The team at Bell Potter have been consistently bullish on ASX materials stock WA1 Resources Ltd (ASX: WA1) this year.
WA1 listed on the ASX in February 2022. Since then, it has focused on an aggressive drill-out program at West Arunta, specifically targeting the Luni carbonatite structure.
Niobium is a niche commodity, primarily micro-alloyed into structural steel to improve strength and reduce weight in applications.
In the last 12 months, this ASX materials stock has been relatively flat.
However a key announcement has led to a strong upgrade from the team at Bell Potter who now see this ASX materials stock as one that could double in the next 12 months.
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What happened?
WA1 has completed larger-scale processing tests on ore from its Luni niobium project.
The tests showed the company can successfully concentrate the niobium into a high-grade product using a relatively simple flotation process and ordinary site water.
For investors, this is a big positive as one of the biggest risks for any mining project is whether the ore can actually be processed economically.
These results show that:
- The processing method appears to work consistently across different parts of the deposit.
- The quality of the concentrate produced is high enough to be commercially attractive.
- The project's future processing plant design is becoming more certain.
In mining terms, this "de-risks" the project because investors now have more confidence that the ore can be turned into a saleable product.
Standout results
The best area of the deposit (Composite A), which is expected to be mined first, delivered:
- 46% niobium concentrate grade
- 67% recovery rate.
Recovery rate means 67% of the niobium in the ore was successfully captured during processing.
This was better than previous test results and suggests the project could be more profitable than originally expected.
Because recoveries were stronger than expected, Bell Potter increased its assumption for how much niobium WA1 can extract from the ore.
Big upgrade for ASX materials stock
As a result, Bell Potter has upgraded its price target on this ASX materials stock to $27.20 (previously $24.40).
This is significant because this ASX materials stock currently trades for around $12.50 per share.
The new target from Bell Potter indicates an upside potential of 129%.
The testwork confirms a two-stage flotation regime can produce high-quality niobium concentrates with commercially relevant recoveries across the deposit, using raw site water.
The broker has retained its speculative buy recommendation.
