Interview with mine operator Almonty Industries: "Tungsten makes e-cars better"

Several things are coming together. I think the analysts at the consulting firm Roskill hit the nail on the head when they talked about a change from an industrial metal to a technology metal concerning tungsten. While tungsten has always played an important role in the chip industry, it is now being added to batteries for e-cars. Many of these batteries are manufactured by Samsung or Toshiba in South Korea. Our Sangdong project is located in South Korea, and because of its size, it can serve precisely this new demand.

To put it briefly: where there was cobalt before, there will be tungsten in the future. Tungsten is extremely heat resistant and offers advantages in terms of both battery charging performance and safety. Tungsten also allows more nickel to be incorporated into batteries for e-cars, which in turn extends range. Faster charging with a longer range are improvements every driver would like to see. Tungsten's particular suitability for such batteries first caught on in South Korea, where we traditionally see some of the highest per capita tungsten consumption in the world. However, as South Korea is a high-tech country, we believe this trend will spread to the world as a whole, and tungsten will become more important globally. Although China dominates the tungsten market and has numerous mines in operation, imports to Korea from China were recently up 20% YOY. For us, this is one of the best early indicators that the tungsten market is entering a new phase - after all, China has controlled the market so far. Now, in an already depleted international market, the country is having to buy in. A demand overhang could not be clearer.

Europe is still more of an industrial market. Customers here come from the automotive, defense and aerospace sectors. Although business in Asia is much easier to scale and offers greater opportunities from an investor's point of view, we remain loyal to the market in Europe. We are even expanding our involvement there, as demonstrated by our development project in Spain. Readers will now ask why we are doing this. This question can be answered by looking at the specifics of tungsten mining. Tungsten is considered a challenging element. Our mine in Portugal employs miners whose fathers and grandfathers have worked there before. The mine has been in operation for 126 years. If you shut down such projects for short-term profit, you cannot reactivate them easily because you simply do not have the skilled workers. So we accepted smaller margins in the past years and thought long-term. Tungsten has been declared a critical metal within the EU and its domestic sources will be protected - precisely because of the new uses around e-cars. We, therefore, see ourselves in an excellent position with our two projects in Portugal and Spain. However, the overriding project remains Sangdong.

We want to focus on Sangdong first. That is where the music plays for tungsten, and, furthermore, because of its size, the project also has much greater leverage so that we and our shareholder's benefit. Once this process is complete, we will continue to develop our Valtreixal project. We are proceeding gradually, so each project gets the attention it deserves.

We are in the process of building the mine and expect final approvals in the fourth quarter of 2022. The permitting process is proceeding normally, and we expect a favorable decision.

Investors must bear in mind that we are currently primarily in a development stage. Of course, this is reflected in the figures and means that many things can change from quarter to quarter. Our focus is clearly on South Korea. When Sangdong is producing, our figures will also move into entirely different areas. Then there will be no getting around us as a tungsten producer. Only the project in Portugal is producing at present, which is little more than in the black. For us, this is fine for the reasons outlined above, as we expect the tungsten market in Europe to pick up speed, and we are perfectly positioned for the future with the activities in Panasqueira. Those with our numbers and projects in mind must always keep in mind that a new tungsten project can be even slower to come into production than other commodity projects. We, therefore, believe that Portugal is an ace up our sleeve that we can play when the time comes.

Our total capacity is 1.2 million tons of rock, whereas we will only process a little more than half at the beginning. The reason lies in our experience with tungsten. We have one of the most experienced teams there is in the world. For this reason, we know that sometimes it is better to walk first and then run. Once we see that everything is running smoothly, we will expand the capacity. That is the better approach and costs much less if there are teething problems at the beginning.

We will stand for about 30% of tungsten supply outside China. Since China is currently even importing tungsten, this shows the vital role we play in this market. And there are more good arguments for Almonty beyond this one number: we stand for 100% transparent supply chains, pursue an aggressive ESG concept, which for example, provides that Sangdong relies 100% on renewable energy. We also plan to be completely carbon neutral and use electric vehicles. That makes Almonty a unique company with an outstanding market position in tungsten.

We are fully funded and in a good position to put Sangdong into production. But we still do not want to rule anything out and never say never. But our shareholders can be sure that we will only raise capital if we can use it to generate strong growth that will also benefit our shareholders. Otherwise, such a step makes no sense for us. In this context, I would like to mention that I myself am the second-largest shareholder in Almonty. The management knows exactly to whom we are committed: the shareholders. For this reason, there is only dilution with us, which ultimately pays off for shareholders.

We are not looking for strategic partnerships. However, sometimes there are good reasons to enter into partnerships anyway. For example, we also have large molybdenum deposits in our Sangdong concession area. If a large company saw opportunities here and an investment was worthwhile for all concerned, there would be no reason not to turn a bigger wheel. But again, we do not need investors to support our current plans. These are secured. We will only enter into new partnerships if this brings significant growth.

If you compare Almonty to its peer group, we are clearly undervalued. We believe that tungsten's new role can help put a focus on that undervaluation. The impending launch of Sangdong may also be a catalyst for the stock. The market has yet to recognize that Sangdong is unique given its size, geographic location and economic fundamentals. Nevertheless, we are not panicking in the face of undervaluation but focusing on the continuous development of our project. Some CEOs would now be going from one roadshow to the next. We are keeping our eye on the ball operationally and waiting for the fundamentals to prevail in the end. This much is clear: tungsten is a technology metal, and Almonty Industries will be mining up to 30% of global supply outside of China from the end of 2022 in a carbon-neutral manner and to the highest ESG standards. I have no doubt that Almonty will be a success story for all shareholders.