Why Mineral Resources shares could rocket 70%+

Bell Potter thinks this miner's shares are dirt cheap at current levels.

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Mineral Resources Ltd (ASX: MIN) shares were on fire last week.

So much so, the mining and mining services company's shares are up 25% over the past five sessions.

But if you thought the gains were over, think again.

That's the view of analysts at Bell Potter, which believe the ASX 200 mining stock is severely undervalued at current levels.

What is the broker saying?

Bell Potter highlights that Mineral Resources has announced Foreign Review Investment Board (FIRB) approval for the sale of a 49% stake in the Onslow Iron Haul Road and has highlighted significant cost savings. It said:

MIN announced receipt of FIRB approval for the sale of 49% of the Onslow Iron Haul Road. Following the approval, upfront consideration of $1.1b is expected to be received within 3 weeks. On cost reductions, MIN identified $300m in FY25 costs savings, without impacting production guidance, with more being investigated.

The broker believes this means that there will be no need for a capital raising. It adds:

MIN reiterated that it has many non-dilutionary options to release capital, which could be interpreted as signalling that MIN has no plans to raise new equity capital, and foreshadow further asset sales to release capital.

Mineral Resources shares tipped to rocket

In light of the above, Bell Potter has reaffirmed its buy rating and $66.00 price target on its shares.

Based on the current Mineral Resources share price of $38.27, this implies potential upside of 72% for investors over the next 12 months.

Summarising the above, the broker said:

MIN's share price weakness is driven by the combination of its net-debt level, and weak commodity prices and sentiment. Management expects Mining Services EBITDA of $1b per annum from FY26, which will be foundational to deleveraging the balance sheet. MIN's share price appreciated 16% on the Business Update, a very-strong response to (1) a well guided capital release, and (2) speculation of a modest quantity of marginal Chinese lithium production suspension.

And given its belief that lithium prices will improve soon, Bell Potter appears to believe that Mineral Resources' shares could rally strongly when good news starts flowing. It adds:

The response was indicative of how sensitise the share price is to good news on the balance sheet and commodity sentiment. Options for MIN to enhance the balance sheet include: (1) refinancing debt to delay the maturity schedule, with first Notes redeemable at par-value in May 2025, (2) releasing capital by selling the Onslow ~$800m carried expenditure loan, and (3) releasing capital by selling interests in its Energy assets. We'd expect these options and others to be under active consideration.

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