If you have a high tolerance for risk, then read on!
That's because analysts at Bell Potter have just named two ASX mining stocks as speculative buys with huge upside.
Here's what the broker is saying about these stocks:
Chalice Mining Ltd (ASX: CHN)
Bell Potter notes that this mineral exploration company has just been awarded Major Project Status from the Federal Government for its 100%-owned Gonneville PGE-Ni-Cu project in Western Australia. This follows the recent award of Strategic Project status from the Western Australia Government.
The broker highlights that this is rare for a mining project, which demonstrates the importance of Gonneville. It said:
Very few critical minerals project have been awarded this status and we view this milestone as a significant endorsement of the Gonneville project. In our view, it reduces the permitting risk of the project at both State and Federal levels and is particularly significant following the recent decision that effectively cancelled the McPhillamys Gold Mine in NSW.
In light of this, the broker has reiterated its speculative buy rating and $5.15 price target on the ASX mining stock. This implies potential upside of 200%+ from current levels. It concludes:
We do not see CHN needing to raise equity in the foreseeable future, thereby protecting shareholders from dilution while providing exposure to a PGE market which is, in our view, at cyclical lows and vulnerable to supply shocks. Recent share price appreciation reflects CHN as a long-dated option on PGE and nickel prices, in addition to its exposure to a world class critical minerals project.
Lotus Resources Ltd (ASX: LOT)
Another ASX mining stock that has been named as a speculative buy is Lotus Resources. It is a uranium developer aiming to restart the Kayelekera Mine in Malawi next year.
Bell Potter notes that Lotus Resources has outlined an advanced timeline for the restart of Kayelekera Mine, which will see production recommence in the third quarter of 2025.
This accelerated timeframe sees a portion of upfront capital costs deferred (US$39.5 million), with restart capital estimated now at US$49.7 million (previously US$87.7 million). Total capital inclusive of deferred capital is now US$89.2 million, up 1.7% from previous estimates. Commenting on the change, Bell Potter said:
It all comes out in the wash. The staged development capex slows the cash burn rate we had assumed for the restart of KM, which could see a portion of FCF used to fund deferred capital items (a positive from a dilution perspective). On the flip-side the higher upfront and ongoing operating costs have a negative impact on our earnings and valuation.
In response, the broker has retained its speculative buy rating and 50 cents price target on this ASX mining stock. This suggests that upside of 85% is possible from current levels.
