GreenRoc Mining shares sank to an all-time low on Wednesday after the Greenland-focused miner conducted a heavily discounted placing.

GreenRoc Mining has raised £460,786 through a placing of 18.4 million new shares at 2.5p per share. Participants in the placing included GreenRoc’s CEO, Chairman and an Independent Non-Executive Director.

Shares in the company were down 24% to 2.56p at the time of writing. GreenRoc shares traded as high as 4.5p in early November after the company’s float at 10p in 2021.

The proceeds will primarily be used to fund work related to GreenRoc’s Amitsoq graphite project in Greenland. This includes completing a feasibility study on building a processing plant to produce active anode material for electric vehicle batteries. The feasibility study is being supported by a £250,000 grant and is expected to finish in Q2 2024.

Additional proceeds will support the completion of environmental and social impact assessments for the Amitsoq project. These assessments will be delivered in 2024 and are required for GreenRoc to submit an application for an exploitation permit. A recent change in Greenland’s mining law allows companies to apply for this permit before submitting the final assessments, subject to their subsequent approval.

The funds will also be used for further commercial negotiations with potential partners, as well as general working capital needs.

The FTSE 100 dipped on Tuesday posting a 0.5% decline despite US stocks soaring overnight. Oil majors dragged as oil prices fell on positive developments in Hamas and Israel ceasefire talks.

The risk-on rally in UK large caps is starting to fade as investors look to the economic realities of a nearly two-year interest rate hiking cycle coming to an end.

Markets have priced an end to rate hikes and now must prepare for the next chapter in the equity market’s story which may be slower growth.

Economic data certainly suggests the US, Europe and the UK are losing steam. Central banks will now have to carefully balance the risk of inflation increasing by cutting rates with not tipping their economies into recession by keeping them at higher levels.

Many economists predict interest cuts in the first half of next year. 

“The narrative has shifted from how fast interest rates could go up to now focusing on when rates might start to go down. Smaller companies have perked up on the market in recent weeks, alongside long duration investments such as infrastructure and property funds, which implies a slight shift in investor thinking,” said AJ Bell’s Russ Mould.

“However, these are bouncing off a low base and it is too early to proclaim any definitive market rotation.”

FTSE 100 movers

Coca-Cola HBC was the FTSE 100’s top gainer, rising over 4%, after announcing a major share buyback programme.

BP and Shell were both down in the region of 1.5% as Brent oil prices slipped back towards $80.

Ocado was the top faller as the company failed to break through technical resistance.

It was a quiet day for FTSE 100 corporate updates, and company-specific news came largely from the mid-caps.

AO World gained after upgrading its profit guidance for the year and Capita added 6% on news of cost savings and margin expansion. 

Cranswick fought off inflationary pressures in their most recent half-year period and produced 12.3% revenue growth assisted by price inflation and volume growth.

The 12.3% increase in revenue took their top line to £1.25bn and helped a 25% leap in operating profits to £85.5m, much higher than analysts expectations.

The company’s shares were up 1.5% at the time of writing. 

The food producer reported resilient volume growth in all four main UK food categories.

Cranswick indicated a positive impact from expanding pig farming operations, efficient capital deployment, and stringent cost management, raising adjusted operating margin from 6.1% to 6.8%.

According to Adam Couch, Cranswick’s CEO, “Momentum has continued through the start of the third quarter as our customers and the UK consumer continue to appreciate the affordability, value for money and versatility of our core pork and poultry categories.”

He added that,  “continued positive progress is made possible by the substantial ongoing investment in our asset base, expansion of our pig farming operations and the quality and capability of our colleagues across the business.”

The company’s statutory profit before tax rose by 41.3% to £86.9 million in comparison to the previous year’s £61.5 million, while statutory earnings per share increased by 29.9% to 119.5p, up from 92.0p in 2022.

 The interim dividend saw a 10.2% growth, reaching 22.7p. 

Return on capital employed improved by 54 basis points, reaching 16.4% in 2023, up from 15.9% in the previous year. 

The company continues to invest in their processes and is improving facilities across the country.

A multi-phased expansion project, totaling £62 million, is underway at the Hull pork primary processing site. While, a £23 million fit-out for a new houmous facility in Worsley, Manchester, is currently in progress.

According to Orwa Mohamad, analyst at Third Bridge, “Cranswick has demonstrated it has pricing power as it has wrestled with how to address high inflation. (square brackets) the UK poultry industry is facing a shortage of butchers and this is driving up costs for many food producers. Cranswick has been able to avoid such problems  by creating a more self-sufficient supply chain and employing greater automation.”

Furthermore, the total capital expenditure of £39.4 million has been allocated across the Group’s assets to enhance capacity, capability, and operational efficiencies, with over £600 million deployed since FY16.

The acquisition of the Elsham Linc indoor pig farming business for £31.7 million diversifies the Group’s pig farming operations and adds feed milling capability, bringing self-sufficiency in UK pigs to over 50%

According to Steve Clayton, head of equity funds at Hargreaves Lansdown, “It is hugely encouraging to see the group continuing to invest in the growth of the business. Cranswick have committed over £600m into capital investment in recent years, building greater independence through owning more of the farms that underpin their own pork production. Vegan and vegetarian exposure has been added through the Cypressa acquisition and now the UK’s leading poultry and pork producer is also the number one in houmous.”

However, Mohamad cautioned that “Cranswck’s margins are under pressured from union activists advocating for improved wages and welfare. Cranswick has also had to rejig it’s grain sourcing routes away from Ukraine and Russia.”

UK-based Capita shares jumped by more than 6% on Tuesday after the company stated that it was planning on pushing for faster delivery of efficiency savings.

Capita revealed new cost-saving measures today as it aims to double its operating margin to 6% in the medium term.

Capita CEO Jon Lewis added, “We are, today, announcing the accelerated delivery of the efficiency savings announced in our Half Year Results with a £20 million increase in overhead cost reduction to £60 million on an annualised basis from Q1 2024. As part of the organisational review that underpins the programme we are announcing today, we continue to identify further areas of cost efficiency and will pursue these during 2024.”

The measures also include a 2% workforce cut. This is 900 out of the 50,000 employees in the offices worldwide.

Capita shares were up by 6.25% and were trading at 20.4p at the time of writing.

According to Russ Mould, Investment Director at AJ Bell, the developments were “good news for shareholders as it should benefit the company’s profit margins, but bad news for the 900 employees of Capita who face potential redundancy.”

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.