Astral Resources NL (ASX:AAR) has been maintained as a ‘Buy’ by Shaw and Partners, which believes the Western Australian gold developer is trading at a substantial discount to its peers despite a funded pathway to early production.
The broker retained a A$0.30 price target, representing potential upside of 62.2% from the share price used in its analysis.
Shaw described Astral as “cashed up” and argued that its valuation discount to comparable developer Minerals 260 Ltd (ASX:MI6, OTC:MTSZF) was too wide given Astral’s resource base, project grade and near-term development catalysts.
Wide valuation gap
Astral was valued at about A$128 per resource ounce based on the 2.1-million-ounce Mandilla resource, less than half Minerals 260’s valuation of A$272 per ounce for its 6.2-million-ounce Bullabulling resource.
It was also well below the average of A$206 per ounce across the broker’s selected group of ASX-listed gold developers.
Shaw acknowledged Bullabulling’s larger resource and more advanced study status but did not consider these factors sufficient to justify a valuation premium of more than two times.
Astral’s combined resource inventory across Mandilla, Feysville and Spargoville stands at 61.6 million tonnes grading 1.0 g/t gold for 2.07 million ounces.
Mandilla also hosts an ore reserve of 1.08 million ounces, supporting the pre-feasibility study’s production target of 1.41 million ounces.
Think Big provides early production pathway
Recent infill drilling at the Think Big deposit within Astral’s wholly owned Feysville Gold Project returned several high-grade results, including:
- 11 metres at 7.34 g/t gold from 38 metres;
- 12 metres at 5.89 g/t from 30 metres;
- 3 metres at 10.0 g/t from 21 metres; and
- 9 metres at 6.01 g/t from 93 metres.
The average assay grade across the 92-hole program was 1.78 g/t gold, comfortably above the 1.2 g/t grade used for Think Big in the Mandilla pre-feasibility study.
The Native Vegetation Clearing Permit has also been approved ahead of schedule.
Completion of the Mine Development and Closure Plan and construction of the Think Big haul-road intersection are now the key items ahead of a targeted March 2027 mining start.
First revenue is anticipated in June 2027 under Astral’s fully funded joint venture with contractor Mineral Mining Services.
Re-rating catalysts ahead
Shaw expects the Mandilla definitive feasibility study, due in March 2027, to provide a potentially significant re-rating catalyst.
Additional catalysts include further permitting and development milestones, resource growth and new discoveries, with mineralisation remaining open in several directions.
The broker also identified Astral as a potential acquisition target because of its asset quality and strategic position near Kalgoorlie.
Shaw maintained its high-risk designation, noting exposure to gold-price volatility, exploration risk, construction costs and the challenges associated with bringing Mandilla into production.