The mining sector has been a great place to invest this year. Thanks to rising commodity prices, mining shares have been pushing higher while the rest of the market seemingly crumbles.
The good news is that it may not be too late to invest in the sector. For example, the three ASX mining shares listed below have been tipped as buys recently. Here's what you need to know about them:
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Lake Resources N.L. (ASX: LKE)
If you're interested in gaining exposure to lithium, then Lake Resources could be worth a look. Analysts at Bell Potter are positive on the lithium developer and have put a speculative buy rating and $1.82 price target on its shares.
The broker said: "LKE's key project is the 50ktpa lithium carbonate Kachi Lithium Brine Project in Argentina. This project is expected to employ direction lithium extraction technology which has enormous ESG benefits compared with incumbent brine and hard rock lithium production methods. With this development project, uncommitted product offtake and an independent share register, LKE has strategic appeal."
Rio Tinto Limited (ASX: RIO)
The team at Goldman Sachs is bullish on this mining giant. Its analysts currently have a buy rating and $131.50 price target on its shares. Goldman likes Rio Tinto due to its valuation, strong free cash flow, positive iron ore price outlook, and its return to production growth in 2022. In addition, the broker highlights the miner's compelling low emission aluminium exposure.
It commented: "In addition to copper production growth, Rio has one of the highest margin, lowest carbon emission aluminium businesses in the world, with over 2.2Mt of Ali production powered by hydro, and we think ELYSIS inert anode technology could be worth billions of $. Aluminium will contribute 20% of RIO's group EBITDA and generate US$3bn of FCF in 2022 on our estimates."
South32 Ltd (ASX: S32)
Goldman is also a fan of this diversified miner. The broker currently has a conviction buy rating and $5.90 price target on South32's shares. Its analysts like the company due to its attractive valuation and strong free cash flow generation.
It explained: "The stock is trading at c. 0.9x NAV (A$5.34/sh) including the completion of the acquisition of a 45% stake in the Sierra Gorda copper mine in Chile.:
"We forecast a FCF yield of c. 20% in FY23 (over 25% at spot), driven mostly by exposure to base metal price momentum, met coal, a c. 30% or c. 280ktpa increase in aluminium production over the next 18 months from the Alumar restart & c. 17% increase in Mozal stake, creep in nickel from Cerro Matoso and lead/zinc/silver from Cannington, and uplift from the Sierra Gorda acquisition," it added.
