Premier African Minerals and Kodal Minerals are two of London’s foremost ‘lithium stocks’ operating African lithium mines. They are well-placed to enjoy any growth in lithium demand to feed the burgeoning electric vehicle battery industry.

There are still fantasists who think they’ll be driving a diesel car in 15 years. However, it’s clear that by the end of the next decade, almost all vehicles will be electric, powered by some form of battery or hydrogen fuel cell. Whether the majority of batteries are lithium-ion or sodium-ion, or indeed hydrogen power cells, is anyone’s guess.

Should hydrogen or sodium-ion powered vehicles gain material traction in the coming years, lithium prices could plummet, making the economics of Premier African Minerals and Kodal Minerals’ mine unattractive.

One may speculate that the drop in lithium prices this year reflects not only a slowing demand for EVs but also concerns about the future of lithium-ion batteries.

That said, lithium is at the forefront of most EV manufacturers’ plans for the coming years, and demand for the white metal is set to grow in the near term.

This underpins the investment case for both Premier African Minerals and Kodal Minerals.

In the interest of diversification, it is probably a good idea for investors prepared to take a higher level of risk in junior miners to buy both. There are also excellent lithium mining ETFs available.

However, in this article, we make a concise assessment of both Premier African Minerals and Kodal Minerals as investment propositions in 2024.

Premier African Minerals shares

Premier African Minerals shares have resumed a holding pattern as investors await crucial news on production.

As we have explained previously, there is tremendous value in the ground at Zulu. Their Chinese partners Canmax, know this or they wouldn’t be involved.

Premier African Minerals’ Zulu lithium project contains 20.1Mt @ 1.06% Li2O & 51.05ppm Ta2O5 at a 0.5% Li2O cut-off.

The problem sits with how much of this value is realised by Premier African Minerals shareholders.

The company freely issues new shares to settle invoices and provide working capital. All of this is diluting shareholders.

In addition, we have not gained any real insight into whether their partners will call in their penalty payments.

Premier said their partner remains ‘supportive’ as far as they haven’t called for penalty payments. Canmax probably hasn’t yet called the payments in because they know Premier African Minerals doesn’t have the cash.

We will see how supportive Canmax are if the Zulu lithium mine is up and running by the end of February.

Premier African Minerals recently announced major upgrades and changes to the processing plant at Zulu, which will delay the ramping up of production well into 2024.

Despite the clouds gathering over Premier African Minerals in recent months, there is a silver lining.

The company confirmed Zulu is producing lithium offtake of the required grade. By simulating the processing capabilities of a properly functioning facility, Premier said they had produced offtake at a Li20 grade of 7.4%.

It is unlikely the average grade of the plant’s lithium offtake is as high as this when spodumene is processed at scale, but it does show the project is able to produce the grade required by their offtake agreement.

The potential upside in Premier African Minerals is probably greater than Kodal at this point. However, it will require a brave investor to take a meaningful position here, given the problems the company have experienced to date. Much of which is of their own doing.

Kodal Minerals

Kodal Minerals share trades more than 50% lower than 52-week highs, despite completing their financing package with Chinese partners for mine construction at the Bougouni Project.

Like Premier African Minerals, Kodal Minerals has a world-class lithium resource.

After an extensive drill campaign through 2023, Kodal Minerals’ upgraded the Bougouni Project’s resource to 31.9 Mt at 1.06% Li2O, with 337.2kt contained Li2O. Kodal says it has further targets to drill, which may increase the resource further.

Just as Premier African Minerals ran into problems with their offtake partners this year, Kodal was hampered by delays and uncertainties in its relationship with its funding partners. However, unlike Premier African Minerals, these have now been rectified, and the company is focused on the construction of its mine.

Kodal Minerals are in the very early stage of mine construction, having said road construction would start earlier this year. Kodal has set an ambitious target of achieving production at Bougouni within 12 months of mid-November this year.

One would expect investors to turn their attention to Kodal Minerals shares as this production target approaches. However, the short-term promises little of interest and Kodal shares may drift into the summer.

Kodal Minerals has huge gold resources that may prop up the share price if the lithium project hits bumps in the road in 2024.

Table-top gaming company Games Workshop announced an agreement with Amazon to produce films, TV series, and associated merchandise.

Games Workshop shares have stormed higher over the past ten years as the popularity of their games grew, and they looked beyond the painting of figurines to digital gaming formats and entertainment, utilising their characters and branding.

The Amazon deal is something of a holy grail and is a testament to Games Workshop’s broad appeal, which is likely to be boosted when the productions are released.

Games Workshop rose 1.9% in early trade on Monday.

“Games Workshop, the producers of fantasy roleplaying games and miniature models have announced that their earlier co-operation agreement to explore licencing deals with Amazon Studios has progressed,” said Steve Clayton, head of equity funds at Hargreaves Lansdown.

“Amazon have been granted exclusive rights to develop films and TV series set within Games Workshop’s Warhammer 40,000 universe with an option for further development of Games Workshop’s intellectual property in the movie and TV space.

“Perhaps the day will come before too long when parents can simply send their kids off to the cinema to watch this stuff rather than have to spend half their weekends doing the model-making and painting on Junior’s behalf? Whatever happens, Games Workshop are not predicting any benefit to income from the deal in the 2024 financial year, but investors still welcomed the news, pushing the shares up 2.5% in early trade.”

Despite flat Q4 sales, the Swedish fast-fashion brand’s H&M shares rose on Friday as the company announced 4% sales growth in 2023.

Despite the 4% yearly growth, which came around as the side effects of the pandemic ending, H&M’s net sales for the period from September 1, 2023, to November 30, 2023, remained unchanged compared to the same quarter last year.

