First Berlin – Almonty Industries Inc. Research Update (08/10/2018)

First Berlin Equity Research has published a research update on Almonty Industries Inc. (ISIN: CA0203981034). Analyst Simon Scholes reiterated his BUY rating and increased the price target from CAD 1.45 to CAD 1.50.

Almonty's update on the progress of negotiations over the project financing of its Sangdong tungsten mine indicates that the final term sheet will be signed within 12 weeks. The terms outlined are attractive. China currently accounts for ca. 80% of world primary tungsten supply and is expected to become a net importer by the mid-2020s. The driving force behind the Sangdong deal is the concern of major downstream tungsten products manufacturer, Austria's Plansee/Global Tungsten & Powders Corp. (GTP), to ensure long term security of primary tungsten supply. A ten year offtake agreement signed with Almonty in March stipulated minimum revenue of CAD500m and accounts for ca. 85% of the first ten years of Sangdong's output. Plansee/GTP's selection of the Sangdong mine to become one of its most important long term suppliers is a strong validation of Almonty/the Sangdong mine in our view. Publication of the general terms of the Sangdong project financing causes us to raise our price target from CAD1.45 to CAD1.50. We maintain our Buy recommendation.