PLS and LYC are overvalued, yet FMG and BOE are cheap… ASX mining stocks valuation insights

Is your favourite ASX mining stock cheap or expensive? Does its share price fully reflect the current commodity pricing environment, or is it trading at a major discount? There are many, and often complex ways financial analysts attempt to answer these questions.

One of the simplest tools – and possibly one of the most useful comparative tools – is implied spot pricing. This financial metric aims to highlight just how far the valuations of a group of stocks in the same commodity group have drifted from that commodity’s spot price.

In this article, we’ll investigate the concept of implied spot pricing with the help of a new research report on the topic from major Australian-based research and broking house Barrenjoey. In their report, titled "Metals & Mining, Joey's what's priced in?", Barrenjoey investigates the implied spot pricing of dozens of major ASX mining stocks across several commodity groups including iron ore, metallurgical coal, copper, uranium, lithium, rare earths, and gold.

What is implied spot pricing?

At its simplest, implied spot pricing reflects the commodity price the market is assuming based on a company’s current share price.

Here’s how it works: Analysts start with a valuation model, usually a discounted cash flow (DCF) or net present value (NPV) analysis. They ask, “All things being equal, what commodity price is being assumed by today’s share price?”

• If a company’s share price implies a commodity price below the commodity’s spot price, it means investors are pricing the company’s shares too cheaply.

• If a company’s share price implies a commodity price above the commodity’s spot price, it means investors are pricing the company’s shares too highly.

• If a company’s share price implies a commodity price roughly the same as the commodity’s spot price, it means investors are pricing the company’s shares about right.

Think of it this way:

Consider that implied spot pricing is a high-level financial metric. “High-level” means it provides a broad overview of a mining stock’s valuation that enables easy comparison against peers. But it should never be used in isolation.

There are many other valuation metrics – like cost curves, capital intensity/balance sheet strength, growth pipelines, and project risks – that explain why a stock might trade above or below its implied spot pricing. But, for retail and institutional investors alike, implied spot pricing offers a quick, ready reckoner:

• It helps spot mismatches: If two lithium stocks have vastly different implied spot pricing, then it may highlight a major valuation discrepancy in the sector.

• It clarifies sentiment: If all lithium stocks show implied spot pricing well above the current spot price – then it may point to broad confidence in the outlook for this commodity – or that investors have grown overly optimistic towards the lithium sector. The opposite is also true, i.e., if all lithium stocks show implied pricing well below the current spot price – then it may be a signal investors have grown overly pessimistic towards the lithium sector.

• It guides portfolio positioning: Investors can decide whether they’re comfortable paying for future upside or whether expectations look too stretched. Conversely, it helps identify if there are mis-pricings within and across commodity groups.

In short, implied spot pricing doesn’t just show where commodities are trading, but how much hope, hype, and/or doubt is embedded in the share prices of various mining companies.

Which ASX mining stocks does Barrenjoey view as undervalued / overvalued?

Barrenjoey’s latest snapshot shows some striking divergences between spot and implied prices across the ASX mining landscape.

Copper: Mixed signals

• Spot copper price: US$4.53/lb
• Implied spot copper price range: US$3.90–4.95/lb

With the exception of 29Metals (ASX: 29M), major ASX copper stocks are trading at an implied premium to spot, signalling potential overvaluation – or that the market is forecasting higher copper prices ahead.

Gold: A wide spectrum of market expectations

• Spot gold price: US$3,643/oz
• Implied spot gold price range: US$2,300–4,275/oz

Companies like Greatland Gold (ASX: GGP) screen cheaply with implied gold around US$2,300/oz, well below spot. Essentially, GGP’s share price could increase by 58.4% and still be considered fair value compared to the current spot gold price. At the other end of the spectrum sits Regis Resources (ASX: RRL) with an implied gold price north of US$4,200/oz – suggesting investors see improved performance ahead to justify its implied-to-spot price premium.

Iron ore: Market caution

• Spot iron ore price: US$106.35/t
• Implied spot iron ore price range: US$67–88/t

Major ASX iron ore stocks are pricing in a lower iron ore price than today’s spot, potentially reflecting scepticism about the sustainability of current spot pricing. This is typical for iron ore stocks over the last few years, however, with most research analysts and government organisations forecasting an iron ore price closer to US$80-90/t.

Metallurgical Coal: Screening as moderately cheap

• Spot metallurgical coal price: US$187.30/t
• Implied spot metallurgical coal price range: US$163–182/t

Generally, major ASX coal stocks are trading at an implied discount to spot, signalling potential undervaluation – or that the market is forecasting lower coal prices ahead.

