If you can pick the right companies, buying into ASX mining shares as the company progresses from explorer to miner can be a lucrative way to invest.
Naturally, picking the right companies to invest in is the key.
I've had a look at the reports coming out of broker Shaw and Partners this week, and there are two companies they think could do extremely well.
Let's see who they like.
Image source: Getty Images
Brightstar Resources Ltd (ASX: BTR)
Brightstar shares have not performed well over the past year, sliding just more than 40% to be changing hands for 32 cents.
The company in recent days released a new mineral resource estimate for its Sandstone project, saying the amount of gold contained on a measured and indicated resource basis had more than doubled to 1.1 million ounces.
Overall, the company said it had resources of 4.5 million ounces.
The company also said drilling was ongoing at Sandstone, with four rigs operating.
Brightstar Managing Director Alex Rovira said:
A huge amount of drilling has been completed at the project, so it is encouraging to see the results reflected in this interim MRE update. The result has exceeded expectations for Mineral Resource growth in this first update, with the strategic focus to date on improving the quality of the Mineral Resource ahead of the prefeasibility study and eventual mining development. Importantly, the project now hosts 1.1Moz of Indicated-classified Mineral Resources. This higher confidence is crucial for the delivery of our PFS, and we are targeting further increases in subsequent estimates with drilling underway now at key deposits such as Bull Oak, Indomitable and Two Mile Hill-Shillington.
Shaw and Partners said the project, "in our view, the project suffers from perceptions of uncertainty''.
They added:
Sandstone currently has no mine study, no Reserve and limited measured and indicated resources, at least prior to today. This Resource upgrade could help persuade that Sandstone has a critical mass of gold to justify development.
Shaw and Partners has a price target of $1.23 on Brightstar shares.
Global Lithium Resources Ltd (ASX: GL1)
Shaw and Partners said GL1's recent deal to buy a nickel-copper processing plant from IGO Ltd (ASX: IGO)'s Nova division, which it could convert to process lithium ore from its Manna lithium project, was a positive.
They added:
The acquisition will accelerate Manna's development pathway by leveraging Nova's commissioned infrastructure rather than GL1 having to construct a standalone processing plant. This will well and truly allow GL1 to capture the forecast 2027/28 lift in lithium demand and position GL1 as a near-term producer.
Shaw and Partners has a price target of $1.75 on GL1 shares compared to 46.5 cents currently.
