BHP shares may not double in 12 months but this ASX mining share could

BHP Group Ltd (ASX: BHP) shares are arguably one of the best options in the mining sector.

However, the potential upside from current levels could be somewhat limited.

So, if you are looking for big potential returns and have a high tolerance for risk, then it could be worth checking out the ASX mining share in this article.

That’s because Bell Potter believes it could more than double in value over the next 12 months.

Which ASX mining share?

The mining share that Bell Potter is recommending to investors is Minerals 260 Ltd (ASX: MI6).

It highlights that the company has released an updated mineral resource estimate (MRE), a pre-feasibility study (PFS) and a maiden ore reserve estimate (ORE) for its 100% owned, 6.2Moz Bullabulling Gold Project (BGP) in Western Australia.

While the market didn’t react positively to these releases, with its shares crashing following their release, Bell Potter remains positive and notes that they mark the delivery of key catalysts in line with guidance and major milestones in the advancement of the BGP towards development.

Bell Potter believes BGP will be a significant, high margin, long-life project. It said:

The PFS presents a compelling case for project development. It outlines a long-life, high margin gold project that positions MI6 to become a stand-alone, mid-tier gold producer. It is based on a 2.5Moz Maiden ORE that is the largest undeveloped gold Reserve in Australia not owned by an existing producer. 

Key parameters include a maiden ORE of 90Mt @ 0.86g/t Au for 2.5Moz Au supporting a 5.0Mtpa process plant producing an average of 150kozpa (years 1-10) at average All-In-Sustaining-Costs (AISC): A$2,520/oz (years 1-10) over a 19 year mine life for CAPEX of $180m preFID plus $675m (post-FID, pre-production). MI6 estimate a project NPV5 of US$2.3b and IRR of 43% using a US$3,800/oz (A$5,500/oz) gold price. The PFS does not yet incorporate upside from today’s updated MRE.

Shares tipped to more than double

According to the note, the broker has retained its speculative buy rating on the ASX mining share with an improved price target of $1.40 (from $1.35). 

Based on its current share price of 63.5 cents, this implies potential upside of 120% for investors over the next 12 months.

Commenting on its buy recommendation, Bell Potter said:

MI6 offers gold exposure via the 6.2Moz Bullabulling MRE, valuation uplift through discovery success, project advancement and de-risking as the BGP progresses towards production. MI6 holds ~$250m cash, sufficient to fund to Final Investment Decision (FID) in early CY27, long-lead items and early site works. We lift our valuation to $1.40/sh and retain our Speculative Buy recommendation.

The post BHP shares may not double in 12 months but this ASX mining share could appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.