What are the best ASX Resources Stocks for FY25? Here are our top 4 picks!

Nick Sundich Nick Sundich, July 3, 2024

With the start of a new financial year, here are our best ASX Resources Stocks for FY25!

 

The 4 best ASX Resources Stocks for FY25

 

Metals Acquisition (ASX:MAC)

Let’s start our list of best resources stocks with a copper miner – Metals Acquisition. This company is not just any copper miner, but one that owns one of the most famous copper mines in Australia. Namely, the Cornish, Scottish and Australia (CSA) copper mine, which it bought from Glencore in June 2023. The mine was named after the nationalities of its first owners. CSA lies 11km northwest of the NSW town of Cobar and has been producing high-grade copper for almost 60 years. The company expects 38-43,000t in 2024, 43-48,000t in 2025 and 48-53,000t in 2026.

One downside to the project was that it was only projected to last until 2029. That is, until last month when it updated its Resource, which allows for an extension of its life until 2034. It has 8Mt at 5.2% for 413,000t of copper. 4.7Mt at 4.9% for 229kt of copper is Measured and Indicated. There has been limited exploration away from known deposits, and the company has indicated this is a route it could take.

Copper has been volatile, but is currently at levels not seen in 2 years, and expected to play a major role in decarbonisation. And don’t be surprised to see this company buy further assets, including potentially neighbouring Aurelia (ASX:AMI).

 

Capricorn Metals (ASX:CMM)

We couldn’t write an article of best ASX resources stocks to buy in FY25 without including a gold stock. Capricorn Metals is in a unique position of having a producing gold mine, and being about to bring a second gold mine into production that will be even better than the second. Its Karlawinda Gold Mine, near Newman in WA’s Pilbara, produces over 100,000 ounces a year. And its Mt Gibson project will be bought into production in the next couple of years. Specifically, Capricorn is hoping to commence production within 12 months of completing the permitting process, which it has just commenced.

The company has built up a 1.45Moz Ore Reserve Estimate, with an operation delivering A$1.2bn in free cash flow and with an NPV of A$828m. It anticipates an average of 152kozpa for the first 7.5 years and a full mine life of 10 years. The development is fully funded with A$258m banked up to December 2023.

 

Black Rock Mining (ASX:BKT)

Black Rock Mining (ASX:BKT) is developing the Mahenge Graphite Project in Tanzania. It is hoping to capitalise on the hot demand for battery metals such as graphite, aided by Tanzania coming back into favour as a mining investment destination.

Mahenge has a JORC 2012 resource of 212 million tonnes at 7.8% Total Graphitic Content (TGC) and reserve of 70 million tonnes at 8.5% TGC. That reserve is so big, it’s the second largest graphite reserve in the world, while the resource makes it the fourth largest. 

The Definitive Feasibility Study (DFS) has laid out the blueprint for an initial mining operation worth US$1.4bn in Net Present Value – taking into account the government’s 16% stake. This represents a 36% IRR and a 61% AISC margin. To top it all off, Black Rock has an offtake agreement with South Korean industrial giant Posco for its graphite, and Posco is a 12% shareholder in the company.

Black Rock’s share price has suffered because it has taken longer to secure funding and to get to production than investors had anticipated. However, we think Black Rock can re-rate in 2024 as the graphite outlook comes to fruition and it secures funding. The target of first production in CY26 was reaffirmed by the company last month, and it has secured an initial US$59.6m from the Development Bank of Southern Africa.

 

Boss Energy (ASX:BOE)

Uranium is another commodity that deserves a spot on our list of best resources stocks. It has been in the spotlight and is having a good time, given the decarbonisation thematic. A difference with this sector is that a high proportion of ASX companies aren’t explorers but companies with existing mines that are looking to bring them back into production after they were mothballed due to low prices.

Boss Energy is one such company. It has the South Australian Honeymoon Uranium Project since acquiring it 2015. The deposit, which has a JORC Resource of 71.6Mlb at an average grade of 620ppm, has lied dormant for a decade since the previous owners mothballed it due to low prices.

Boss has gradually worked towards bringing it back into production completing feasibility studies, raising capital and undertaking infrastructure construction works at the project. Mining re-commenced just a few months ago and the first sale will occur early in FY25.

It is anticipated that the mine can last for 11 years, produce 21.81Mlb, with an IRR of 47.1% and a pre-tax NPV of A$412m (using a US$60/lb spot price and an 8% discount rate). It anticipates low capital costs of just US$80m and US$580m in free cash flow over the life of the project.

On top of all this, the company recently expanded its portfolio, buying 30% of a project in South Texas with a resource of 3.41m pounds at 0.109% and has also just re-tarted mining? Production will ramp up to 1.5Mlb a year, with Boss keeping sale and marketing rights over its 30% share.

 

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