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
‑34.6 mil­li­on was lar­ge­ly dri­ven by a CAD 25.8 mil­li­on non-cash loss from the reva­lua­ti­on of war­rant lia­bi­li­ties, a tech­ni­cal IFRS ad­jus­t­ment cau­sed by a sharp rise in the company’s share pri­ce. This ac­coun­ting tre­at­ment has no im­pact on the company’s li­qui­di­ty or cash flow.

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​/​3​2​8​2​4​.​pdf

Cont­act for ques­ti­ons:
GBC AG
Hal­der­stras­se 27
86150 Augs­burg
⁰⁸²¹⁄₂₄₁₁₃₃ 0
research@​gbc-​ag.​de
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Com­ple­ti­on: 10.06.2025 (8:00 a.m.)
First dis­tri­bu­ti­on: 10.06.2025 (8:30 a.m.)