From sky-high iron ore prices to the long term prospects of lithium, Macquarie sees both short and long term upside for these ASX 200 mining shares.
Why Macquarie likes these 4 ASX 200 mining shares
Chalice Mining Ltd (ASX: CHN)
The Chalice share price has surged some 65% year-to-date as the company continues to deliver on its exploration success. The company’s overall strategy is to target tier-1 scale mineral projects (net present value greater than US$1 billion) and undertake high impact activity to bring them closer to production.
Chalice Mining currently has two new and significant discoveries. Firstly, the Julimar project in Western Australia and secondly the Pyramid Hill gold project in Central Victoria. In addition, Chalice Mining has a number of minor exploration projects and royalty interests.
Macquarie observes the Julimar project has grown significantly over the past 12-months and expects a maiden resource around September. The broker believes the latest round of drilling provides more clarity on the size of the deposit with the likelihood of more upside.
An outperform rating was retained with a $9.20 target price. Chalice shares have pushed another 3% higher at the time of writing to $7.37.
IGO Ltd (ASX: IGO)
Macquarie believes IGO has undergone a significant transformation after the sale of its 30% interest in Tropicana and acquisition of 50% of the global lithium joint venture. The broker says that the company’s nickel project, Nova, will continue to drive earnings in the short term. However, its diversification into lithium will drive long-term value for shareholders.
The broker retained an outperform rating with an $8.50 target price. IGO shares are currently fetching $7.78.
Mineral Resources Ltd (ASX: MIN)
Mineral Resources’ presentation at the Macquarie Conference Australia 2021 highlighted the company’s plans to increase iron ore production from 20Mtpa to 90Mtpa over the next five years. This was well above Macquarie’s 50Mtpa base case estimates.
In a similar narrative to IGO, the broker believes that iron ore operations will continue to generate strong cash flows while its emerging lithium operations will possess significant growth potential in the medium to long term.
An outperform rating was retained with a $61 target price. Mineral Resources shares continue to hover around record territory of $48, its shares are up 25% year-to-date.
Oz Minerals Ltd (ASX: OZL)
The Oz Minerals share price has bounced back after its first-quarter update on 22 April. Macquarie has pointed to its Prominent Hill and Carrapateena as key growth prospects that will increase production in the near term.
The broker believes a key driver of the Oz Minerals share price will be buoyant copper prices. Its analysts estimate that spot prices could increase Oz Minerals earnings by 25% in 2021 and 75% in 2022. An outperform rating was retained with a $29.50 target price.
Oz Minerals shares have had a relatively flat month following share price weakness after its first-quarter update. However, sky-high copper prices have pushed its shares up some 30% year-to-date to $25.06.