I'm a big fan of identifying mining companies in the middle of the development process, when there is still a chance to buy in before they start generating significant cash flow, which then gets priced into the shares.
The analyst team at Barrenjoey has produced new reports on two such companies which they believe could deliver significant share price upside.
Let's see who they like.
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Lotus Resources Ltd (ASX: LOT)
Lotus just yesterday announced the departure of the first four containers of uranium concentrate from its Kayelekera site, with the product to be delivered to France before the end of the year.
The company is also expecting more shipments to leave before the end of the year.
This follows the company receiving final approvals to move the product through Namibia late last month, meaning the uranium could be shipped overland from Malawi through Zambia and then Namibia.
The Barrenjoey analysts said in their research report dated 30 October that Lotus' quarterly production was 6% below consensus, but that uranium production was improving after a recommissioning of the company's sulphuric acid plant.
The broker forecasts that Lotus might need to raise additional capital in the second half of the financial year, depending on the strength of the uranium price and the timing of shipments and payments.
Barrenjoey has a price target of 50 cents on Lotus shares compared with 18 cents at the time of writing. If achieved, this would be about a 178% return.
Lotus shares are 87.9% down on a 12-month basis.
Resolute Mining Ltd (ASX: RSG)
This miner is also operating in Africa, this time in Mali and Côte d'Ivoire.
The company reported in late October that it had produced 44,398 ounces of gold for the quarter at an all-in sustaining cost of $2,506 per ounce.
Net cash fell from $317.4 million to $276.1 million.
The company's Doropo development project in Côte d'Ivoire is on time and on budget, the company said, with a site workforce of more than 600 people.
Barrenjoey said in its 30 October report it was a tough quarter for the company, citing bottlenecks at its Mali mine.
But it said if the gold price stays at about US$4,000, "the value case will very quickly become apparent''.
The broker is expecting the company to produce limited free cash flow this financial year, but for that figure to lift to $700 million per year once Doropo is constructed.
Barrenjoey has a $1.60 price target on Resolute shares compared with $1.11 at the time of writing.
This would be a 44.1% return if achieved.
