Don't listen to the bears! Buy this ASX mining stock

One broker thinks investors should be bullish on this miner.

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Over the long weekend, I wrote about how analysts at Goldman Sachs are feeling very bearish about Mineral Resources Ltd (ASX: MIN) shares. You can read about that here.

The broker believes the ASX mining stock is seriously overvalued and could be destined to crash deep into the red.

However, another broker doesn't agree with this view and is urging investors to buy its shares right now.

What is the broker saying about this ASX mining stock?

According to a note out of Bell Potter, its analysts were pleased with news that the company has sold a 49% interest in the Onslow Iron Haul Road to Morgan Stanley Infrastructure Partners for gross proceeds of $1.3 billion. It commented:

The timing of the haul road sale is in-line with guidance, following the commencement of ship loading on 21 May 2024. Prior to the announcement, we had estimated MIN would achieve net after tax proceeds of A$1.1 billion for 49% of 50Mtpa of capacity. The sale is value accretive relative to our estimates as (1) higher net-proceeds will be realised relative to our estimate, and (2) a lower proportion of potential future tolling fees was sold (40 Mtpa vs 50 Mtpa).

In response to the news, the broker has reaffirmed its buy rating with a slightly trimmed price target of $84.00.

Based on the current Mineral Resources share price of $68.63, this implies potential upside of 22% for investors over the next 12 months.

What else did it say?

Bell Potter notes that the Onslow iron ore operations are now ramping up and this means that iron ore production is on the verge of increasing materially.

In light of this and expansions elsewhere in its portfolio, the broker believes the future is looking bright for the ASX mining stock. It concludes:

The commencement of the ramp-up of Onslow operations is the precursor to strong forecast Iron Ore and Mining Services earnings growth, with Stage 1 completion expected by June 2025. MIN is also advancing an unparalleled portfolio of growth options. We expect near-term news flow on (1) the expansion of Onslow to 50Mtpa, (2) development and financing options for MIN's energy discoveries, with (3) details on lithium expansion timing at Wodgina and Bald Hill also possible. EPS changes are, FY24: 0%, FY25: -46%, FY26: -12% on increased forecast depreciation allowances. Our valuation reduces -1.2% as we increase forecast sustaining capital in FY25.

All in all, time will tell whether the bulls or bears make the right call on this one.

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 positions in and has recommended Goldman Sachs Group. 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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