ASX mining shares can offer great opportunities if investors buy them at the right time. I'm going to dig into two that might be strong performers over the long term.
It's to be expected that mining shares go through volatility because of how much commodity prices fluctuate month to month, and how mining developments can excite or hurt investor confidence.
With that in mind, I'm going to talk about two ASX mining shares that I think could do well over the next two or three years.
Aeris Resources Ltd (ASX: AIS)
Aeris has several operating mines, a development project and a portfolio of exploration targets in Queensland, Western Australia, New South Wales and Victoria. It's involved with resources including copper, gold and zinc.
The ASX mining share has guided FY24 production of 40kt to 50kt copper equivalent, which would be a reduction from 51.5kt in FY23, though the Tritton copper production is forecast to increase "significantly". This could offset the company's halt of mining operations at its Jaguar site until a restart can be justified with improved economics.
Aeris has the backing of major shareholder Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which has provided a $50 million working capital facility.
I like the company's exposure to copper, which has a promising outlook thanks to the world aiming to decarbonise in the coming years, with a focus on electricity.
As an investor, I think it's the long-term that's the most important. What happened in FY23, or what will happen in FY24, won't define the company's long-term future, in my opinion.
Estimates on Commsec suggest that in FY25, Aeris could make earnings per share (EPS) of 13 cents. I think there's a good chance of it achieving that, particularly if more production comes online. It'd be valued at just 2x FY25's estimated earnings if it achieves that projection.
Lynas Rare Earths Ltd (ASX: LYC)
Lynas produces a number of commodities used in advanced technologies, such as smartphones, electric vehicles and wind turbines. Its production includes Neodymium and Praseodymium (NdPr), Lanthanum (La) and Cerium (Ce).
Over the past 12 months, the Lynas share price has dropped around 30%, making it much cheaper than it was a year ago.
The ASX mining share has seen a reduction in profitability after a fall in lower market prices for rare earth materials. However, in the three months to June 2023, it achieved its highest-ever quarterly production of NdPr of 1,864 tonnes, and Mt Weld delivered a record quarterly concentrate production.
Lynas also recently made an announcement regarding the construction of the heavy rare earths component of the US processing facility in Texas. The contract with the US Department of Defense has been updated to say that all of Lynas' "properly allocable construction costs will be reimbursed".
A contribution by the US government of approximately US$258 million is currently allocated to the project, up from US$120 million announced in June 2022.
Lynas is working on a number of ways to grow earnings. According to Commsec, EPS is expected to improve from 33 cents in FY23 to 44 cents in FY24 and then 65.2 cents in FY25. This puts the Lynas share price at just 10x estimated earnings for FY25.
