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 1.55 to CAD 1.70.

Almonty announced on 5 July that it had received the fully executed utilisation request for the first USD12.8m drawdown from the USD75.1m Sangdong tungsten project financing facility. The first drawdown funds will be sent to Almonty following completion of the mortgage registration in South Korea, which we expect by the end of this month. Orders for large, long lead time items such as the milling and flotation equipment were placed last year, and so project cost inflation is likely to be limited to 5%, which will be absorbed by the 15% contingency built into the project costs. Completion and commissioning is now expected during H2 2023. China produced over 80% of global primary tungsten output in 2021 with Russia and Vietnam together accounting for a further 10%. When Sangdong reaches full capacity from the middle of this decade, it will account for ca. 30% of non-Chinese and 7-10% of global supply. The closing of the tungsten project financing will allow Almonty to pursue other opportunities at Sangdong. On 18 July Almonty published a maiden JORC-compliant resource estimate for the molybdenum deposit at Sangdong. This shows inferred 21.48m tonnes grading 0.26% MoS2 based on a 0.19% cut-off. At the current molybdenum price of over USD50,000/tonne, the in situ value of the resource is over USD1.7bn. This compares with an in situ value of USD2bn for the Sangdong tungsten resource. The future molybdenum and tungsten mines will share common infrastructure. In March KfW-IPEX bank signed a letter of intent to provide a further USD50m for a tungsten oxide/nano tungsten oxide downstream processing plant in South Korea. South Korea is the largest per capita consumer of tungsten worldwide. It also consumes ~40% of global tungsten hexafluoride gas, which is used in the production of semiconductors, the raw material of which is nano tungsten oxide. However, the country currently imports 95% of its tungsten oxide requirement from China. Feedstock for the tungsten oxide plant could come from Sangdong, local scrap and also Almonty’s Panasqueira and Valtreixal mines in Europe. We maintain our Buy recommendation and raise the price target from CAD1.55 to CAD1.70.