huge recovery or get almost completely wiped out.

The review reports back in ‘mid Q4’ — essentially any day now — and the smaller the number is, the better the chances are that shareholders get to enjoy something of a recovery. Those who bought at the top are unlikely to recover everything, but in the context of the size and life of this particular asset, this may yet prove to be a hiccup on the way to production.

Or not. AIM shares are not Phoenix Group.

You can trade Greatland Gold, ECR Minerals and Horizonte Minerals using our partner Spreadex — use the link below!