GBC AG: Almonty Industries Inc. | Rating: Buy
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Original-Research: Almonty Industries Inc. - from GBC AG
Classification of GBC AG to Almonty Industries Inc.
Almonty Readies Sangdong Mine Amid Rising Tungsten Prices Almonty Industries has reported first quarter 2025 financial results in line with expectations and reaffirmed its position as one of the most strategically important critical mineral suppliers in the Western Hemisphere. The company continues to deliver on its operational roadmap, capital deployment, and geopolitical positioning at a time when global interest in reliable non-Chinese tungsten supply is intensifying. Following a significant rally in tungsten prices since February and the continued de-risking of its Sangdong Mine in South Korea, we have updated our forecasts and valuation model. As a result, we are increasing our target price to CAD 5.50 (EUR 3.52) from the prior CAD 4.20 (EUR 2.69) and maintain our BUY recommendation. Almonty reported CAD 7.91 million in revenue for the three months ended March 31, 2025, representing a slight year-over-year increase compared to CAD 7.82 million in Q1 2024. The consistent performance is underpinned by stable output and pricing at the company’s Panasqueira Mine in Portugal. Income from mining operations rose by 24 percent to CAD 0.75 million due to higher realized tungsten prices and improved operating efficiencies. Adjusted EBITDA for the quarter was CAD -3.5 million (q1 2024: CAD -1.3 million), reflecting increased corporate expenditures as the company ramps toward production at Sangdong. Operating expenses were higher primarily due to non-cash share-based compensation, the costs associated with redomiciling from Canada to the United States, and an embedded derivative revaluation. Most significantly, the reported net loss of CAD The most significant operational milestone in the first quarter was the substantial progress made toward completing the Sangdong Mine. Construction is nearing finalization, the processing plant is in the final stages of installation, and the final drawdown of the US$75.1 million KfW IPEX-Bank project financing facility has been completed. Commissioning is expected to begin shortly, with first ore processing anticipated in the second half of 2025. With its high average grade, large resource base, and nearly completed vertically integrated infrastructure including a planned tungsten oxide processing plant, Sangdong is positioned to become a key strategic asset in the global tungsten supply chain. The company’s low-cost structure giving it resilience against pricing volatility and making it an ideal long-term supplier to price-sensitive industrial and defense buyers. Strategically, Almonty continues to strengthen its geopolitical alignment with Western governments. During the quarter, it secured a landmark offtake agreement with a major U.S. defense contractor for the exclusive supply of tungsten oxide to be used in American defense systems. This agreement confirms Almonty’s role as a critical upstream partner in the U.S. defense supply chain. Further reinforcing this position, the company was invited to join the U.S. Defense Advanced Research Projects Agency (DARPA)-funded Critical Minerals Forum. This inclusion grants Almonty access to artificial intelligence-driven forecasting models that evaluate critical mineral demand, pricing, and geopolitical risk tools that will enhance its ability to structure long-term commercial agreements and guide capital allocation. Furthermore, Almonty Industries announced the execution of a binding offtake agreement with U.S.-based defense contractor Tungsten Parts Wyoming (TPW) and Israeli tungsten processor Metal Tech (MT), marking a key milestone in its strategic alignment with national security objectives. Under the terms of the agreement, TPW will purchase a minimum of 40 metric tons of tungsten oxide per month, with all material designated exclusively for U.S. defense applications such as missile, drone, and ordnance systems. MT will process the tungsten oxide into metal powder either in Israel or the United States for use solely in TPW’s defense production programs. Deliveries will begin upon Almonty’s commencement of commercially saleable tungsten oxide production and will be priced with a hard floor consistent with existing agreements, subject to grade-specific adjustments and no cap on the upside. The contract spans an initial three-year term from first delivery, with automatic annual renewals thereafter. This agreement not only secures predictable revenue and long-term demand but also reinforces Almonty’s role as a key upstream supplier in the U.S. defense supply chain, highlighting its commitment to shareholder value and alignment with national security priorities. On the corporate governance front, the company appointed Alan Estevez, former U.S. Under Secretary of Commerce for Industry and Security, to its Board of Directors. Mr. Estevez brings decades of experience in defense logistics, export controls, and critical mineral policy, and his presence is expected to deepen Almonty’s ties to U.S. strategic initiatives. In parallel, the company received shareholder approval for its redomiciliation to the United States, a move designed to align corporate structure with its growing U.S. business interests. Management has signaled that this transition will support its goal of uplisting to the NASDAQ in the near future. A NASDAQ listing would significantly expand Almonty’s investor base, improve liquidity, and enhance its profile among institutional and strategic investors focused on critical materials and national security themes. The macro environment for tungsten has also improved meaningfully. Market prices for ammonium paratungstate (APT) have increased from USD 342.50 per MTU in late February to USD 430,00 per MTU by early June 2025, a rise of approximately 25 percent. This uptrend reflects both tightening supply and heightened demand, particularly from defense and semiconductor applications in Western economies. In response to these market developments, we have revised our long-term tungsten price assumptions upward from USD 325 to USD 375 per MTU, and have modeled near-term prices in the range of USD 410 to 450. This adjustment significantly enhances the free cash flow generation profile of Sangdong, particularly in its initial ramp-up years, and increases our estimated NAV. As a result, our DCF-derived target price increases to CAD 5.50. Looking forward, we expect further positive catalysts including the commissioning and ramp-up of production at Sangdong, progress toward NASDAQ listing following U.S. redomiciliation, and additional strategic agreements linked to the company’s tungsten oxide and molybdenum output. We also anticipate further clarity on the company’s plans for its vertically integrated nano tungsten oxide facility, which is targeted for commissioning between 2027 and 2028 and could add significant downstream value. Almonty Industries is uniquely positioned as a transparent, conflict-free Western supplier of tungsten at a time when U.S. and allied governments are actively reducing dependence on China for critical minerals. With high-quality assets, government-backed financing, strategic partnerships, and rising market prices, Almonty offers compelling upside. We reiterate our BUY rating and raise our target price to CAD 5.50 (EUR 3.52) from the prior CAD 4.20 (EUR 2.69), reflecting both improved tungsten market fundamentals and enhanced visibility on Sangdong’s value realization. You can download the research here: http://www.more-ir.de/d/32824.pdf Contact for questions: GBC AG Halderstrasse 27 86150 Augsburg 0821 / 241133 0 research@gbc-ag.de ++++++++++++++++ Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,6a,7,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter: https://www.gbc-ag.de/de/Offenlegung +++++++++++++++ Completion: 10.06.2025 (8:00 a.m.) First distribution: 10.06.2025 (8:30 a.m.)
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2152764 10.06.2025 CET/CEST
