Viridis Mining And Minerals (ASX: VMM) is a small-cap ASX materials stock that has already increased significantly in the last 12 months.
Since December 2024, it has increased by an impressive 172.37%.
The company engages in mineral exploration in Australia, Canada and Brazil.
The team at Bell Potter released a new report on the company yesterday.
The broker has a speculative buy recommendation on this ASX materials stock, along with a price target indicating a further rise from current levels.
Here is the latest from Bell Potter.
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Brazil project faces delays
Viridis Mining & Minerals was scheduled to have a license hearing on 28 November. This hearing is part of the environmental permitting process in Minas Gerais, Brazil.
The questioning focused on:
- proximity of operations to local residents
- hydrogeological and water balance impacts
- environmental and public impacts
- processed clay residue
However, the hearing was postponed because the state environmental agency (FEAM) needs to respond to a list of concerns raised by the Federal Public Prosecutor's Office (MPF).
This effectively created a delay and a share price fall 27% followed by a trading halt.
The market likely interpreted the MPF's intervention as a sign of elevated permitting risk, or possible delays, or potential for tougher environmental conditions.
Bell Potter said in its report that it spoke with management who was optimistic the situation would soon be resolved.
According to the broker, Management reiterated that the state environmental agency (FEAM) supports the project and has already responded to the federal prosecutors, with a more detailed reply coming soon.
They believe the MPF's concerns are overstated – only 3 of 98 springs would be affected – and say the MPF also misrepresented issues around clay residue and the project's proximity to residents.
Bell Potter said that the company is targeting the December 19th COPAM meeting for approval of the project.
Price target indicates big upside
It appears the strong selloff amidst the legal proceedings has created even more upside for this ASX materials stock.
The broker is optimistic on the outlook of the company's Colossus project getting back on track.
We see projects like Colossus being able to quickly scale into a growing market, offsetting supply shortages over the coming decades. The importance of low operating costs will become apparent in time we believe, with current hard rock projects facing margin pressure despite increasing production capacity.
Bell Potter has reiterated its speculative buy recommendation.
The broker also has a price target of $2.65.
This is 154.81% higher than yesterday's closing price of $1.04.
We maintain our Buy (spec) recommendation and valuation of $2.65/sh (unchanged). Our recommendation and valuation are based on a 40% risked assessment of estimated FCF for the Colossus ionic adsorption clay project in Brazil. Near-term catalysts, along with a strong secular tailwind, are likely to continue to support VMM.
