The Rio Tinto Ltd (ASX: RIO) share price has been pushing higher this week.
So much so, the mining giant's shares are now up 6% since this time last week.
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Can the Rio Tinto share price keep rising?
The good news is that Goldman Sachs believes the Rio Tinto share price has further to climb.
According to a note this morning, the broker has retained its conviction buy rating on the miner's shares with an improved price target of $129.40.
Based on where its shares are currently trading, this suggests that they could rise approximately 10.5% over the next 12 months.
But the returns won't stop there. Rio Tinto is one of the most generous dividend payers on the Australian share market and Goldman expects this to remain the case in the near term.
The broker is forecasting fully franked dividends per share of US$3.70 in FY 2023 and US$4.00 in FY 2024. Based on the current Rio Tinto share price and exchange rates, this will mean dividend yields of 4.6% and 5%, respectively.
What did the broker say?
Goldman Sachs has just visited Rio Tinto's Oyu Tolgoi (OT) copper project in Mongolia and was very impressed with what it saw. It commented:
OT is one of RIO's most important growth projects as we estimate it will generate >US$1bn of FCF in 2025, increasing to >US$2.5bn by 2026, and will more than double RIO's copper EBITDA to >30% of group on our estimates. We value OT at US$29.5bn on a 100% basis and RIO's 66% share at US$20.2bn.
The broker expects OT to support a significant increase in copper production in the future. This could also increase further thanks to its US opportunity at a project that has been described as a higher grade "twin" of OT. It adds:
OT will take RIO's copper production to over 1Mtpa (from 0.6Mt today), with potential to increase to 1.2Mtpa with projects such as Resolution in Arizona, expansion of the UG at Kennecott in Utah, the development of Winu in Western Australia and copper cathode production from heap leach technology such as Nuton. They believe Resolution is a twin of OT but with higher grades and think it is more a brownfield expansion due to the two existing shafts and tunnel etc.
All in all, if you are feeling bullish on copper because of the decarbonisation megatrend, then Goldman appears to believe Rio Tinto could be the way to gain exposure to the metal.
