If you have a high tolerance for risk, then it could be worth taking a look at the speculative ASX stock in this article.
That's because if one leading broker is on the money with its recommendation, there could be some very big returns on offer over the next 12 months.
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Which speculative ASX stock?
The stock that is being tipped as a buy is Lotus Resources Ltd (ASX: LOT).
It is an Africa focused uranium developer which owns the Kayelekera and the Letlhakane uranium projects. It also owns the Wilconi nickel project.
Kayelekera is a restart uranium project in Malawi with a current 23Mlb Ore Reserve and a 46.3Mlb mineral resource. Whereas Letlhakane is a greenfield uranium project located in Botswana with a current mineral resource estimate of 118Mlbs at an average grade of 345ppm, inclusive of a 34.4Mlb indicated resource.
Who is bullish?
Bell Potter is bullish on this speculative ASX stock and was pleased to see it recently announce an offtake agreement. Commenting on the news, the broker said:
LOT announced it had signed a binding offtake agreement with a US Nuclear Utility for production of 600klbs U3O8 from 2026-2029, bringing total binding offtake to between 1.3-1.6Mlbs from 2026 onwards. This excludes the PSEG (non-binding) offtake for up to 400klbs pa beginning in 2026, which brings total offtake to between 2.9-3.2Mlbs. Pricing for the most recent offtake is fixed, in reference to the current US$80/lb long-term contract price less a small margin, with an escalation in-line with the RBA long-term inflation target.
Big potential returns
In response to the news, the broker has put a speculative buy rating and 35 cents price target on the uranium developer's shares. Based on its current share price of 18 cents, this implies potential upside of 94% for investors over the next 12 months.
To put that into context, a $2,500 investment would turn into almost $4,900 by this time next year if everything goes to plan.
Commenting on its recommendation, the broker said:
Our valuation changes incorporate 1) updates to the contracting mix and pricing, 2) adjustments to our operating and cost assumptions for Kayelekera as we head into production towards the end of CY25, and 3) adjustments to our notional development scenario for Letlhakane. Our valuation is reduced to $0.35/sh (previously $0.45/sh) and our recommendation remains Buy (speculative).
Overall, this could make this speculative ASX stock one to consider, especially if you are wanting exposure to the uranium industry.
