Austral Resources Australia Ltd (ASX: AR1) is deeply undervalued according to the team at Shaw and Partners, which said in a recent report that they believe the stock could more than quadruple.
So where do they get this confidence from?
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Company reset succeeds
Austral has been pretty active of late, releasing its full-year profit report, but also acquiring a copper deposit outright from Glencore and raising a tranche of money, which will leave the company debt-free and cashed up to focus on production.
So let's go through these in sequence.
Firstly, the company announced last week that it had made a net profit for the year of $11.9 million, up from a loss of $22.6 million the previous year.
Australia chair David Newling said it was a turning point for the company.
These results are the outcome of a long period of hard work and perseverance by the company's employees, contractors and stakeholders. Following the re-quotation of the company's securities on the ASX in early November 2025, it is extremely pleasing to report to our loyal shareholders that our revised strategy has enabled a financial reset of the company. Looking forward, and acknowledging our recent $65m placement in February 2026, the company is fully funded and ready to accelerate its production, production capability and exploration potential. Given the copper industry's positive tailwinds, we find ourselves very well positioned to achieve our vision of becoming Australia's next mid-tier copper powerhouse.
Regarding the capital raise, the company is raising $65 million at 9 cents per share, with $15 million coming from the Queensland Government's Critical Minerals and Battery Technology Fund.
The money will be used to accelerate copper production at the company's Rocklands and Mt Kelly mines, and to fund exploration at the Lady Annie pit extension.
Once the capital raise is complete, the company will be debt-free with $97 million in cash.
The company also said it was acquiring the Lady Loretta deposit from Glencore, in an announcement made in mid-February.
Shares looking cheap
Shaw and Partners has looked at this sequence of events and said in a note to clients that the ASX copper company has made the transition from a debt-laden junior mining company in a long-term suspension from trade, "to a well-capitalised producer with enormous growth potential''.
The Shaw team added:
Austral is targeting production 50kt of copper per annum by late 2027. This will be achieved through a dual strategy focusing on resource development and exploration, particularly at Lady Loretta and Mount Clark/Flying Horse, as well as M&A and regional consolidation. Austral is positioning Rocklands as a critical regional processing hub, leveraging the fact that it is the only facility in NW QLD with excess third-party capacity.
Shaw said the company was also looking to process ore for third parties, targeting 70% of their own ore and 30% external ore, with a refurbishment of its Rocklands production facility expected to be finished by mid-2027.
Shaw has a price target of 42 cents on Austral shares, which would be a huge 356.5% return if achieved.
