Buy this ASX mining share with 75% upside: broker

Could small-cap share AIC Mines Ltd go higher? One broker thinks it can.

Key points
  • ASX mining share AIC Mines Ltd could have more than 75% upside, according to analysts 
  • An acquisition of another mine could be a positive for this explorer 
  • Analysts have a target price of 80 cents on this small-cap share 

Research analysts at Ord Minnett are tipping one ASX mining share to have a potential 75% upside.

The AIC Mines Ltd (ASX: A1M) share price has been highlighted in a broker report, published on the ASX equity research website. The AIC Mines share price rose 1.11% on Monday to close at 45.5 cents.

Let's take a look at this ASX mining share in more detail

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.

Image source: Getty Images

Target price of 80 cents

Ord Minnett has placed a speculative buy rating on the AIC Mines share price with an 80 cent price target. This implies an upside of 75.8% on Monday's closing price.

Analysts highlighted AIC Mines' takeover of Demetallica Pty Ltd (ASX: DRM). In November, AIC Mines and Demetallica advised the market they had agreed to combine. This would see AIC's Eloise mine and processing facility combine with Demetallica's Jericho copper deposit.

AIC Mines advised in December it has now acquired an interest in more than 90% of Demetallica shares and is now at the compulsory acquisition stage.

Commenting on the outlook for AIC Mines, Ord Minnett analysts said they have now included the DRM acquisition in their base case model. Analysts said:

Whilst there is dilution to our near-term earnings (FY23/24 ~20%), our NAV increases ~A$59m (+A$0.05/sh – diluted) improved FY25+ metrics (production / opex) and a higher exploration figure.

Furthermore, the acquisition increases A1M's prominence in terms of scale, liquidity, mine life and risk profile – which should place it on the radar for more investors.

We increase our Target Price to A$0.80/sh (+7%) and retain our positive view.

Ord Minnett is tipping AIC Mines to achieve earnings before interest, tax, depreciation and amortisation (EBITDA) of $50.4 million in FY23, up from $37.6 million in FY22.

AIC Mines share price snapshot

AIC Mines shares have fallen 3% in the last year and 13% year to date.

This ASX mining share has a market capitalisation of about $175 million based on the current share price.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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