'Strategic value': 2 ASX mining shares to buy now before they shoot up

Resources stocks are infamously volatile. Here are two expert recommendations that could guide you to gains rather than losses.

| More on:
Two mining workers in orange high vis vests walk and talk at a mining site

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Although mining shares have such a massive presence on the ASX, picking the right ones to buy is still a tricky business.

That's because resource stocks are notoriously cyclical. They fluctuate wildly on the whims of commodity prices, the global economy, and simple supply and demand.

That's why it pays to listen to the experts when they recommend mining stocks that are in the low part of their price cycle.

Here are two such picks from BW Equities equity salesperson Tom Bleakley:

This stock is the king of the hill

The global gold price has dipped slightly since the end of May.

However, with so much uncertainty surrounding the global economy, the so-called safe haven asset might still have some legs.

That's why Bleakley reckons now might be a great buying opportunity for producers like Red 5 Limited (ASX: RED).

"The company's King of the Hills gold mine in Western Australia produced 24,033 ounces in June, up from 19,039 ounces in May," Bleakley told The Bull.

"The company retains production guidance of between 90,000 ounces and 105,000 ounces in the second half of fiscal year 2023 at an all-in-sustaining cost of between AU$1,750 and AU$1,950 an ounce."

The Red 5 share price has risen more than 23% since the end of May.

The combination of economic factors and gold prices means Bleakley is thinking Red 5 shares still have more upside risk than downside.

"We expect favourable share price momentum to continue at this stage of the cycle."

Lithium demand will not wane anytime soon

The international lithium price seems to have stalled recently, just going sideways since 24 May.

But the demand for batteries for new-world devices like electric cars will only head upwards over the next few years.

This gives a junior miner like Green Technology Metals Ltd (ASX: GT1) plenty of upside potential.

"Green Technology Metals is a North American lithium exploration and development business," said Bleakley.

"We see strategic value in Green Technology Metals as it continues to grow its lithium resource."

The company's prospects just received a huge institutional endorsement, which is a great omen for retail investors.

"It recently received a $20 million strategic investment from LG Energy Solution (LGES) at a big premium to Green Technology Metals' share price," Bleakley said.

"The agreement includes an off-take term sheet for Green Technology Metals to sell 25% of its spodumene concentrate production from its flagship Seymour project to LGES for five years."

Motley Fool contributor Tony Yoo 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.

More on Resources Shares

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

Why did the Fortescue share price fall 7% in October?

Let's review what happened with the ASX 200 mining giant in October.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Resources Shares

Why did the BHP share price get hammered in October?

ASX 200 investors sent BHP shares sharply lower in October. But why?

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Resources Shares

Gina Rinehart's empire raked in another $5.6 billion. Here's how

Resources and mining continue to dominate the Australian market.

Read more »

two men in business suits sit across from each other at a table with a chess board on it. Both hold their hands to their chins and look down in serious contemplation of their next move.
Resources Shares

'Not ruled out': Could BHP still buy Anglo-American?

This mega-deal might not be as dead as it looks.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

Mineral Resources share price rockets 16% on $1.1 billion news!

ASX 200 investors appear thrilled with Mineral Resources' latest news.

Read more »

Miner looking at a tablet.
Resources Shares

Here are the latest share price forecasts for Fortescue

Let’s unearth what analysts think could happen with this iron ore miner.

Read more »

A businesswoman ponders why her boat is sinking in the ocean.
Resources Shares

Lake Resources share price sinks on quarterly cash flow news

Let's take a look at the highlights of the company's Q3 update.

Read more »

A company manager presents the ASX company earnings report to shareholders at an AGM.
Resources Shares

Why today is a big day for BHP shares

Guess why everyone’s talking about BHP shares today.

Read more »