Original-Research: Almonty Industries Inc. (von Sphene Capital GmbH): Buy

Classification of Sphene Capital GmbH to Almonty Industries Inc.

H1/2024 above estimates – increasing price target to CAD 2.31

On the backdrop of higher production and increased tungsten recovery rates at the Panasqueira Mine, H1/2024 profits from mining operations were significantly above our estimates and last year’s level. With the world’s longest producing mine (Panasqueira) and the world’s largest tungsten deposit (Sangdong) under construction, Almonty is – in our view – very close to becoming one the most important global suppliers of conflict-free tungsten material. We continue to value the shares of Almonty Industries using a two-stage Discounted Cashflow entity model of Almonty’s current and future producing assets (Sangdong, Panasqueira, and Los Santos,) to which we have added the discounted value of the development project (Valtreixal). We calculate a target price of CAD 2.31 per share. With an expected share price performance of 203.4%, we confirm our Buy rating for the shares of Almonty Industries.

Tungsten is classified as a critical raw material by the European Union, the United States, Canada, Japan, South Korea, Australia and other countries – and additionally as a strategic raw material by the EU – due to its high technological importance and unstable supply. Decarbonization and digitalization are causing a change in demand for raw materials, moving away from fossil and towards mineral raw materials, some of which are expected to see significant demand increases. In addition, as geopolitical tensions continue to rise, demand for advanced defense technologies is likely to increase, driving demand for tungsten armour, which is less regulated than depleted uranium and considered “exportable” by the US government.