ASX mining shares have been running hot and bargain hunters will probably need to start looking among small caps shares to find value.
The bull run in the sector is triggered by the surge in commodity prices. Iron ore, copper and other metals have either broken new records or are close to setting fresh highs.
This is why the Fortescue Metals Group Limited (ASX: FMG) share price, Rio Tinto Limited (ASX: RIO) share price and BHP Group Ltd (ASX: BHP) share price have outperformed the S&P/ASX 200 Index (Index:^AXJO) in the past year.
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Smaller ASX miners could provide better value
But most experts are loath to recommend you chase these big miners higher. Talk about FOMO!
On the other hand, those willing to look at the smaller end of the market could still find a nugget or two.
One possible small ASX miner is the BCI Minerals Ltd (ASX: BCI) share price. While the shares have doubled over the past 12-months, Bell Potter reckons it could go much higher.
Salt and fertilizer provides boost
The broker bolstered it 12-month price target on the BCI share price to $0.57 from $0.50 after management provided an update on its projects.
The miner released its Mardie Salt and SOP project Optimised Feasibility Study (OFS) highlighting a 20% increase in plant throughput capacity.
The upgrade will lift steady-state salt production to 5.35 million tonnes per year (Mtpa) from 4.5Mtpa. SOP production is expected to increase to 140,000 tonnes a year (ktpa) from 120ktpa.
"BCI combines an iron ore royalty-like business with a large scale salt and fertiliser project," said Bell Potter.
"BCI's current EV is around 4x its 2022 iron ore EBITDA alone. The optimised Mardie Salt and SOP Project has the potential to add significant value."
Beating on two fronts
Meanwhile, Macquarie Group Ltd (ASX: MQG) is urging investors to buy the Champion Iron Ltd (ASX: CIA) share price after it posted a better-than-expected quarterly production report.
"Production and shipments of ~2.0mt were above our forecasts in 4QFY21, and cash costs also came in 7% lower than our expectations," said Macquarie.
"Despite the COVID-19 interruptions in 1QFY21, CIA has produced and shipped at a rate higher than the current nameplate capacity of 7.5mtpa."
The lower costs are noteworthy as many of its peers are struggling with cost inflation.
Macquarie's 12-month price target on the Champion Iron share price is $8 a share.
