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

Einstufung von Sphene Capital GmbH zu Almonty Industries Inc.

Unternehmen: Almonty Industries Inc.
ISIN: CA0203981034

Anlass der Studie: Aufnahme der Coverage Empfehlung: Buy
seit: 15.11.2022
Kursziel: CAD 1,67
Kursziel auf Sicht von: 24 Monate
Letzte Ratingänderung: -
Analyst: Peter Thilo Hasler, CEFA

The revival of the Sangdong tungsten project  
We are initiating research coverage of Almonty Industries with a Buy rating and a CAD 1.67 price target, which is derived using a blended NAV- and two-stage DCF-based approach. Considering the expansion of its own value creation by building a vertically integrated nano-tungsten oxide processing plant to supply the South Korean battery anode and cathode manufacturing industry would unlock additional value creation potential for Almonty, allowing the company to generate significant earnings growth, which is not yet reflected in the current share price, in our view. Almonty’s shares are currently trading at 1.82x and 5.5x 2024e revenues and EBIT, respectively, and we believe the stock needs to re-rate to reflect the company’s value creation prospects.

Almonty Industries is a Canadian-based mining, exploration, and development company that controls a portfolio of four high-grade tungsten projects in stable Tier 1 jurisdictions in South Korea and the Iberian Peninsula. The Group's flagship tungsten deposit is Almonty Korea Tungsten ('AKT'), which was one of the world's leading tungsten producers for more than 40 years, under the former name Sangdong Mine. After a planned restart in 2023e, AKT is expected to be the largest tungsten mine outside China.

Almonty Industries was able to conclude an off-take agreement for the South Korean production facility with The Plansee Group—one of the world's leading tungsten suppliers with 11,000 employees in 35 production facilities in 50 countries—at what we consider attractive conditions: With a minimum term of 15 years and a floor price of USD 235 per MTU, Almonty Industries expects a minimum estimated operating cash flow of USD 580mn over the term of the agreement. Since the agreement covers only ~50% of the production, this is for only half of the potential cash flows from the Sangdong Mine. Given South Korea being the largest per capita tungsten consumer globally, Almonty could hold the balance back for sale, f. ex. to the South Korean battery markets, in our view.

By commissioning its own vertically integrated nano-tungsten oxide processing plant ('Sangdong Downstream Extension Project') to supply the South Korean battery anode and cathode manufacturing industry, Almonty Industries would substantially enhance its value creation and profitability, according to our view. Annual production capacity is reported between 3,000 and 4,000 tonnes. Completion and commissioning are expected in the second half of 2023e. Once the downstream plant reaches full capacity from 2026e, it will provide up to 30% of non-Chinese and up to 10% of global tungsten supply, according to the company estimates.

Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/25941.pdf

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