Austal shares have soared after the federal government indicated German ship designer Luerssen will use the company to build 10 of the 12 offshore patrol vessels it has ordered for the Royal Australia Navy.
The government on Friday announced Luerssen had won the design bid for Australia's $3 billion patrol vessel project and indicated Austal will build 10 vessels of the 12 vessels in Henderson, Western Australia, Austal said.
The first two boats will be constructed by shipbuilder ASC in Adelaide.
Contract negotiations are expected to take place over coming months, Austal said.
Chief executive David Singleton said the company looks forward to establishing a productive future with Luerssen.
"This important program will not only deliver new capability for the Navy but will continue to build the industrial base in Australia in line with the government's state intent," Mr Singleton said.
"The Australian government has made a commitment to a continuous naval shipbuilding industry and Austal looks forward to playing a role in making this happen."
Austal shares closed up 16.5 cents, or 9.9 per cent at $1.84.