2 dirt cheap ASX mining stocks to buy for massive returns

Analysts expect ~30%+ returns from these stocks over the next 12 months.

| More on:
Two young African mine workers wearing protective wear are discussing coal quality while on site at a coal mine.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There are a lot of options in the mining sector on the Australian share market.

But which ASX mining stocks could be cheap at current levels? Let's take a look at two that analysts rate as buys with major upside potential. They are as follows:

Chalice Mining Ltd (ASX: CHN)

The first ASX mining stock that could be cheap is Chalice Mining. It is the mineral exploration company behind the 100%-owned Gonneville PGE-Ni-Cu project in Western Australia.

Bell Potter currently has a speculative buy rating and $5.15 price target on its shares. This suggests that its shares could rise almost 170% from current levels.

The broker is very positive on the Gonneville project and believes it is a world class critical minerals project. It said:

CHN is sufficiently funded to complete the PFS by mid-2025 and lay out a clear case for the project's value ahead of any potential transaction via its strategic MOU with Mitsubishi Corporation. CHN also has sufficient funding to maintain an active exploration program beyond 2028 and retain capacity to pursue exploration success.

We do not see CHN needing to raise equity in the foreseeable future, thereby protecting shareholders from dilution while providing exposure to a PGE market which is, in our view, at cyclical lows and vulnerable to supply shocks. Recent share price appreciation reflects CHN as a long-dated option on PGE and nickel prices, in addition to its exposure to a world class critical minerals project.

Iluka Resources Limited (ASX: ILU)

Goldman Sachs likes this mineral sands producer and sees it as a cheap ASX mining stock to buy now.

It currently has a buy rating and $7.70 price target on Iluka's shares. This implies potential upside of almost 30% for investors.

Goldman notes that the company is trading with a very high free cash flow (FCF) yield, which it expects to be supportive of 5%+ dividend yields in FY 2025 and FY 2026. It also sees a lot to like from its rare earths (RE) plans. It said:

ILU is trading on a FCF yield of ~12% in 25/26 without the RE refinery capex. We are positive on ILU's project pipeline and forecast >20% production growth in mineral sands volumes, ~18ktpa of Rare Earths (~4ktpa of high value NdPr) over the next 5yrs.

We think ILU's Eneabba RE refinery is a strategic asset considering it will be only the third significant western world RE refinery. Despite the recent capex increase to A$1.7-1.8bn we continue to think the economics are attractive when including the large Wimmera project (GSe A$0.93bn capex, 30yr life project with heavy rare earths and ~70ktpa of zircon) as feed in the base case with a long run NdPr price of ~US$70/kg (real $, from 2028) required to deliver a ~15% IRR on our estimates.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Rio Tinto share price tumbles on CEO bombshell news

The mining giant is now looking for a new leader.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

What's going on with the Fortescue share price today?

This mining giant is making changes to its leadership.

Read more »

Happy construction worker at a building site with a group of workers at the background.
Materials Shares

After its result, does Macquarie rate James Hardie shares a buy, hold or sell?

The company announced its FY25 earnings on Wednesday.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Fortescue shares fall on Iron Bridge blow

Iron Bridge is taking longer to ramp up than planned.

Read more »

Three miners looking at a tablet.
Materials Shares

Buy Rio Tinto shares for a 23% return

Let's see which broker is tipping this mining giant as a top buy.

Read more »

A bricklayer peers over the top of a brick wall he is laying with a level measuring tool on top and looks critically at the work he is carrying out.
Materials Shares

Brickworks shares have surged 15% in a month. Are they still good value according to Macquarie?

Here's what this broker has to say about the stock.

Read more »

A man checks his phone next to an electric vehicle charging station with his electric vehicle parked in the charging bay.
Materials Shares

Are Pilbara Minerals shares too cheap to ignore?

A leading broker has given its verdict on this beaten down lithium miner.

Read more »

An unhappy man in a suit sits at his desk with his arms crossed staring at his laptop screen as the PointsBet share price falls
Materials Shares

Does Macquarie rate James Hardie shares a buy, hold or sell?

The company is set to report FY25 earnings this week.

Read more »