With 46% potential upside, this ASX materials stock is a compelling buy

ASX materials stock IperionX Ltd (ASX: IPX) is in focus today after the company announced the results of a Definitive Feasibility Study.

The study was focused on its 100% owned Titan rare earths project located in Tennessee, USA.

Company and announcement snapshot

IperionX’s mission is to be the developer of low carbon titanium for advanced industries. This includes space, aerospace, electric vehicles and 3D printing.

It is commercialising novel titanium production technologies which have the potential to disrupt the current global titanium supply chain. 

The technologies: HAMR (Hydrogen Assisted Metallothermic Reduction) converts titanium scrap or minerals into high spec titanium powders; and HSPT (Hydrogen Sintering & Phase Transformation) converts titanium powders to high-end titanium components. 

These technologies have materially lower production costs than other forms of titanium production through lower energy consumption, reduced waste and lower carbon emissions. 

Yesterday, the company announced the results of its recent feasibility study (DFS). 

It said the DFS confirms Titan as a large-scale, technically robust and high-return critical minerals project designed to produce titanium, zircon and a heavy rare earth concentrate from a single domestic resource in the United States.

The Study underpins an initial 14-year mine plan based entirely on Proved and Probable Ore Reserves, with no Inferred Mineral Resources included in the Production Target.

Bell Potter weighs in 

Following the announcement, the team at Bell Potter provided updated guidance on this ASX materials stock. 

The broker said the company now has a study to anchor partnership and funding discussions. 

While the DFS outlines a timeline with development commencing in early 2027, we do not expect IPX will commit to the project in the absence of a minimally or non-dilutive funding solution. 

The main game for IPX remains the build-out of its Titanium Manufacturing Campus, which is targeting 1,400tpa capacity in 2027 and has a longer-term target of +10,000tpa powder capacity by 2030.

Compelling upside for this ASX materials stock

Based on this guidance, Bell Potter has retained its speculative buy rating on IperionX. 

The broker also has a 12 month price target of $8.25, indicating 46% upside from current levels. 

IPX has the potential to disrupt the incumbent titanium supply chain through materially lowering production costs and manufacturing waste.

The company will incrementally expand capacity and progress commercial relationships with aerospace, automotive, luxury goods and government end users. IPX will benefit from increased defence sector spending and with its focus on domestic US manufacturing.

The post With 46% potential upside, this ASX materials stock is a compelling buy appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.