Almonty Industries: When the market picks up again, things could move quickly!

The Big Picture

Fundamentally, commodity producers, especially those dealing with critical raw materials, are on the winning side. Security of supply for Western nations from "Western" sources is a high priority on the global political agenda. Alternatives to Chinese dominance have been neglected for too long. The People's Republic holds approximately 80% of the world's reserves of rare earths and other critical raw materials. Export restrictions and significantly rising demand have led to enormous price increases over the past several quarters.

High Demand

The price of tungsten has increased nearly tenfold in just over a year. Tungsten is classified as a critical raw material by many countries because it possesses many unique properties and is virtually irreplaceable. Tungsten is an extremely heat-resistant, very hard, and dense metal. It is precisely these unique properties that make it indispensable for high-tech, industrial, and military applications.

At the beginning of the year, the US government announced the creation of a strategic reserve for rare earths and other critical raw materials to support the national technology industry. This reflects the new reality in the raw materials sector. Governments and states are establishing themselves as a major investor group. They are willing to pay high, strategically motivated prices to ensure supply security. Almonty represents the world's largest tungsten operations outside of China, giving the US-based company significant geopolitical weight.

What Analysts Are Saying

A growing number of analysts are covering Almonty. All experts are issuing "Buy" recommendations and setting price targets that are significantly above the current level of around USD 14. Most experts derive their price targets from future cash flows. The company is currently valued at USD 3.9 billion.

According to market consensus, rising cash flows and profits will be driven by high prices and strong production, which is expected to accelerate significantly starting in 2027. Experts believe a fundamental shift in the market is currently underway: China's export restrictions and the sharp rise in defense demand. On the other hand, few new mining projects are emerging—Almonty is the major exception here. In general, analysts use tungsten price levels of USD 1,000 to USD 1,500 per MTU. Currently, prices are approaching USD 3,000 per MTU.

In conclusion, GBC analysts arrive at a price target of CAD 28.60 or EUR 17.71. Bank of America analysts calculate a target of USD 20. Cantor Fitzgerald sets the bar at USD 25.80, explicitly pricing in a premium justified by the company's strategic role as a non-Chinese supplier of tungsten.

Since the Sangdong Mine was designed to operate profitably even at low price levels of USD 250 to USD 300 per MTU, this explains the high net margins of 60% that can be achieved starting in 2028 with annual revenues exceeding CAD 1 billion.

Sangdong as a Game Changer

Almonty recently reached full production capacity during Phase 1 of its flagship Sangdong mine in South Korea. This is a significant milestone. The mine now processes 640,000 t of tungsten ore annually, enabling the production of approximately 2,300 t of tungsten concentrate. The second expansion phase is scheduled for completion by the end of 2027, at which point production volume will increase significantly once again, and Almonty will be able to meet 40% of global demand outside of China.

South Korea plays a major role as a location and platform. Almonty's goal is to establish a fully integrated local value chain for critical raw materials, which would make the Asian country a global hub for the production, refining, and processing of tungsten.

Even though Sangdong is currently in the spotlight, tungsten production in Portugal played an important role in gathering valuable know-how. In addition, the US project acquired a few months ago is scheduled to go into production in the second half of the current year.

With tungsten production ramping up in South Korea, the start of production in the US in the second half of the year, and existing production in Portugal, the company will, in the future, meet 40% of global non-Chinese demand, thereby carrying significant geopolitical weight. All analysts recommend buying and see upside potential of over 80%. The surging tungsten prices are making current estimates look outdated.