The stock was up 2 cents today at 58 cents, capping a solid rise over the past few months, as investors factor in a bullish profit outlook for the coal junior.

Austral's shares have more than doubled since November, when the economic recovery story started gaining momentum after the September 11 wash-up.

But analysts say that the recent gains are due mainly to profit forecasts contained in yesterday's 2001 results statement.

Austral announced a $4.2 million net profit for calendar 2001 and predicted a $13 surplus this year due to higher coal prices and increased production.

"People are re-rating the stock on the back of that forecast," Rob Brierley, an analyst at stockbroker Paterson Ord Minnett, said.

"It has never been on people's radar screens before, and suddenly the company is saying that it will earn $13 million this year."

Austral is obviously fairly confident about the forecast to release it to the market.

But it does represent something of a punt because one of the key assumptions is an "expected increase in the US dollar price for hard coking coal" later this year.

Given that the annual talks between the Japanese steel mills and major producers such as BHP are still at the posturing stage, such an outcome is by no means guaranteed.

Austral company secretary Stephen Peterson says that the company's general manager of marketing tips an increase of a "couple of bucks per tonne", equivalent to a rise of roughly 5%.

"Coking coal is in short supply," he said. "And the Japanese mills are no longer the best payers - they have to come up to the market price."

"So it is not just our finger in the air - there is a bit of substance behind it."

Austral sells around 50% of its product to Japan, 35% to the Koreans and the rest to Europe and BHP Billiton's Port Kembla steelworks.

If Austral does achieve the forecast it will be an impressive turnaround for the tiddler after it was stuck for several years with low coal prices and an underwater currency book.

The recovery story will also please major shareholders Brooklyn Resources (an Indonesian coal miner) with 19.9% and Ralph Sarich's Cape Bouvard (held in the name Ossan Pty Ltd).

The latter recently sold down its holding to 11.3% from 12.7% previously.

Brokers say that Sarich's average entry price into the stock is probably below 20 cents a share, giving him a nice capital gain at current levels.

Profit forecasts aside, one question mark over Austral is its funding options for the new Tahmoor North development, which requires of $115 million in new capital over the next two years.

The mine will start-up in early 2004 and is forecast to nearly double Austral's run-of-mine production to around 3.1 million tonnes per year.

At the same time, unit cash costs are forecast to slide from the current mid-$40 per tonne to low-$30s as the higher production rates kick in.

"The Tahmoor North project is in essence buying a new longwall - at a cost of $60 million - and upgrading all of the surface facilities to accommodate the increased production," Peterson said.

With sales predicted at more than $100 million this year, Austral will have a bit of free cash slushing around to use on the Tahmoor North upgrade.

But buying a new longwall unit may require some extra funding.

Some sources suggest that the time is ripe for Austral to make a placement to capitalise on its strong share price run.

The company, however, is not giving anything away.

"I wouldn't like to speculate on that sort of stuff," Peterson said.