The ASX mining share sector can be a great place to find opportunities that are trading with a low price/earnings (P/E) ratio and are expected to grow earnings in FY24.
Despite the regular economic bumps along the road, the global economy has continued to grow over the years and this has driven increasing demand for commodities.
Some investment themes could be a very useful tailwind, such as decarbonisation which could increase demand for resources such as copper, nickel, lithium and green hydrogen.
With that in mind, these are two ASX mining shares I'm very positive about for FY24 (and FY25).
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Aeris Resources Ltd (ASX: AIS)
Aeris Resources is a relatively small miner in Australia with a copper-dominant portfolio. It's not just an explorer because it's already generating earnings, but the business continues to look to expand its portfolio as it develops and explores further projects.
Copper is a very attractive commodity in my opinion because it has a solid base of demand, but there are expectations for growth as it'll be needed in large quantities for things like wind turbines, electric vehicles and improvements to the electricity grid.
The business is on a very cheap valuation. Estimates on Commsec suggest the ASX mining share could generate earnings per share (EPS) of 9.8 cents in FY24 and 13 cents in FY25.
That implies the company is trading at under 6 times FY24's estimated earnings and under 4 times FY25's estimated earnings. I wouldn't be surprised to see the Aeris Resources share price rise by at least 50% over the next two years and it'd still trade at a very reasonable P/E ratio.
A dividend payout ratio of just 25% in FY25 would be a dividend yield of 7%, excluding franking credits. There's no talk of any dividend payments yet from the company though.
Mineral Resources Ltd (ASX: MIN)
Mineral Resources is another ASX mining share that I think is trading on a cheap P/E ratio.
Mineral Resources is best known for being an iron ore and lithium miner. It also has a mining services division as well as a promising gas segment. However, I'm excited about its potential for the mining side of the businesses.
Mineral Resources is working on developing its lithium and iron ore production. This will reduce the company's cash expenditure and unlock a lot of earnings.
I think both the iron ore earnings and lithium earnings will do well. Lithium demand is expected to keep increasing, thanks to the large increase in electric vehicle production.
Iron ore demand is a bit more difficult to forecast as Chinese demand can be cyclical. However, Chinese steel exports have significantly increased – not all of the iron has to be used within China itself.
According to Commsec, it's valued at under 14 times FY24's estimated earnings and 10 times FY25's estimated earnings.
