Original-Research: Almonty Industries Inc. (von GBC AG): Buy
| Original-Research: Almonty Industries Inc. – from GBC AG
08.09.2025 / 08:00 CET/CEST Classification of GBC AG to Almonty Industries Inc.
Strategic Positioning Strengthens as Sangdong Nears Commissioning Almonty Industries Inc. delivered first half 2025 results that highlight both the transitional state of its operating portfolio and the considerable strategic progress achieved in the period. For the six months ended June 30, 2025, revenue totaled C$15.10 million, down modestly from C$15.76 million in the prior-year period, while the net loss widened sharply to C$92.83 million compared with C$5.58 million in the first half of 2024. The increase in losses was driven primarily by non-cash revaluation charges related to warrants and embedded derivatives, along with higher share-based compensation and increased corporate expenses linked to the company’s redomiciling and U.S. listing preparations. Although headline results were weak, the company advanced its strategic positioning significantly during the first half. Key developments included the execution of a long-term molybdenum offtake agreement with SeAH in January, confirmation in April that U.S. tariffs on certain critical minerals would not apply to tungsten, participation in the U.S. Critical Minerals Forum in April, the signing of a strategic defense-focused tungsten oxide offtake in May, and recognition from the U.S. House Select Committee in June for its contribution to securing American supply chains. These operational and strategic milestones culminated in the successful U.S. Nasdaq listing and US$90 million public offering in July, which substantially strengthened Almonty’s balance sheet. Tungsten Market Context The tungsten market continues to experience supply-driven tightness, with China’s export restrictions accelerating price appreciation. Benchmark ammonium paratungstate prices exceeded US$500 per metric ton unit in mid-August 2025, up sharply from US$350 in March 2025. Demand remains robust across defense, aerospace, energy, and industrial tooling sectors, while U.S. Department of Defense restrictions on adversary-sourced tungsten beginning in 2027 will structurally elevate demand for non-Chinese supply. Almonty’s planned expansions at Sangdong and Panasqueira point to a step-change in output over the next few years, positioning the company as a leading non-Chinese tungsten supplier. With long-term offtake agreements that include price floors, Almonty appears comparatively de-risked versus peers. Furthermore, the recently released USGS Open File Report 2025 characterizes the tungsten market as strategic and cost sensitive, with demand concentrated in cemented carbides and supply heavily concentrated in China under export controls, resulting in an estimated probability weighted U.S. GDP impact of about $544 million. Substitution is limited and pricing is set by APT and powder benchmarks that pass through quickly to carbide tool costs, implying near term input cost pressure for metalworking OEMs and operating leverage for Western miners, recyclers, and converters positioned to benefit from supply chain diversification. HY1 2025 Financial Results Review For the six months ended June 30, 2025, Almonty reported revenue of C$15.10 million, compared with C$15.76 million in the first half of 2024. The modest decline reflects temporary production constraints at Panasqueira as resources were allocated to preparation for the Level 4 expansion, offset by continued demand for the mine’s high-grade concentrate. Production costs rose to C$14.17 million from C$12.83 million in the prior-year period, with mining ore and processing costs both higher year-over-year. This resulted in a near breakeven performance from mining operations, with a loss of C$0.19 million compared to a profit of C$1.81 million in the first half of 2024. Operating expenses increased significantly, with general and administrative expenses totaling C$7.49 million compared with C$3.01 million a year earlier, and share-based compensation of C$7.62 million compared with C$0.94 million in the prior year. These increases were linked to corporate expansion, preparation for the Nasdaq IPO, and equity-linked compensation expenses. The most material impact on reported results came from non-cash items. A C$63.89 million loss (PY: C$+0,41) was recorded on the revaluation of warrant liabilities, alongside a C$9.85 million loss (PY: C$0,00) on the valuation of embedded derivative liabilities. These IFRS-mandated adjustments, while substantial, are accounting-based and do not reflect operating cash flows. Net loss for the half-year was C$92.83 million, compared with C$5.58 million in HY1 2024. Operating cash outflow for the half-year was C$17.62 million, compared with C$5.42 million last year, reflecting higher corporate expenses and working capital requirements. Investing activities consumed C$14.87 million (PY: C$5.42 million), largely directed toward continued development at Sangdong. Financing activities provided C$49.46 million (PY: C$7.14 million), driven by warrant exercises and equity issuances, leaving the company with cash of C$24.68 million at June 30, 2025, compared with C$7.64 million at year-end 2024. Financial Position At the end of HY1 2025, Almonty held C$24.68 million in cash, strengthened further by the US$90 million Nasdaq raise in July. Long-term debt totaled C$192.7 million, primarily tied to Sangdong financing. Shareholders’ equity declined to C$10.5 million due to accumulated losses and non-cash revaluations, but the subsequent equity raise meaningfully improves solvency metrics. Liquidity is our opinion sufficient to complete Sangdong commissioning and advance downstream initiatives. Valuation Assumptions Given the recent strength in tungsten markets, we now assume a long-term tungsten price of USD 520/mtu (previously USD 430/mtu). In addition, we have rolled forward our valuation horizon by one year, with our target date moving from December 31, 2025 to December 31, 2026. Reflecting both the higher commodity price assumption and the rollover effect, we are revising our target price for Almonty Industries to CAD 9.00 per share (from CAD 8.25 previously). You can download the research here: 20250904_Almonty_Note Contact for questions: |
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