There are a lot of options in the mining sector on the Australian share market.

But which ASX mining stocks could be cheap at current levels? Let's take a look at two that analysts rate as buys with major upside potential. They are as follows:

Chalice Mining Ltd (ASX: CHN)

The first ASX mining stock that could be cheap is Chalice Mining. It is the mineral exploration company behind the 100%-owned Gonneville PGE-Ni-Cu project in Western Australia.

Bell Potter currently has a speculative buy rating and $5.15 price target on its shares. This suggests that its shares could rise almost 170% from current levels.

The broker is very positive on the Gonneville project and believes it is a world class critical minerals project. It said:

CHN is sufficiently funded to complete the PFS by mid-2025 and lay out a clear case for the project's value ahead of any potential transaction via its strategic MOU with Mitsubishi Corporation. CHN also has sufficient funding to maintain an active exploration program beyond 2028 and retain capacity to pursue exploration success.

We do not see CHN needing to raise equity in the foreseeable future, thereby protecting shareholders from dilution while providing exposure to a PGE market which is, in our view, at cyclical lows and vulnerable to supply shocks. Recent share price appreciation reflects CHN as a long-dated option on PGE and nickel prices, in addition to its exposure to a world class critical minerals project.

Iluka Resources Limited (ASX: ILU)

Goldman Sachs likes this mineral sands producer and sees it as a cheap ASX mining stock to buy now.

It currently has a buy rating and $7.70 price target on Iluka's shares. This implies potential upside of almost 30% for investors.

Goldman notes that the company is trading with a very high free cash flow (FCF) yield, which it expects to be supportive of 5%+ dividend yields in FY 2025 and FY 2026. It also sees a lot to like from its rare earths (RE) plans. It said:

ILU is trading on a FCF yield of ~12% in 25/26 without the RE refinery capex. We are positive on ILU's project pipeline and forecast >20% production growth in mineral sands volumes, ~18ktpa of Rare Earths (~4ktpa of high value NdPr) over the next 5yrs.

We think ILU's Eneabba RE refinery is a strategic asset considering it will be only the third significant western world RE refinery. Despite the recent capex increase to A$1.7-1.8bn we continue to think the economics are attractive when including the large Wimmera project (GSe A$0.93bn capex, 30yr life project with heavy rare earths and ~70ktpa of zircon) as feed in the base case with a long run NdPr price of ~US$70/kg (real $, from 2028) required to deliver a ~15% IRR on our estimates.