Kali Metals Ltd (ASX: KM1) shares have caught the eye with some sensational gains this week following the lithium explorer's IPO.
If you missed out on those gains, don't worry. That's because Bell Potter is tipping a small cap ASX lithium stock to more than double in value from current levels.
That lithium stock is Delta Lithium Ltd (ASX: DLI), which owns the Mt Ida Lithium and Yinnetharra Lithium Projects in Western Australia.
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What is the broker saying about this ASX lithium stock?
Bell Potter was pleased with the recent announcement of the initial mineral resource estimate (MRE) for its Yinnetharra project. It notes that its combined indicated and inferred resources totalled 25.7Mt at 1.0% Li2O across five deposits.
This is a similar scale to the 2018 MRE of Bald Hill (26.5Mt at 1.0% Li2O), which is owned by Mineral Resources Ltd (ASX: MIN).
In addition, the broker appears to believe that recent weakness has created a compelling buying opportunity for investors with a high tolerance for risk. Particularly given how there are a number of potentially positive catalysts on the horizon. It said:
We maintain our BUY (Speculative) recommendation for DLI, in accordance with our ratings structure. DLIs' share price declined materially in 2HCY23 as on-market strategic investment ended, and lithium prices and sector sentiment declined. We see upside in DLIs' share price through CY24 with i) expected positive re-valuation catalysts from Yinnetharra exploration and Resource growth, ii) our forecast improvements in lithium prices, and, iii) the possibility of further strategic investment / M&A activity, which could be catalysed by further discovery, or improving sector sentiment.
Bell Potter has a speculative buy rating and 75 cents price target on the ASX lithium stock. Based on its current share price of 34 cents, this implies a potential upside of 120% for investors over the next 12 months.
