The Austal Limited (ASX: ASB) share price has surged 9.52% today after the shipbuilder announced a US$50 million agreement with the US Government. The US Department of Defense has entered into an agreement with Austal to maintain and protect its domestic shipbuilding and maintenance capacity.  

What does Austal do?

Austal is a shipbuilder that designs, constructs, and supports defence and commercial vessels. The company produces high speed passenger ferries and passenger-vehicle ferries, as well as frigates, high speed military transport vessels and patrol boats. Austal operates from shipyards across the US, Western Australia, Vietnam, and the Philippines.

What does the new agreement mean?

The new agreement is part of the US Government’s national response to COVID-19 and aims to protect and expand critical domestic shipbuilding capacity. Austal intends to use the funds to invest in the development of additional capacity for steel naval vessel construction at its shipyard in Mobile, Alabama.

Austal says it is likely to match the US$50 million investment, bringing the total investment to around US$100 million. The company reports that this should benefit US Navy shipbuilding and accelerate pandemic recovery efforts in the Gulf Coast region.

How has Austal been performing?

The Austal share price was crunched in the March correction, falling 47% to $2.31 at its lowest. Since then the Austal share price has regained much of this ground, with shares currently trading at $3.68. The Austal share price was also boosted by upgraded guidance last month along with a US$43 million contract modification last week.

In May, Austal increased its FY20 earnings guidance to group revenue of approximately $2 billion and group earnings before interest and tax of no less than $125 million (up from $110 million). The upgraded guidance was issued as a result of COVID-19 having a more limited impact on performance than anticipated, along with the sustained strength of the US dollar, and the award of a new vessel construction contract announced in May.

Commenting on the upgraded guidance, Austal CEO David Singleton said: “Austal’s continued strong performance across our shipyards in the USA, Australia, Philippines, and Vietnam during the COVID-19 pandemic has provided confidence to increase the Company’s FY2020 earnings guidance.”

In 1H FY20, Austal reported a 22% increase in revenue which reached $1.04 billion. The shipbuilder made a net profit after tax of $40.8 million, up 72% on the prior corresponding period. Austal finished the half with net cash of $152.4 million.

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Motley Fool contributor Kate O’Brien has no position in any of the shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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With the Australian share market home to a large number of quality growth shares, it can be hard to decide which ones to buy.

To narrow things down for you, I have picked out three top ASX growth shares which I think would be great buy and hold options. Here’s why I like them:

Kogan.com Ltd (ASX: KGN)

The first ASX growth share to consider buying and holding is this ecommerce company. Kogan’s shares have been on fire this year thanks to its explosive earnings and sales growth over the last few months. And while its shares are certainly not cheap, I believe they justify this premium because of its increasingly positive outlook thanks to the structural change that is happening in the retail industry. Another positive is that Kogan announced a $115 million capital raising earlier this month. It intends to use these funds to acquire businesses that add value and drive further growth.

ResMed Inc. (ASX: RMD)

Another growth share to consider buying is ResMed. It is a sleep treatment-focused medical device company which has delivered consistently strong earnings growth over the last decade. The good news is that I’m confident this positive form can continue over the next decade thanks to its high quality masks and software solutions and its growing market opportunity. Management has previously estimated that only ~20% of sleep apnoea sufferers have been diagnosed.

SEEK Limited (ASX: SEK)

A final growth share to look at buying and holding is SEEK. I think the job listings giant has the potential to grow materially in the future. This is largely due to its growing Zhaopin business in China. Given its massive opportunity in the lucrative market, I expect the Zhaopin business to be the key driver of growth over the next decade. Another positive is that earlier today the company released a trading update which showed that trading conditions are improving. This could make it an opportune time to invest.

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Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended ResMed Inc. and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The EHR Resources Ltd (ASX: EHX) share price closed 20% higher today at 12 cents on the back of a strongly supported capital raising.

EHR is a mineral resources exploration company with an increasing focus on diamond exploration and project development.

Just this month, the company announced an earn-in agreement over a diamond project in Nunavat, Canada, as well as an exploration alliance agreement with a privately-owned company focused on diamond exploration in Botswana. 

EHR Resources also owns 625 mineral claims located in northern Quebec through its wholly-owned subsidiary Nanuk Diamonds, and an 18% interest in the La Victoria Gold-Silver Project in Peru.

Details of the capital raising

This morning, EHR announced it has received commitments for a $10 million institutional placement. New shares will be issued at 9.6 cents per share, which represents a 4% discount to EHR’s last closing price of 10 cents.

On top of the institutional placement, EHR will also conduct a share purchase plan (SPP) to raise up to an additional $2 million. New shares under the SPP will be issued at the same price as the placement.

The funds raised will be used to meet expenditures on existing projects, for potential incremental transactions in line with the company’s strategy, and for general working capital.

Commenting on the capital raising, managing director Peter Ravenscroft said:

“EHR has made very good progress since adding a focus on diamonds to its mineral resource project strategy, and the capital raising positions the Company to meaningfully progress the projects we have acquired.”

“Importantly, a raising of this size allows us to fully focus on adding value to our existing investments, while also strengthening the Company’s position with regards to other potential project acquisitions,” Mr Ravenscroft added.

Recent developments

At the beginning of the month on 2 June, EHR announced it had secured an option agreement with North Arrow Minerals to earn a 40% interest in the Nuajaat diamond project in Canada.

In return for the interest, EHR will fund a C$5.6 million preliminary bulk sample of 1,500 to 2,000 tonnes to be extracted in 2021. The project represents the largest underdeveloped diamond property in Canada not under the control of a major mining company.

EHR Resources followed up this announcement with another diamond-related ASX release on 9 June. It revealed it had entered into a diamond exploration agreement with Diamond Exploration Strategies, a privately-owned company with diamond licenses in Botswana.

Under the terms of the alliance, EHR will provide funding of US$1.5 million over three years to finance exploration activities. In return, EHR will earn 50% ownership of any discoveries made.

The alliance is initially over five areas that have existing prospecting licenses, but extends to cover other prospective areas of Botswana that may be identified.

The EHR Resources share price closed at 12 cents today, taking the company’s current market capitalisation to around $17 million. If you’d rather invest in much larger and more liquid companies, check out the top ASX growth shares in the free report below.

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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