The Aeris Resources Ltd (ASX: AIS) share price looks very cheap to me, given the company's promising future in copper. I'm going to tell you why it's my number one ASX mining share pick at the moment.
It's not exactly a tiny business. According to the ASX, it has a market capitalisation of $332 million. Aeris is best known as a copper miner which is one of the main reasons I like it.
Firstly, I'm going to explain why I'm optimistic about future demand for copper.
Positive outlook for the copper ASX mining share
Commodity prices typically move up and down through cycles as supply and demand change.
I think there is a very positive tailwind for copper as the world moves towards decarbonisation.
ASX mining giant Rio Tinto Limited (ASX: RIO) has described the many uses of copper:
We use copper in pots and pans, in the water pipes in our homes, and in the radiators in our cars. Copper also plays an essential role in computers, smartphones, electronics, appliances and construction.
Copper also promises to play an essential role in the transition to the low-carbon economy. Just one 1MW wind turbine, for example, uses three tonnes of copper. And electric vehicles have a copper intensity 3 to 4 times higher than traditional vehicles. As a result, global demand for copper is set to grow 1.5% to 2.5% per year, driven by electrification and increasing requirements for renewable energy.
While nothing is certain, there are predictions the copper price could rise in the future because of new demand. However, it's becoming increasingly difficult to find easily accessible, large copper deposits.
Why I'm bullish on the Aeris Resources share price
It's beneficial for any ASX mining share's profitability if the commodity it sells goes up in price because, essentially, it gets more revenue for the same amount of production, improving profitability.
The company is working on expanding its copper production, with potential growth in Victoria with the Stockman project as well as the company's plans in North Queensland.
Certainly, the ASX mining share's profit could ramp up in FY24 and FY25 as more production comes online.
Current earnings projections on Commsec suggest the business could generate 11.2 cents of earnings per share (EPS) in FY24 and 14.5 cents of EPS in FY25. These estimates would put the Aeris Resources share price at just 4.5 times FY24's estimated earnings and 3.5 times FY25's estimated earnings.
That seems exceptionally cheap to me. Even if it were to rise 25% over the next 12 months, I still think it would seem cheap.
I think the business has a very good future and it's priced at a very good valuation.
