Things continue to go well for Almonty Industries (TSX:AII) (WKN: A1JSSD; ISIN: CA0203981034; EUR 1.59). The stock is already one of the best commodity stocks for 2025. The market is gradually realizing that this story could be worth billions. The trade dispute between the US and many nations is proving to be a death blow for Western industries, especially those in China. In response to announced trade tariffs of over 100%, the leadership in Beijing has imposed export restrictions on strategic metals. Tungsten is one of the most critical metals, essential for high-tech and defense applications. Deposits and producers are few and far between, with a good 70% of supply coming from China. Almonty Industries is set to start production in South Korea in 2025, and US producers are already securing valuable tungsten. A jump in valuation is on the cards!
In the eye of the volcano – Donald Trump sets the pace
Anyone involved in high-tech, aircraft construction or the defense industry cannot ignore the need for a secure supply of critical metals. In a recent report, NATO identified a list of 12 critical metals that are considered essential for current defense products. The heat-resistant metal tungsten was officially classified as “highly critical.” Tungsten is a rare metal that occurs in relatively small quantities in the earth’s crust. To date, China accounts for over 70% of global production. It is used in the manufacture of superalloys, filaments, and electronic components, primarily in sensitive areas of technology. The conflicts in Ukraine and the Middle East, as well as the rapprochement between Russia and China, highlight the international complexity of this issue, as Western industrialized countries need security of supply and stable supply chains from secure jurisdictions. The Trump administration is setting the pace, with everyone else following suit. But the band is just getting started!
Almonty Industries – Another lucrative purchase agreement
The Canadian company Almonty Industries (TSX:AII) (WKN: A1JSSD; ISIN: CA0203981034) will deliver its first tungsten oxides from South Korea in 2025 and will also be able to mine the essential molybdenum in the future. This puts the soon-to-be US-based company in an important key position. Savvy investors have been involved in the liquid stock since the beginning of the year, but the story is gaining momentum now. Official material procurement agencies and producers from the high-tech industry are sounding the alarm and searching for suppliers.
However, finding partners is by no means easy. Yesterday, for example, came the unsurprising news of a three-party purchase deal focusing entirely on Almonty’s coveted tungsten concentrate. International security policy and raw material supply could hardly be more closely intertwined. The so-called “offtake agreement” comes from US defense contractor Tungsten Parts Wyoming Inc. (TPW) and Israeli processing specialist Metal Tech. High-tech supplier Tungsten Parts wants to purchase at least 40 tons of tungsten oxide per month to equip military equipment such as missiles, drones, and other weapon systems. Tungsten is a hardening metal that makes outer shells extremely resistant to enemy attack. Metal Tech is responsible for processing the raw material and supplies TPW directly with tungsten metal. The purchase agreement stipulates a hard price floor, but there is no upper limit. A raw material squeeze on the global markets will therefore flow 100% into Almonty’s coffers.
CEO Lewis Black has been working for years on a security-oriented strategy to make Almonty Industries indispensable in the international arena for strategic metals. Now he can reap the rewards of many discussions and connections for himself and his shareholders. As a future US company, certification for lucrative military deals is significantly easier. When considering the requirements of other defense organizations in Europe or the rest of the world, the demand can be scaled to the limits of existing mining capacity. In other words, the sought-after commodity is already sold out today!
Excellent prospects point to an imminent price explosion
The scarcity criterion is therefore particularly valuable for Almonty shareholders. In a highly security-sensitive context, only a few officially authorized buyers could be supplied. The AII share price has been rising steadily since the beginning of the year and remains rock solid even after the recent correction. The appeal lies in the availability of security-relevant raw materials. This makes the Company a highly sought-after commodity in the future. Looking back, CEO Lewis Black’s strategy has been 100% successful. This is because he and Almonty acquired a stake in a mine in South Korea that had been shut down in 2015, at a time when international peace efforts were focused more on disarmament than on geopolitical security requirements due to falling commodity prices. Hats off!
Analysts at Sphene Capital recently raised their price target twice to CAD 5.40, which would value the 282.78 million shares at approximately CAD 1.53 billion. Research firm GBC published its initial coverage in April with a “Buy” rating and a price target of CAD 4.20, while B. Riley Securities set its price target at CAD 5.00. With a price premium of over 6% and more than 700,000 shares traded, NASDAQ aspirant Almonty was once again on a roll yesterday. There is much to be said for acquisitions at this level, as comparable “critical raw material producers” are valued at multiples on the NYSE or NASDAQ. The real value appreciation is therefore yet to come!
Click here for the latest interview by Stockhouse reporter Lyndsay Malchuk with capital market expert Christopher Ecclestone, as well as the analyses by GBC and Sphene Capital.
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