2 Undervalued Lithium Stocks With Room to Grow
The lithium sector has always been cyclical. Prices soar when demand from electric vehicles (EVs) and energy storage ramps up, only to cool off when supply outpaces expectations. For investors, this volatility can feel intimidating—but it also creates opportunity. When lithium cycles turn, those who do the homework on balance sheets, cost positions, and upcoming catalysts are usually the first to benefit.
Right now, two ASX-listed companies look particularly interesting: Mineral Resources (ASX: MIN) and Lithium Energy (ASX: LEL). Both are trading at inflection points, where near-term challenges mask longer-term upside. While MinRes is simplifying and de-risking its portfolio to be ready for a price upturn, Lithium Energy has reshaped its balance sheet and is actively hunting for new growth avenues. Let’s dive into why these two undervalued lithium stocks deserve a closer look.
Mineral Resources (ASX: MIN) – A diversified engine tightening costs
Mineral Resources, or MinRes, is one of Australia’s most diversified mining names. It has cash flow coming not just from lithium, but also from iron ore and its high-margin mining services division. The company has had a difficult FY25 on paper, with lower commodity prices, impairments, and even a pause on dividends. But beneath the headlines, the business is actively reshaping itself for the next upcycle.
FY25 Snapshot
Revenue: $4.5 billion
Statutory NPAT: −$896 million, hit by $632 million in impairments
Mining Services: Delivered record volumes and $737 million in underlying EBITDA, up 34% year-on-year
While earnings from lithium and iron ore took a hit, Mining Services provided resilience—a reminder of how important diversification is in cyclical markets.
Operating Momentum
A key highlight has been the Onslow Iron project, which reached a 35Mtpa annualised run rate in August 2025, with full nameplate capacity targeted in Q1 FY26. This is a big deal: iron ore remains a strong cash engine, and lower FOB cost guidance ($54–$59/t at Onslow) positions the project competitively.
At the same time, MinRes has reset lithium costs:
Wodgina: $730–$800/t (FOB, SC6 equivalent)
Mt Marion: $820–$890/t (FOB, SC6 equivalent)
Bald Hill: Moved to care & maintenance to preserve value
This cost discipline means that even if prices stay weak, MinRes can ride through the cycle and be in pole position when prices normalize.
Why It Looks Undervalued
Markets often focus too heavily on recent losses or paused dividends, but they miss the bigger picture. MinRes has:
Reset its cost curve for lithium assets
Proven strength in Mining Services earnings
A major new iron ore project adding volume and cash flow
If lithium prices stabilize or rise, MinRes’ scale and leverage could translate into powerful earnings torque. Add to that the optionality of restoring dividends once the balance sheet strengthens, and this is a company that looks stronger than current sentiment suggests.
Lithium Energy (ASX: LEL) – Cash in hand and optionality in play
On the other end of the spectrum sits Lithium Energy, a micro-cap company that has undergone major changes in 2025. Unlike MinRes, which is already a heavyweight, LEL is a smaller player repositioning itself for the future. What makes it intriguing is that it has used smart asset sales to build cash reserves while retaining exposure to the lithium story.
Solaroz Sale – A Balance Sheet Reset
Lithium Energy sold a large stake in its Solaroz brine project in Argentina to Chinese partners. As of April 2025, the company had received US$33.8 million (~A$52 million) in deposits and completion proceeds, plus access to a US$15 million loan to progress ongoing evaluation. The full completion is targeted for January 2026.
This transaction de-risked Solaroz while bringing in material cash, giving LEL breathing space and financial flexibility.
New Strategic Direction
With fresh cash on hand, Lithium Energy is now aiming to:
- Pursue acquisitions in lithium and adjacent battery minerals like copper, cobalt, vanadium, manganese, and rare earths
- Advance its Burke Graphite Project in Queensland, positioned as a potential future anode material opportunity
- Complete the Solaroz transaction steps while meeting ASX requirements for reinstatement to quotation
This pivot allows LEL to shop for undervalued assets at a time when many juniors are struggling, effectively buying low during a weak cycle.
Why It Looks Undervalued
Micro-caps are often punished during transition periods, as investors wait to see clear direction. But LEL already has cash proceeds banked, a lean enterprise value, and the optionality to acquire new projects at attractive prices. Add the graphite project to the mix, and you get multiple pathways to value creation. If management executes well, upside could be significant once market sentiment turns.
What Investors Should Watch
For Mineral Resources (MIN):
- Onslow Iron hitting nameplate production in FY26
- Delivery of lower lithium FOB costs at Wodgina and Mt Marion
- Any reinstatement of dividends once leverage improves
- Further portfolio streamlining or new JV deals
For Lithium Energy (LEL):
- Timing and completion of remaining Solaroz sale proceeds
- Specific acquisition targets and deal terms
- Technical milestones at Burke Graphite that open an anode pathway
- Re-listing process and market reaction to its refreshed strategy
Bottom Line
Mineral Resources and Lithium Energy offer exposure to the lithium sector, but through very different lenses. MinRes brings scale, diversified cash engines, and proven cost discipline, giving it the torque to rebound strongly when lithium prices recover. LEL, on the other hand, offers high-risk, high-reward potential: it’s smaller, but armed with cash, new strategic direction, and optionality in both lithium and graphite.
For investors willing to position ahead of the next lithium upturn, these two undervalued names could be worth adding to the watchlist. MinRes provides stability with upside, while LEL offers speculative leverage with room to surprise.
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