If you are looking for a combination of big returns and some mining sector exposure, then it could be worth looking at Develop Global Ltd (ASX: DVP) shares.
This ASX mining stock is focused on the exploration and production of future-facing metals through the Sulphur Springs copper-zinc-silver project and the Pioneer Dome Lithium project in Western Australia, and the Woodlawn zinc-copper project in New South Wales.
The company also provides underground mining services to companies such as Bellevue Gold Ltd (ASX: BGL), Mineral Resources Ltd (ASX: MIN) and Westgold Resources Ltd (ASX: WGX).
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What is the broker saying about this ASX mining stock?
Bell Potter is very positive on the company. It was pleased to see that a $100 million loan facility and five-year offtake agreement has just been signed for the Woodlawn mine. It said:
DVP has announced that the documentation of the commercial terms for the A$100m loan facility and five-year offtake agreement for Woodlawn concentrate production has been finalised with Trafigura, one of the largest global commodity trading firms.
The facility and offtake agreements are critical de-risking milestones for the restart of operations at Woodlawn, with Trafigura a credible counterparty. We see scope for further commercial dealings between Trafigura and DVP for the development of Sulphur Springs and Pioneer Dome. The loan, together with cashflow from DVP's Mining Services business and cash at bank ($30.5m at 30 September 2024), should more than satisfy all capital expenditure requirements.
Time to buy
Bell Potter points out that production should be starting in the coming months, leaving the company well-placed to start generating cash flow in 2025. It adds:
DVP is also making rapid progress with its plant modifications, which are being implemented by GR Engineering (GNG; not rated) and DVP staff. Pleasingly, plant refurbishment is currently 50% complete and is on time and budget. Ore productioœn is scheduled to commence in the March 2025 quarter with first concentrate production and cashflow anticipated in the June 2025 quarter (previously mid-CY25).
In light of the above, the broker has retained its buy rating and $3.50 price target on the ASX mining stock. Based on its current share price of $2.46, this implies potential upside of 42% for investors over the next 12 months.
Commenting on its buy rating, the broker said:
DVP has demonstrated impressive execution of workflows to date to enable a timely and within-budget restart of operations at its flagship Woodlawn operations. Ramping production in FY26 is expected to coincide with increasing activity at the Mining Services business, delivering a transformation in the company's EPS outlook.