Lithium: Betting on a rebound

• Spot spodumene price: US$800/t
• Implied spot spodumene price range: US$1,075–1,350/t

Here lies the biggest mismatch between implied and spot pricing across the commodity groups. Investors are assuming a 25–40% recovery in the spodumene price – or that ASX lithium stocks are grossly overvalued compared to the current spot spodumene price.

Rare earths: Divergent signals

• Spot NdPr price: US$70.85/kg
• Implied spot NdPr price range: US$46–90/kg

Iluka (ASX: ILU) screens as substantially undervalued, with its peers Meteoric Resources (ASX: MEI) and Lynas Rare Earths (ASX: LYC) appearing overvalued. However, it’s questionable whether the NdPr price is the best basis for this comparison, as ILU has significant exposure to other rare earth minerals. It’s also fair to say that investors may be pricing higher spot prices for rare earths down the track.

Uranium: Fair value

• Spot uranium price: US$75/lb
• Implied spot uranium price range: US$73–88/lb

With the exception of Boss Energy (ASX: BOE), major ASX uranium stocks are trading at an implied premium to spot, signalling potential overvaluation – or that the market is forecasting higher uranium prices ahead.

Barrenjoey’s commodity price forecasts vs what’s priced in

That last point, a point made often through the analysis today – that investors are pricing a higher/lower commodity spot price down the track – is a critical component of understanding implied spot versus spot discrepancies. To help with this layer of analysis, I note Barrenjoey’s commodity price forecasts.

Assume:

• If Barrenjoey’s forecast is higher than a stock's implied spot price, it points to improved value for the stock
• If Barrenjoey’s forecast is lower than a stock's implied spot price, it points to diminished value for the stock

Copper

Barrenjoey's 2026 copper price forecast is US$4.75/lb, higher than the spot price of US$4.53/lb – suggesting bullish sentiment for copper, but that most major ASX copper stocks’ valuations are likely still stretched (FFM screens cheap at an implied spot price of US$3.90/lb, but SFR, 29M, and CSC screen moderately expensive at US$4.80-4.95/lb).

Gold

Barrenjoey's 2026 gold price forecast is US$3,300/oz, lower than the spot price of US$3,643/oz – suggesting bearish sentiment for gold, but that most major ASX gold stocks’ valuations look attractive (only GMD at an implied spot price of US$3,375/oz and RRL at US$4,275/oz appear expensive).

Iron ore

Barrenjoey's 2026 iron ore price forecast is US$95/t, lower than the spot price of US$106.35/t – suggesting bearish sentiment for iron ore, but that most major ASX iron ore stocks’ valuations look attractive (RIO is most undervalued at an implied spot price of US$67/t vs MIN as least undervalued at US$88/t).

Metallurgical Coal

Barrenjoey's 2026 metallurgical coal price forecast is US$190/t, higher than the spot price of US$187.30/t – suggesting neutral sentiment for coal, but that most major ASX coal stocks’ valuations remain moderately attractive (WCH, SMR, CRN at an implied spot price of US$163-182/t).

Lithium

Barrenjoey’s 2026 spodumene price forecast is US$1,000/t, higher than the spot price of US$800/t – implying that ASX lithium stocks’ valuations still look stretched. This is perhaps the clearest indication of a sector that appears overvalued, or where investors appear overly optimistic.

Rare Earths

Barrenjoey's 2026 NdPr price forecast is US$85/kg, higher than the spot price of US$70.85/kg – suggesting bullish sentiment and that ASX rare earth stocks’ valuations look attractive (ILU scans cheap at an implied spot price of US$46/kg, MEI moderately undervalued at US$81/kg, and LYC moderately overvalued at US$90/kg).

Uranium

Barrenjoey's 2026 uranium price forecast is US$85/lb, higher than the spot price of US$75/lb – suggesting bullish sentiment and that ASX uranium stocks’ valuations look cheap (BOE at an implied spot price of US$73/lb) to fair value (PDN at US$84/lb and DYL at US$88/lb).

Conclusion: What’s priced in?

Spot prices dominate headlines, but implied spot pricing reveals the hidden consensus. Implied spot pricing is not a prediction of where commodity or share prices will go. Instead, it’s a mirror showing investors the assumptions already baked into share prices.

For resource investors, the key takeaways from today’s analysis are:

Barrenjoey’s implied spot pricing data shows that the broker presently sees the greatest value in gold and iron ore stocks, whilst lithium stocks are either grossly overvalued or appear priced for major recovery (a reasonable assumption or not?). For other commodities like copper, coal, rare earths and uranium, the valuations of ASX stocks look roughly in-line with both the broker’s and the market’s expectations.

For investors, the message from implied spot pricing is clear: Don’t just watch the rise and fall of spot commodity prices – Ask yourself what’s already priced in!?

This article first appeared on Market Index on Tuesday 16 September, 2025.