The All Ordinaries Index (ASX: XAO) has gained 7% over the past 12 months, but this ASX All Ords mining stock has left those gains wanting.
The outperforming stock in question is tin miner Metals X Ltd (ASX: MLX), which owns 50% of the Renison Bell tin mine in Tasmania.
Despite closing down 7.3% on Thursday, at 64 cents per share, the Metals X share price remains up an impressive 35% since this time last year.
And according to the analysts at Ord Minnett, the miner is well-placed to deliver another year of outsized gains.
Here's why.
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Should I buy the ASX All Ords mining stock today?
Ord Minnett recently initiated coverage on Metals X with a buy recommendation and an 80 cent per share price target.
That represents a potential upside of 25.0% from Thursday's closing price.
The broker noted that Metals X's Renison mine has a mid-cost curve position, expansion projects, and new discoveries still being drilled. And with tin an essential element in soldering electronics, Ord Minnett expects plenty of demand for the miner's product.
And the broker expects Metals X will generate a 13% free cash flow yield in the next 12 months. On the heels of that strong run, it expects the ASX All Ords mining stock will then begin making fully franked dividend payments.
Three reasons Metals X shares could keep charging higher
The first reason Ord Minnett is bullish on Metals X is its "compelling" 2.2 times forward earnings before interest, taxes, depreciation and amortisation (EBITDA) multiple.
Citing the ASX 300 mining stock's $311 million holdings in both cash and key stakes in other tin miners, the broker said:
We believe the market has overlooked MLX due to its lack of self-promotion and broker coverage. We estimate MLX is trading on a mere 2.2x forward EV/EBITDA multiple.
Ord Minnett forecasts investors can expect a dividend yield of around 7% in the near term, growing after FY 2030 with the miner's tailings project expansion.
The second reason to buy Metals X shares today is that Renison's mid-cost curve position is profitable.
According to Ord Minnett
Tin's current price is elevated at +US$32k/t on mine outages. We forecast it to trough at US$25k/t by Jun-26, below the 17-year, real terms average of US$28k/t. Thereafter, we expect the price will recover to LT US$29,500/t, as aging mainstay mines in China, Indonesia, Peru and Bolivia struggle to meet growing demand.
We estimate Renison has a mid-cost curve AISC of US$21k/t, which may decline if the shallow discovery – Ringrose – 700m from Renison is developed.
Which brings us to the third reason this ASX 300 mining stock could keep charging higher, its pending Greenstech share acquisition.
Metals X shares closed up 5.0% on 4 June, the day the miner announced its intent to materially up its stake in Greenstech shares.
And Ord Minnett believes this share acquisition provides an immediate 11% plus upside for Metals X.
The broker noted:
In an opportunistic move, MLX seeks to acquire up to 28% of its JV partner, Greenstech in HK for A$27mn, while it is suspended. If successful, MLXs effective stake in Renison would grow to 61% increasing the NAV to 86cps (+11% upside).
That offer is set to conclude on 23 July.
