Classification of Sphene Capital GmbH to Almonty Industries Inc.

Installation of grinding equipment at Sangdong mine

After the publication of the unaudited interim nine months 2024 report, we continue to value the shares of Almonty Industries using a two-stage Discounted Cashflow entity model of Almonty’s current and future producing assets (Sangdong, Panasqueira, and Los Santos) to which we have added the discounted value of the development project (Valtreixal). We now include the Sangdong downstream extension chain and also the L4 extension at Panasqueira, each effective in 2027e, and significantly increase our target price to CAD 3.21 from CAD 2.31 per share. With an expected share price increase of 260.7%, we confirm our Buy rating for the Almonty shares.

With revenues of CAD 22.6 mn in the first nine months 2024 (9M/2023: CAD 21.2 mn, +6.5% YoY) and an EBITDA of CAD -3.4 mn (9M/2023: CAD -1.0 mn), Almonty is, in our view, well on track to reach our full year forecasts of CAD 29.6 mn and CAD -5.0 mn, respectively. Almonty’s only producing mine is still the Panasqueira (Portugal) polymetallic wolframite deposit, where mine grades and recovery rates (with more than 80% one of the highest in the industry) continued to improve in Q4/2024, according to the company.

Mine production costs (including direct mining costs, milling costs, tailings costs, and waste rock stripping costs associated with current production) were CAD 18.4 mn (9M/2023: CAD 14.6 mn), after and care and maintenance costs of CAD 0.8 mn (9M/2023: CAD 0.8 mn) and depreciation and amortization of CAD 0.9 mn (9M/2023: CAD 0.8 mn, profit from mining operations was CAD 2.5 mn, significantly above last year’s CAD 0.9 mn.

The development of Panasqueira’s operating performance in Q3/2024 was significantly more pronounced than in the two previous quarters: While shipment volumes increased by 21.6% in Q3/2024, revenues increased by 52.0% to CAD 6.8 mn. As a result, Panasqueira’s profit from mining operations increased by 57.0% to CAD 0.909 mn in Q3/2024 compared to CAD 0.579 mn in Q3/2023. This corresponds to a mining margin of 13.4% (Q3/2023: 13.0%).