Hot stock: Austral Resources Australia Ltd (ASX: AR1)

Copper has witnessed a healthy price action on back of surging demand from EV and chip manufacturers. Global copper smelting activities have increased in May due to the Chinese market rebound. With Shanghai coming out of lockdowns, the market experts anticipate the demand to strengthen further. On the other hand, the supply side has remained weak. Meanwhile, one Australian copper producer's share price has soared over 185% in a month, as on Friday’s close.

AR1 share price outperforming on the ASX

As of Friday (3 June) Austral Resources held a market capitalization of AU$275.77 million. The share price has been trading within the 52-week range of AU$0.150 to AU$0.650 a share. In the last thirty days, the AR1 share price has appreciated around 185%.

AR1 Price chart in comparison to ASX 200 and ASX 200 Materials Index (XMJ), as of 3 June 2022 closing

Image Source- Refinitiv

AR1 with gains of 296.88% has beaten the Australian benchmark ASX200 Index (XJO) and the Materials sector index of ASX200 (XMJ) on a year-to-date (YTD) basis. Major spikes in Austral's share price are visible in April and May. Austral had declared its financial results in April end. In May, the shares were put on a trading halt for an ASX price and volume query. The company, in response, acknowledged that the article that is out in the public domain in which it was stated that company CEO had hinted at the company signing a deal with an 'industry gorilla'. Austral made it clear that it is still exploring partnerships and JVs with many companies, not specifying any name.

Let us know more about Austral Resources in detail.

Austral Resources Australia Ltd (ASX: AR1)

Austral Resources Australia Limited is a Queensland based copper explorer, developer and producer, with key assets based in Mt Isa District, northwest Queensland.

Image Source- © 2022 Kalkine Media ®

Data source-Refinitiv

Austral Resources operations lie in the Gulf Country region of Queensland, to the north of Mount Isa. The region experiences a wet season spanning December to March with heavy rainfall and a dry season from April to October. The region is recognized for its mineral deposits.

Austral’s mining and processing activities include

Image depicting Austral’s activities

Image Source- © 2022 Kalkine Media ®

Latest updates on Austral’s operations

Among the latest operational updates, Austral Resources Australia Ltd entered an offtake and prepayment agreement with Glencore (ASX:GLENCORE). Glencore is a global mining biggie operating over 150 mining and metallurgical sites. Glencore has agreed to pay Austral AU$21 million for its offtake rights on 40,000 tonnes of copper cathode produced at Anthill Mine. Austral believes the prepayment will help it speed up the development activities. The exploration activities are to be funded internally from the cash flow generated at Austral's Anthill project. The offtake agreement is anticipated to begin in the second half of FY22.

Also, post listing on the ASX in November 2021, Austral claims to be focused on developing its Anthill oxide copper mine project. It aims to achieve an annualised production rate of 10,000 tpa of the copper cathode by mid-2022.

In its latest quarterly activities report for March 2022, Austral claimed to be on track for the 10,000 tpa production rate. In March, it reported a significant production result of achieving its first copper ore deliveries from the Anthill Mine. It sold around 348 tonnes of cathode for AU$4.83 million during the quarter, with a significant rise in copper production post May.

Here is a snapshot of AR1’s financial position-

Considering the financial data of Austral from FY18 to FY22, we have depicted a year-on-year movement in its key financial data.

Chart depicting AR1 key financial data for FY18 to FY21, Data Source- Refinitiv

Image Source: ^© 2022 Kalkine Media ®

The chart reflects the movement in AR1's Revenue, Gross profit, and Net Income over the past four years. The company appears to have improved its gross profit and reduced its net losses over the years. Also, as reported in its latest quarterly activities report for March 2022, Austral had a cash balance of AU$23.6 million.