The little known ASX uranium stock that could rise 35%

Here's why Bell Potter is tipping this uranium share as a speculative buy right now.

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Investors have been flooding into the uranium industry in large numbers over the last 12 months.

You only need to look at the performance of the ASX uranium stocks such as Boss Energy Ltd (ASX: BOE) and Deep Yellow Limited (ASX: DYL) to see this.

Over the period, these uranium stocks are up a remarkable 155% and 94%, respectively.

But if you thought the gains were over, think again.

One little known ASX uranium stock has just been named as a buy and tipped to rise strongly from current levels.

Which ASX uranium stock is a buy?

According to a note out of Bell Potter, its analysts think that Lotus Resources Ltd (ASX: LOT) could be a top option right now.

It owns an 85% interest in the Kayelekera Uranium Project in Malawi, Africa, and a 100% interest in the Letlhakane Uranium Project in Botswana, Africa.

The broker was pleased with the recent mineral resource estimate (MRE) update for the the Letlhakane project. It commented:

The updated MRE stands at 155.3Mt at 345ppm U3O8 for a total contained 118.2Mlbs U3O8, inclusive of 34.4Mlbs in Indicated Resources, which is a reduction on the original ACB [previous owner] MRE (2015) of 190Mlbs at 321ppm U3O8. The main difference between the two estimates is the hypothesised operations, which infer the economic cut-off grade. Under ACB, LM was a large-scale, low-grade two stage heap leach operation. In our February initiation on LOT, we didn't see this as the path forward for the project. Our initial interpretation was that LOT would look to focus on the highgrade portions of the deposit and utilise ore-sorting to increase the milled grade over +600ppm. With a starting point of +400ppm, a conservative estimate of 40% mass rejection could achieve this we hypothesised. Today's announcement is a step towards proving that thesis.

Big returns

In response to the news, the broker has reaffirmed its speculative buy rating on the ASX uranium stock with an improved price target of 60 cents.

Based on its current share price of 44.5 cents, this implies potential upside of 35% for investors over the next 12 months.

Commenting on its recommendation, the broker said:

We maintain a Speculative Buy recommendation and our valuation lifts to $0.60/sh (previously $0.50/sh). Our valuation lift comes from an extension of potential operations at LM beyond our initial forecast (initial LOM production of 61Mlbs). We see positive catalysts at KM including 1) MDA finalisation, 2) FID and 3) offtake negotiations. Successful navigation of these hurdles will place LOT in the best position to advance project funding for KM, all whilst LM advances in the background.

Though, it is worth highlighting the broker's speculative rating. This means it would only be suitable for investors with a high risk tolerance.

Motley Fool contributor James Mickleboro 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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