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Why brokers love these ASX mining shares

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With the resources sector performing very strongly in 2022 and its outlook becoming increasingly positive, investors may be looking for mining shares to buy.

If you are, then you might want to take a look at the two mining shares listed below which are highly rated by brokers. Here’s what you need to know about them:

Iluka Resources Limited (ASX: ILU)

The first ASX mining share that could be in the buy zone is Iluka. It is a mineral sands and rare earths producer with a number of quality operations across South Australia, Western Australia, and Sierra Leone.

Goldman Sachs is very positive on the company due to its attractive valuation and the favourable outlook for mineral sands and its exposure to rare earths.

The broker commented: “ILU is trading at a >50% discount to RE peers and >10% discount to min sands/pigment peers on an EV/EBITDA basis. Iluka recently released a larger-than-expected maiden resource on the Wimmera rare earth (RE) & zircon deposits in Victoria containing over c.1Mt of rare earth oxides (REO) and 10.6Mt of zircon. The Wimmera deposit is an important part of ILU’s rare earth growth strategy,” Goldman added.

Goldman Sachs currently has a conviction buy rating and $12.50 price target on Iluka’s shares. This compares favourably to the latest Iluka share price of $10.09.

Another mining share that could be in the buy zone is Santos. Although its shares have risen strongly in recent months, the team at Morgans still sees plenty of value in them. Particularly given its resilient growth profile and diversified earnings base.

The broker explained: “We expect the resilience of STO’s growth profile and diversified earnings base see it best placed to outperform against a backdrop of a broader sector recovery. While pre-FEED, we see Dorado as likely to provide attractive growth for STO, while its recent acquisition increasing its stake in Darwin LNG has increased our confidence in Barossa’s development.”

Morgans has an add rating and $9.00 price target on its shares. This compares to the latest Santos share price of $7.40.

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