Meet the ASX lithium stock tipped to rise 200%+

Is gold the reason to get excited about this lithium stock? Here's what a leading broker is saying.

| More on:
Excited group of friends sitting on sofa watching sports on TV and celebrating.

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

If you have a high tolerance for risk and space in your portfolio, then read on.

That's because analysts at Bell Potter believe one ASX lithium stock with golden opportunities could be severely undervalued by the market.

Which ASX lithium stock?

The undervalued company in question is Delta Lithium Ltd (ASX: DLI). It is an exploration and development company focused on bringing high-quality, lithium-bearing pegmatite deposits in Western Australia into production.

However, it is not necessarily the lithium that is getting analysts at Bell Potter excited. It is the gold that lies beneath one of its projects.

Last week, the company released an update on the Baldock gold deposit at the Mt Ida Project near Kalgoorlie. Bell Potter was pleased with the update, highlighting the following:

We estimate the potential value a Baldock Gold Operation, considering two different scenarios (a 4Mt Reserve, and an 8Mt Reserve). Using a 4Mt Reserve, we estimate a Net-Present-Value (NPV, post-tax, real, 8% discount rate) of $250m. The 4Mt Reserve scenario is representative of the existing Resource plus likely incremental discovery.

Using an 8Mt Reserve, contemplating the Resource doubling, we estimate a NPV of $750m. Very significant in the context of the current $77.4m enterprise value (with 4QFY24 closing cash of $86m). Both scenarios assume: (1) $200m initial capex, (2) $200/t underground mining costs, (3) $45/t processing and site admin, a A$3,500 gold price, (4) 700kt of ore processing per annum, producing (5) 81kozpa of gold.

In light of this, the broker has reaffirmed its speculation buy rating and 75 cents price target.

Based on the current Delta Lithium share price of 23 cents, this implies potential upside of approximately 225% for investors over the next 12 months.

To put that into context, a $1,000 investment would turn into approximately $3,250 if Bell Potter is on the money with its recommendation.

What else?

It is also worth noting that Bell Potter is also positive on the company's lithium operations and suspects that future improvements in lithium prices will boost its shares. It concludes:

Our valuation and recommendation are unchanged. We see upside in DLIs' valuation from: (1) the ongoing exploration and development of the Yinnetharra and Mt Ida Lithium Projects, (2) future improvements in lithium prices and sector sentiment, and, (3) increasing levels of newsflow from gold exploration and monetisation activities. DLI have stated that it plans to maximise the value of the Mt Ida gold assets. The value maximising pathway is contingent on exploration results over the next twelve months. Continued success could result in DLI's first operation being a gold mine.

Should you invest $1,000 in Delta Lithium Ltd right now?

Before you buy Delta Lithium Ltd shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Delta Lithium Ltd wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

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.

More on Materials Shares

A man sits at his home desk calculating tax on a calculator.
Materials Shares

$10,000 invested in Core Lithium shares five years ago is now worth…

Core Lithium shares have been on a tremendously wild ride these past five years.

Read more »

Business people standing at a mine site smiling.
Materials Shares

Is this beaten down lithium share now in the buy zone?

Mineral Resources has sunk amid an array of bad press. Has that created a buying opportunity or is there more…

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Materials Shares

Guess which ASX lithium stock is jumping 10% on big news

What is getting investors excited today? Let's find out.

Read more »

CSR share price rising asx share price represented my man in hard hat giving thumbs up
Materials Shares

Should I buy Rio Tinto or BHP shares?

Which of these mining giants do analysts think would be the best to buy? Let's find out.

Read more »

A miner stands in front of an excavator at a mine site.
Materials Shares

Why are Boss Energy shares surging 7% higher today?

Boss Energy shares continue their stunning run today.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Guess which ASX mining stock is jumping 11% on big news

Investors are celebrating another big announcement this morning.

Read more »

A young man goes over his finances and investment portfolio at home.
Materials Shares

Should you buy, hold, or sell Liontown shares?

Do analysts think that now is a good time to invest? Let's find out.

Read more »

A lion dressed in a business suit roars as two sheep sit awkwardly at the boardroom table.
Materials Shares

Liontown share price roars higher on half year results

This lithium miner has handed in its report card on Friday.

Read more »