BHP Group Ltd (ASX: BHP) is a popular option for investors looking for copper exposure.
But given its very strong run over the past 12 months, investors might find better value elsewhere on the market.
The team at Bell Potter certainly thinks that is the case and is recommending one ASX copper stock to clients.
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Which ASX copper stock?
The stock that has caught the eye of Bell Potter is AIC Mines Ltd (ASX: A1M).
It is a Western Australia-based copper production and exploration company focused on the 100%-owned Eloise Copper Project (ECP).
Bell Potter highlights that the ASX copper stock has announced the acquisition of the Mt Cuthbert copper project, located ~150km northwest of its Eloise operation. It said:
Mt Cuthbert is a past-producing copper mine, with infrastructure including copper oxide heap leach pads and an 8,000tpa solvent extraction and electrowinning (SX-EW) processing facility (on care and maintenance). The project also has a 64-room camp, site offices, workshops and diesel fired power generation.
Past production includes ~17.3kt Cu cathode from oxide operations and ~5.7kt Cu in concentrate at a recovery of 92% via toll-treatment of sulphide ore at the Ernest Henry mine (2020). The project has Mineral Resources of 18.7Mt @ 1.3% Cu for 246kt Cu located entirely on granted Mining Leases within a highly prospective 2,400km2 tenement package. ~74% of the current Resource is sulphide ore, for ~180kt contained copper.
Should you invest?
According to the note, the broker has retained its buy rating on the ASX copper stock with an improved price target of $1.15 (from $1.05).
Based on its current share price of 90 cents, this implies potential upside of approximately 28% for investors over the next 12 months.
Bell Potter believes this leaves the company well-positioned to become a multi-mine copper producer. Commenting on its recommendation, the broker said:
This sets a clear strategic direction for growth for A1M to develop a second production asset and become a multi-mine copper producer. The implied acquisition valuation of the Resource compares favourably with A1M's pre-deal valuation and the infrastructure and production history de-risks the asset.
While A1M's development strategy relies on exploration success, we view the existing Resources as highly prospective for growth and A1M's planned 60,000m drill program as aggressive. EPS changes in this report are: FY27: -26%, FY28: -30%, FY29: -23%, reflecting increased exploration expenditure and the dilution of equity issuance for the deal. We retain our Price performance Buy recommendation on a 10% higher NPV-based target price of $1.15/sh.
