Far East Capital Newsletter
Lindian secures buyer for high-grade bauxite production
21 May 2023

In This Issue

Lindian secures buyer for high-grade bauxite production

The selling across the board that we saw at the start of the year was a logical and direct response to rising interest rates, but that seems to have run its course while we have found a pause in the interest thematic. Many stocks have started bottoming formations and this has caused our Sentiment Oscillator to lift off its lows, so that is a start of a recovery.

However, for a recovery to have any real legs we have to see reasons to buy, and so far they have been absent. Bottom fishing can stabilise markets but it doesn't drive them higher. We are still suffering from weak commodity prices, especially in battery related commodities such as lithium, cobalt, copper, nickel and rare earths to name a few. (See the commentary below, on cobalt). Gold has been bouncing around near its highs, but even that has weakened over the past week.

Lindian announced that it has signed a Supply Agreement for 23 Mt (wet) of bauxite with C&D Logistics Group, a subsidiary of Xiamen C&D Inc, a conglomerate listed on the Shanghai Stock Exchange with net assets of US$23.7bn.

Perhaps the most significant effect of the announcement is that the share price of Lindian is no longer 100% linked to the volatile rare earth prices. That reduces stock market risk and enables shareholders to have greater confidence in the future. Both the bauxite and the rare earths projects deserve a premium rating due to their high grades. This is not just a great punt. It could be an emerging mining house, so expect renewed buying by serious investors. 

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