If you have room in your portfolio for some ASX 200 mining shares, then it could be worth considering Lynas Rare Earths Ltd (ASX: LYC) shares.
That's the view of analysts at Bell Potter, which remain very positive on the rare earths producer.
What is the broker saying about Lynas?
Bell Potter acknowledges that issues at Lynas' Kalgoorlie operation this week were a touch disappointing. However, they don't have any impact on its valuation or positive view on the stock. The broker explains:
LYC' status update on Kalgoorlie has no impact to our valuation for the business and does not alter our investment thesis. With mixed rare earth carbonate (MREC) material now expected to come through in August, we anticipate first delivery to Malaysia in early to mid-September.
Given LYC's track record of navigating production hiccups (water issues – 1QFY23, Covid-19 shutdown 4QFY20), we anticipate the business will be able to work through any further issues ahead of the ban on processing of Lanthanide concentrate on 1 Jan 2024.
In light of this and with NdPr prices "now staging a steady recovery," the broker feels that it is the time to invest.
According to the note, the broker has a buy rating and an $8.55 price target on Lynas shares. Based on its current share price, this implies a potential upside of just under 20% from current levels. The broker concludes:
LYC is a high-quality business, and a key supplier of separated rare earths to Western economies. We see the business as being well placed to weather any issues as it transitions cracking and leaching operations from Malaysia to Kalgoorlie over the next six months.
All in all, the broker appears to believe this could make Lynas a top option if you're looking for mining exposure.
