AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
Analysts at Goldman Sachs have conducted an in-depth analysis of the project pipelines of Rio Tinto (RIO) and BHP in a report, estimating each company’s project pipeline to be worth approximately $50 to $60 billion (excluding maintenance capital expenditures). Despite both mining companies spending around $10 to $11 billion annually, it is anticipated that Rio Tinto will widen the gap with BHP in terms of production (copper equivalent) and free cash flow over the next five years.
Rio Tinto’s copper production is expected to grow at a low single-digit rate in the coming years. From 2025 to 2030, Rio Tinto’s copper equivalent production is projected to increase by 3-4% annually. Cumulatively, Rio Tinto’s copper equivalent production is expected to grow by about 20% by the end of this decade.
Given the positive outlook for copper prices, this is good news for Rio Tinto and its shareholders. From a capital management perspective, based on assumptions, Rio Tinto could maintain a 60% dividend payout ratio, with a medium-term dividend yield of approximately 6-8%.
In light of the above, Goldman Sachs reiterated its buy rating on Rio Tinto’s stock this morning, with a target price of $143.50. With Rio Tinto’s current stock price at $117.23, this suggests a potential upside of about 22.5% over the next 12 months.
Furthermore, the total potential return for Rio Tinto’s stock is expected to increase to about 28% within 12 months. Rio Tinto’s stock remains undervalued (although the gap has narrowed over the past year), trading at about 0.7 times its net asset value.
Additionally, according to a document submitted to the London Stock Exchange on Thursday, J.P. Morgan has acquired a 5.36% stake in Rio Tinto. This makes J.P. Morgan the second-largest shareholder in Rio Tinto, behind Vanguard Group, which holds a 6.02% stake.
Rio Tinto has also recently officially announced the completion of its acquisition of Arcadium Lithium, with the transaction amounting to a hefty $6.7 billion. This deal marks a strategically significant step forward for Rio Tinto in its lithium business layout.
