Austral Resources Australia Ltd (ASX: AR1) recently reported initial drilling results from its Snow Queen prospect, and the copper grades reported have one broker sitting up and taking notice.
The team at Shaw and Partners had a look at the drilling results announced this week and has maintained their buy recommendation and a very bullish share price, which we'll get to later.
First, let's look at what was announced earlier this week by the company.
Image source: Getty Images
Exceptional copper grades
Austral said the first drill hole at Snow Queen hit 10m of copper mineralisation at a grade of 7.52% from a depth of 35m, including 4m at 15.9%.
The Snow Queen prospect is also only 60km from the company's Rockland processing facility, the company said.
Austral Chief Operating Officer Shane O'Connell said regarding the result:
This result is a clear demonstration of Austral's ability to generate and drill high-quality copper targets within our tenure. Snow Queen sits within a broader portfolio of satellite opportunities that underpin our strategy of building regional scale around the Rocklands Processing Facility. As an established copper producer, Austral is focused not only on discovery but on converting these opportunities into mineable inventory that can be efficiently integrated into our existing production and processing infrastructure. This producer mindset ensures that exploration success is aligned with practical development pathways and near-term value realisation.
Mr O'Connell said the company saw significant value in testing these targets, "with the aim of identifying additional sources of copper mineralisation that could complement and sustain our current operations''.
Australia said Snow Queen was just one of 35 historical copper workings it was aiming to drill test over the next 12 to 18 months.
Shares looking cheap
The analyst team at Shaw and Partners said the Snow Queen result was an encouraging start to a broader regional exploration program.
They said regarding the Snow Queen result:
This is genuinely high grade in a global context where there have been no major, tier one, copper discoveries in the past decade. Although just one hole, the result validates the targeting model and gives AR1 good reason to continue drilling. A follow-up hole has already been completed with assays pending in the next 2-4 weeks.
The Shaw team said the infrastructure pathway to production would be straightforward given the prospect's proximity to production facilities.
The Shaw team added:
Austral Resources is building one of Australia's most compelling copper growth stories against a backdrop of strong copper demand and increasingly tight supply.
Shaw has a price target of 42 cents for Austral shares, compared with 9.8 cents currently.
Austral is currently valued at $227.1 million.
