Investment Highlights
- Almonty Industries Inc. (TSX: AII, ASX: AII, OTC: ALMTF, FRA: ALI) (“Almonty” or the “Company”) is a multi-asset owner that develops and operates tungsten projects. Its assets include development projects and a producing mine.
- Poised to become the leading western critical metals producer: The Company is aiming to become the leading western critical metals producer by reaching full-scale production at its tungsten and molybdenum mines by mid-2027. Almonty’s 2027 production target is 40% of the tungsten supply outside of China and 7% of the global tungsten supply. Sangdong tungsten mine is on track to begin production by mid-2025. While the Molybdenum project is expected to commence production by the end of 2026.
- Redomiciling to the U.S.: The Company is planning to change its jurisdiction of incorporation from Canada to the State of Delaware, U.S. We believe that being based in the United States will enhance Almonty’s position as a reliable alternative supplier aligned with U.S. national interests.
- Strategic partnerships to strengthen position in the U.S. critical metals supply chain: Almonty secured a strategic partnership with American Defense International (ADI), a prominent government relations and business development firm. Alongside the Company’s ongoing redomiciling to the U.S., the collaboration with ADI strengthens Almonty’s position as a leading critical metals supplier to the U.S. defense and advanced technology industries.
- Stock up 2.Sx since our initiation in Feb 2023. Almonty has delivered 246% returns since our initiation report dated February 13, 2023.
- Based on our analysis, we update our fair value estimate to $3.97 per share and reiterate our BUY rating.
The Company has made considerable progress in advancing its tungsten and molybdenum mines towards production. Some of the key updates include:
- Sangdong tungsten project: Sangdong mine is on track for completion by mid-2025. Almonty Industries noted that the final drawdown of US$75.1 million KfW IPEX-Bank project loan facility has been completed, and key processing equipment has been installed, setting the stage for first production in the near term. We are optimistic about the profitability outlook of Sangdong mine, especially given the fact that it boasts much higher material grades at 0.46% tungsten grade compared to its operational and profitable Panasqueira Mine (0.14% tungsten grade). The Sangdong mine, being a non-Chinese supplier, positions Almonty as a reliable alternative supplier aligned with U.S. national interests.
- Strategic partnerships to expand footprint: The Company secured a strategic partnership with American Defense International (ADI), a prominent government relations and business development firm. We view the partnership positively, given ADI’s proven track record of helping companies in securing key government relationships and facilitating expansion. ADl’s deep relationship with various U.S. federal agencies will enhance Almonty’s ability to engage and align with government policies and priorities. Tungsten is classified as a critical mineral by the U.S. government due to its importance in aerospace, defense and advanced technology applications. The partnership will strengthen Almonty’s position as a leading supplier of tungsten and molybdenum to the U.S. defense and technology industries.
- Offtake agreement for molybdenum: The recent offtake agreement with SeAH M&S, South Korea’s largest molybdenum processor and the world’s second-largest molybdenum oxide smelter, is a significant milestone for Almonty’s Sangdong Molybdenum Project. The fully permitted project, being developed by Almonty’s wholly owned subsidiary, Almonty Korea Moly Corp. (AKMC), is expected to commence production by the end of 2026. The offtake agreement, which includes a hard floor price of US$19.00/ lb, limits downside and ensures a predictable revenue stream.
- Redomiciling to the U.S.: The Company is planning to change its jurisdiction of incorporation from Canada to the State of Delaware. It will remain listed on the Toronto Stock Exchange and the Australian Securities Exchange. We believe that being based in the United States will enhance Almonty’s position as a reliable alternative supplier aligned with U.S. national interests.
- L4 extension at Panasqueira: Almonty has identified the L4 extension as a significant growth opportunity with substantial upside potential. The Company’s internal studies forecast that the L4 extension is expected to more than double W03 production to approximately 124,000 MTUs annually by 2027, significantly boosting mine economics. The total projected CAPEX for L4 is estimated at US$53 million. The project is expected to have a three-year payback period, and an estimated NPV@7.5% of US$103 million over a 16-year life-of-mine.
In Sangdong, we see Almonty potentially ascending to the status of the largest producer of tungsten concentrate outside of the majority producer China. Almonty has achieved all major milestones for the Sangdong Tungsten mine, including financing and equipment installation. The mine is now just one quarter away from commencing production. Should it successfully execute, bringing this project to the production milestone, Almonty looks poised to evolve into a tungsten major, which coincides with several growth tailwinds facing the broader tungsten market. Further, we see upside from the Sangdong Molybdenum Project, which has secured an exclusive offtake agreement with SeAH Group.
