The Mineral Resources Ltd (ASX: MIN) share price is rocketing higher again today.
Shares in the beaten-down and heavily shorted S&P/ASX 200 Index (ASX: XJO) lithium miner and diversified resources producer closed up 16.0% yesterday at $4.83. In late morning trade today, shares are changing hands for $38.34, up 9.2%.
For some context, the ASX 200 is up 0.6% today.
Despite the strong two-day rally, the Mineral Resources share price remains down almost 46% in 2024.
But the ASX 200 mining stock could be poised to recoup a lot more of those losses, handing some potentially outsized gains to investors buying the stock today.
That's according to JP Morgan (courtesy of The Australian).
The broker just raised Mineral Resources to an overweight rating with a $50 price target on its shares. That represents a potential gain of more than 30% from current levels.
What's been boosting the Mineral Resources share price?
The ASX 200 miner got a big boost yesterday on two fronts, with at least one of those tailwinds continuing to buoy the stock today.
On Wednesday, the Mineral Resources share price rocketed higher after the company reported that it had received unconditional approval from the Australian Foreign Investment Review Board (FIRB) to sell its 49% stake in the Onslow Iron haul road project.
Morgan Stanley Infrastructure Partners will shell out some $1.3 billion for the asset, consisting of $1.1 billion in cash and a conditional deferred cash amount of $200 million.
Management expects that the haul road will be completed in October.
Mineral Resources said it will use the proceeds to cancel its US$750 million undrawn bridge facility.
Also likely spurring investor interest, management said the Onslow Iron project will be cash flow positive commencing next month at current iron ore prices. That project is still ramping up to full production.
How about lithium?
Slumping lithium prices and a gloomy outlook for any near-term recovery have been among the bigger drags on the Mineral Resources share price for most of the year.
But that turned around yesterday, with enthusiasm for ASX lithium stocks continuing today.
Why?
As the Motley Fool reported here yesterday:
Reports are circulating that a Chinese electric vehicle battery manufacturer, CATL, has suspended production at two of its lepidolite lithium mines.
If this proves to be the case, the closure of Chinese lithium mines would be good news for ASX lithium shares, as it would probably result in a reduction in supply and subsequently push up prices.
Indeed, if Citi's revised lithium price forecast proves correct, the Mineral Resources share price should enjoy further support heading into 2025.
"We expect investors, both inside and outside of China, to cover their shorts over the coming weeks on the back of recent supply curtailments from CATL's lepidolite cuts, inventory drawdowns, and seasonal peak demand," Citi analyst Kate McCutcheon said (quoted by The Australian).
The broker forecasts lithium prices will increase 20% to 25% over the next three months. Citi raised its three-month price target for lithium carbonate to US$14,000.
