- Almonty (TSX:AII) extended its Sangdong tungsten offtake agreement with GTP from 15 years to 21 years
- Contracted tungsten volumes increased 40 per cent to 4.41 million MTU, covering about 90 per cent of Phase I production
- Improved pricing terms are expected to lift annual contract revenue by at least US$30 million to approximately US$490 million at current APT prices
- Almonty Industries stock (TSX:AII) last traded at C$22.19
Almonty Industries (TSX:AII), a global producer of tungsten critical to U.S. defence and technology sectors, has amended its long-term tungsten concentrate offtake agreement with Global Tungsten & Powders LLC (GTP), extending the contract term, increasing committed volumes, and securing improved pricing terms that the company says raise expected annual contract revenue to approximately US$490 million at current ammonium paratungstate (APT) pricing.
The amended agreement covers tungsten concentrate production from Phase I of the Sangdong Mine in South Korea, one of the largest tungsten projects outside China. GTP, a member of Austria-based Plansee Group, is a major Western producer of tungsten powders and supplier to U.S. defence and industrial markets.
This article is a journalistic opinion piece that has been written based on independent research. It is intended to inform investors and should not be taken as a recommendation or financial advice.
Under the revised terms, the agreement’s duration has been extended from 15 years to 21 years from the date of first delivery. The amendment also increases total contracted volumes by 40 per cent, from 3.15 million metric tonne units (MTU) to 4.41 million MTU, while boosting the price payable to Almonty across all contracted deliveries by approximately 6.3 per cent.
Key changes to the agreement
The amended offtake agreement includes several significant revisions:
- Contract term extended to 21 years, adding six years to the original agreement and extending deliveries into the late 2040s
- Total contracted volumes increased by 40 per cent to 4.41 million MTU
- Minimum annual deliveries of 210,000 MTU following the mine’s ramp-up period
- Improved pricing structure, which Almonty estimates will increase realized revenue per MTU by roughly 6.3 per cent across the duration of the contract
According to the company, the revised pricing terms are expected to increase annual contract revenue by at least US$30 million compared with the previous arrangement.
The importance of Sangdong
The agreement accounts for approximately 90 per cent of Phase I tungsten concentrate production from the Sangdong Mine. The amendment follows Almonty’s announcement earlier this month that processing plant throughput operations had commenced as the mine advances toward full Phase I production capacity.
Management emphasized that the agreement relates only to Phase I output. It does not include production from the company’s planned Phase II expansion, which is expected to approximately double annual processing capacity, nor does it cover output from Almonty’s other mining operations.
As a result, the company noted that the amended contract represents only part of its longer-term production and revenue potential.
Supply chain implications
The expansion comes amid heightened focus on securing non-Chinese sources of critical minerals. Tungsten is widely used in aerospace, defence, industrial tooling, electronics, and energy applications because of its exceptional hardness and high melting point.
China remains the dominant supplier of tungsten globally, and recent export restrictions have contributed to elevated market prices. Against that backdrop, the amended agreement secures a larger volume of conflict-free tungsten concentrate for delivery into Western supply chains over the next two decades.
GTP, headquartered in Towanda, Pennsylvania, is a key participant in the U.S. tungsten market and supplies materials used in defence and industrial applications. The extended agreement strengthens the partnership between the two companies, which began in 2018.
Management commentary
“GTP and the Plansee Group have stood behind the Sangdong Mine since 2018, and this Amendment reflects both the strength of that partnership and what the Sangdong Mine’s conflict-free tungsten is worth in today’s market. Extending the term to 21 years reflects the longevity of this project, increasing contracted volumes by 40 per cent and increasing expected annual revenue by approximately 6.3 per cent gives Almonty a depth of contracted revenue visibility that no producers in our industry can match,” Almonty’s chairman, president and chief executive officer, Lewis Black, said in a news release. “Just as important, the improved pricing flows directly through volumes we are already contracted to deliver with at least US$30 million of additional approximate revenue per year at current APT prices expected, or roughly US$630 million over the life of the amended Agreement, precisely as Sangdong ramps toward full production in a tungsten market at historic highs.”
Investor’s corner
For investors, the amended offtake agreement provides greater long-term revenue visibility as Sangdong ramps up production. The larger contracted volume, longer duration, and improved pricing terms enhance the project’s economic profile while reinforcing Almonty’s role as a growing supplier of strategically important tungsten outside China.
The agreement’s focus on Phase I production also leaves additional upside exposure tied to future expansions at Sangdong and output from Almonty’s broader portfolio of tungsten assets.
About Almonty Industries
Almonty Industries Inc. is a global provider of tungsten concentrate in conflict-free regions, including from its producing Panasqueira mine in Portugal and its Sangdong mine in South Korea, which is slated to begin operations in 2025. The company is also focused on its Valtreixal tin-tungsten and Los Santos tungsten development projects in Spain.
Almonty Industries stock (TSX:AII) closed trading 4.47 per cent higher at C$22.19 and has risen around 80 per cent since the year began.
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