The S&P/ASX 300 Metal & Mining Index (ASX: XMM) is down 0.53% on Thursday, while the S&P/ASX 300 Index (ASX: XKO) is up 0.09%.
ASX mining shares have been the worst hit by the war in Iran, with the Metal & Mining Index falling 15.7% vs. a 7.3% drop for the ASX 300.
Mining shares have fallen as investors sell out on fears that diesel shortages and higher oil prices will impact earnings and production.
Perennial portfolio manager Sam Berridge told the Australian Financial Review (AFR):
Australia is uniquely sensitive to this because our fuel inventory is so low, and we import such a high proportion of refined products.
Operations in the US, Brazil and Canada are definitely not going to run out of diesel and won't have to curtail production … so we are seeing more opportunities overseas where there isn't the same level of diesel supply risk that Australian miners have.
Berridge, who runs Perennial's Strategic Natural Resources Trust, has sold the fund's ASX gold shareholdings but kept overseas stocks.
US and Iran are continuing negotiations to end the war, but no one knows how long this will take.
The longer the conflict drags on, leaving the Strait of Hormuz virtually non-operational, the more severe this oil supply shock will be.
While we watch and wait, here are the experts' recommendations on three ASX mining shares.
Image source: Getty Images
Turaco Gold Ltd (ASX: TCG)
The Turaco Gold share price is 61 cents, up 0.8% today and down 23% since the conflict in Iran began.
Morgans maintains a buy rating on the ASX gold mining share with a 12-month price target of $2.19.
This implies a potential 260% upside ahead.
The broker said:
TCG released an MRE upgrade for the Afema Gold Project lifting the resource base to 4.65Moz Au at 1.3g/t Au (up from 4Moz)– a beat on our forecasts of 4.5Moz Au at 1.1g/t Au.
Afema now ranks as one of the largest undeveloped gold resources on the ASX.
Rio Tinto Ltd (ASX: RIO)
The Rio Tinto share price is $150.35, up 0.3% today and down 10% since the war began.
This week, UBS reiterated its hold rating on the diversified ASX 200 mining share with a $160 target.
This implies a potential 6% upside from here.
Liontown Ltd (ASX: LTR)
The Liontown share price is $1.69, down 2.6% on Thursday and down 1.5% since the war began.
On The Bull this week, Tony Locantro from Alto Capital revealed a sell rating on this ASX lithium mining share.
Locantro explained:
With earnings still developing and the company transitioning through a capital intensive ramp-up phase, the risk-reward balance at current levels favours taking profits following the sector's recent re-rating.
