300% share Almonty Industries: What is next? Strategic partnerships like MP Materials?

Almonty significantly more affordable compared to MP Materials

Alongside Almonty, MP Materials is also one of this year's high flyers in the commodities sector. Despite a billion-dollar valuation, the stock doubled again last week and is now worth over USD 9 billion on the stock market. For context, Almonty is worth around USD 1 billion. Analyst estimates for both companies are not that far apart. According to LSG/Refinitiv, analysts expect MP Materials to generate revenue of around USD 650 million and an EBITDA of USD 228 million in 2027. For Almonty, the experts at Sphene Capital expect revenue of CAD 483 million and EBITDA of CAD 199 million for 2027. These figures hardly justify a valuation that is nine times higher.

The latest surge in MP Materials' share price followed initial reports that the US government had acquired a 15% stake in the Company, which specializes in the extraction of rare earths. It was then announced that Apple is investing USD 500 million in a multi-year agreement with MP Materials to source neodymium magnets made from recycled materials in the future. These magnets are designed for use in Apple's hardware, specifically in iPhones.

Both a US government stake and involvement from defense companies are conceivable – if not likely – for Almonty. The US has not mined tungsten since 2015, leaving the entire Western world dependent on supplies from China. Tungsten is therefore classified as a critical metal in both the US and Europe. Due to its extreme hardness and high melting point, it is indispensable for key industries such as defense, aerospace, and high technology.

What is next for Almonty?

While strategic partnerships remain speculative, the opening of the tungsten mine in South Korea is imminent. Initially, around 640,000 tons of ore are to be processed in what will be the largest tungsten mine outside China. In a second expansion phase, production is to be ramped up to 1.2 million tons. The medium-term goal is to process around 4,750 tons of tungsten oxide per year. This is expected to be around 40% of the amount required by the West. Production costs are expected to be relatively low, at around USD 110 per metric ton of tungsten. Costs are higher at the Almonty mine in Portugal, but the mine is still profitable.

With its move to the NASDAQ, Almonty has also raised USD 90 million in fresh capital. Among other things, this will be used to extend the value chain. The Company plans to build a tungsten oxide processing plant in Sangdong. This should further increase the Company's margin.

And then, of course, there is the molybdenum deposit at the Sangdong site. Almonty has already secured a major customer from the aerospace industry. Expansion is also likely in Europe. The Company has previously highlighted expansion opportunities for its mine in Portugal. Mines in Spain could also be reactivated. After all, the EU appears to have acknowledged its reliance on raw materials and has announced the easing of regulations for approvals and financing. The goal is to cover at least 10% of the EU's domestic consumption of various ores and minerals by 2030 in order to reduce dependence on third countries such as China.

Conclusion: The stock remains attractively valued

Overall, the NASDAQ listing appears to have been just another milestone in Almonty's ongoing story. A period of consolidation in the share price is healthy. However, the share does not appear to be significantly overvalued. Attention is now turning back to the Company's operational development, and perhaps there will soon be a big announcement in the form of a strategic partner coming on board. Such a move would hardly be a surprise.