“H&M will be hoping for a last-minute rush of shoppers buying clothes for Christmas given how its fourth quarter period to the end of November was disappointing,” said AJ Bell Investment Director Russ Mould.

Excluding Russia and Belarus, there was a 3% increase in SEK (Swedish Krona) currency and a 1% decrease in all local currencies.

Overall, H&M Group’s net sales declined by 4% in local currencies compared to the corresponding quarter last year.

“Like a lot of fashion retailers, H&M has suffered from having too much stock, which it needs to offload. The only way to do that quickly and efficiently is to sell these items at a discount. That’s bad for group profit margins,” Mould added.

Furthermore, the problem did not affect H&M alone.

“Inditex has seen a slowdown in growth, and ASOS and Boohoo are also finding life a lot harder,” said Russ Mould. “Consumers are being more cautious with spending on fast fashion, and there is also fierce competition from the likes of Shein,” he added.

Trainline shares had jumped 14.78% at the time of writing on Friday as the UK Department of Transport (DfT) abandoned plans for its own ticketing platform.

Unexpectedly, on Thursday, the Department for Transport (DfT), headed by Mark Harper, revealed its decision to forsake the plans for establishing a ticket-selling website and app for Great British Railways in a move to generate revenue and decrease costs for customers.

The DfT said on Thursday that they “confirm that we are not pursuing plans to deliver a centralised Great British Railways online rail ticket retailer.”

The plans for an app were initially introduced in May 2021, and the government’s platform would have directly rivalled Trainline.

But for now, the railway company’s stock prices shine as the abandonment of the DfT app “removes a potential competitive threat for the business in its core market,” said Russ Mould, investment director at AJ Bell.

Trainline’s “focus can now turn to the company’s efforts to expand in Europe, where rail travel is more reliable and affordable, and as it consolidates its position in its domestic market,” Mould added.

This year, investor worry escalated for Trainline as the possibility of a new online retail rival loomed in the UK, posing a threat to its dominant 62% market share, as noted by analysts from JP Morgan. 

“Trainline is a well-known brand, and its app has good functionality, but the initial reaction to plans for a state-backed app, when the shares fell more than 20% intraday, shows it is vulnerable to fresh competition,” said Russ Mould.

The FTSE 100 was broadly flat on Friday as London’s leading index consolidated after a landmark week for global monetary policy.

This week, the Federal Reserve sent strong signals to the market that they are well and truly done with the hiking cycle and were eyeing interest rate cuts next year.

Markets have quickly priced in up to 150bps in rate cuts by the Federal Reserve during 2024. The level of cuts predicted by futures markets is at odds with the Fed’s own projections, but there is a clear consensus US interest rates will fall next year.

Global stocks soared after Wednesday’s Federal Reserve instalment, with their dovish tone underpinning a risk-on rally.

The ECB and BoE provided their thoughts on interest rates yesterday.

While Europe and the UK’s central banks weren’t as dovish as the Federal Reserve, they certainly weren’t as hawkish as they have been in recent months.

“The FTSE 100 started the day modestly higher, consolidating its big gains from yesterday but not showing signs of extending its rally,” said AJ Bell investment director Russ Mould.

After starting the session higher, the FTSE 100 was trading down 0.3% at 7,627 on Friday.

Russ Mould continued to explain, “This may reflect the mixed messages coming from central banks this week. The market might be left feeling as if it has stepped through the looking glass. The Federal Reserve, despite a resilient US economy, is happy to talk rate cuts while the Bank of England and the European Central Bank, who face a much less rosy economic backdrop, are pouring cold water on hopes for a pivot.

“Perhaps the Bank of England and ECB remain concerned about energy prices and any possible inflationary pressures they might bring with winter upon us. America’s relative energy independence largely insulates it from this threat.

“Asian stocks pushed ahead as they reacted to the Fed’s dovish stance. The resulting weakness in the dollar tends to be good news for emerging markets.”

The FTSE 100’s miners were a beacon of light on Friday, posting strong gains on a day most other sectors traded negatively.

St James’s Place was the top faller after brokers cut their price target. The wealth manager shares were down 3.5% at the time of writing.

DS Smith was the top gainer, followed closely by miners Glencore, Anglo American, and Antofagasta.

Atlantic Lithium shares were weaker on Friday after the lithium miner completed a successful placement to fund development at its operations in Ghana.

Atlantic Lithium has raised A$8.0 million (approx. £4.2 million) through an institutional placement of 18,181,819 new shares at A$0.44 per share.

The proceeds will fund early works and permitting activities for its lithium project in Ghana, support an upgraded resource estimate in Q3 2024, and provide working capital.

Canaccord Genuity acted as lead manager, and Wilsons Advisory & Stockbroking as co-manager on the placement.

The fundraising comes as Atlantic Lithium aims to deliver Ghana’s first lithium mine after recently securing a mining lease for its project.

“Through the support of our existing institutional shareholder base and in welcoming a number of new institutions onto our register, we are pleased to have successfully raised A$8 million,” said Neil Herbert, Executive Chairman of Atlantic Lithium.

“As we await the completion and the receipt of the funds from the Minerals Income Investment Fund’s investment, as well as the completion of the off-take process that is currently underway, the proceeds put the Company in a strong position to continue advancing the Ewoyaa Lithium Project at pace.

“The Placing enables us to fund the numerous activities that are underway or imminent that seek to add further value to the Project, aligning with the growth ambitions of the Company.

“With a number of key milestones ahead of us, we look forward to providing further updates on our progress in due course.”