Join our daily newsletter At The Bell to receive exclusive market insights
Now, most of the world has heard about this company, Almonty Industries. It’s a leading tungsten producer with projects in Portugal and Spain and is soon to be launching production at its flagship, Sangdong Tungsten Mine in South Korea.
The company recently received shareholder approval to redomicile from Canada to the United States, signalling a major strategic shift.
Then last week, Almonty announced a new collaboration with American Defense International, ADI. And even more recently in Week 13, the company welcomed U.S. General Gustave F. Perna, to its board of directors; a significant move that has turned quite a few heads in the defense and resource sectors.
With trade picking up and tungsten’s price climbing, there’s a lot to talk about.
Lyndsay Malchuk with Stockhouse Publishing recently sat down with Lewis Black, CEO of Almonty to discuss all of these riveting developments.
Lyndsay: Why don’t we actually start with the company’s latest announcements and the growing interest from the defense sector. I think the big question here stands as, is Almonty still purely a resource company or are we now looking at the beginnings of a defense focused enterprise?
Lewis: I’ve done this a long time. I’m the last man standing I’ve been very successful in the tungsten space. Our mines make money and traditionally I was the primary source outside of China and Russia and North Korea for my customers who were best known for building, you know, cars and planes and medical and you know, really making an impact on the planet. But I found myself in the last eight months now being dragged into a geopolitical tug of war that doesn’t just include the US and China, but also you’ve got to throw in the EU into the mix because tungsten is the primary metal for all hardware munitions and armor. And of course, if you have any kind of military program, you of course require munitions and armor. And this is uncharted waters for us as a company and for our sector because now tungsten is no longer commercially desirable as much as it is national security desirable. And given we are the only party in town, we are trying to navigate through lots of people who are being very nice to us right now. But at some point you’re going to have to say no to somebody, and on that basis, you don’t know what their response is going to be. So, in answer to your question in a short answer, we are an involuntary defense stock now.
Lyndsay: There seems to be a significant interest from the United States in securing future tungsten supplies, especially with that partnership with ADI and the addition of General Perna. So do you believe this is raising concerns or even pressure among other nations, particularly in Europe then?
Lewis: I think absolutely. And I mean, one of the reasons we’ve engaged ADI, which is the US’s largest defense lobbyist, and they only do one other mine, which is Mountain Pass. Everyone else in their portfolio of nearly a hundred companies are the biggest defense contractors in the United States. And with General Perna, we have another announcement coming as well shortly to add to that team is because we are trying to fully understand how to correctly integrate into this nexus of defense in the US it’s an extremely complex logistical area and it has been impressed upon us within the United States that we find ways to seamlessly integrate, and it’s much easier to use experts who know really how to navigate through it than trying to do it on our own. As for the EU, yes, the EU are also looking quite anxiously.
And so I suppose in a perfect world, I would like to feel that the output from our Korean project is going to amply provide for the US defense space and our project in Portugal and Spain later on when it’s opened, we’ll provide a defense solution in Europe. And I mean, that’s perfect thinking. That’s on the basis that everybody remains calm and friends. But my initial approach is to follow the direction that’s being intimated to me, to find ways to seamlessly integrate into this. And as I said, Mountain Pass has done it very well. And we’re very fortunate that ADI chose to take us on as only their second line.
Lyndsay: Well, have you seen any early reactions from all of this?
Lewis: From the, the, the US government? Next week I have to go to Washington again. I don’t want to talk too much about all the things that we’re up to because well, I don’t want to start checking under my car every time I sort of leak the house. But I think what we are doing is really important. I mean, to me, despite my accent, actually am American, it’s important to me. And I know in this day and age, it’s unfashionable to do something for the right reason. I know it’s just not considered to be a great idea, but I’m a shareholder first and foremost, I’m seeing great value added to the business because of the fact that we are now a defense stock.
And on top of that, we’re going to do something really important. We are going to provide a solution, a very short term solution, because we are opening in two to three months for a defense dose. And we can provide the same for Europe as well. So, you know, it feels good that we see an accretion of value and we also see that we’re doing something for the right reason, not just, for the free market. We’re doing something I think important and I want to make sure I do it right.
Lyndsay: So what we really want to know is what the actual sentiment is in the tungsten market right now with China’s export restrictions, making those headlines. What are you hearing, what are you experiencing right now within the industry?
Lewis: Well, that’s very interesting. It’s really a kind of a catch-22, the kind of companies that consume tungsten, a very large corporations, and they’re involved in many different areas of the economy, both in their domestic environment and internationally. If you acknowledge publicly that you have a problem, it’s weakness and it tells a competitor potentially with more inventory than you, that your market share can be attacked. So publicly, everything is fine. Nothing to see here. We’re all good. I know that the CCP has restricted the export of tungsten, but not to me, I’ve been buying there for 25 years. Doesn’t count to me. Everyone else. But I went to the wedding anniversary of my suppliers. My children are named after them. And then privately you have an interesting situation.
Privately you have two ways you can go. One, you can tell yourself that everything’s going to be okay. This is just a Trump blip. It’s all going to pass any minute now, you know, everyone’s going to be friends and it’ll be business as usual. And then you can sleep well at night, or you can go into a kind of a very discreet panic because you don’t have a plan B because there no plan B. So it’s one thing if there was a plan B and you knew that a plan B should have existed, but you chose to feed your addiction to the cheap and readily available material from a wonderful supplier, which was China, which is China or has been China. They always had inventory. They worked seven days a week, they didn’t break for summer holidays. If you needed something, they put it on a boat and they even put maybe a small gift in there, a bottle of wine.
And everybody was happy because it was an easy addiction to take. And now that you are looking at the fact that maybe your dealer is not perhaps as available as you would like, you don’t have an alternative source. So in my customers publicly, everyone’s called privately, who knows, some are telling themselves everything will be all right on the night and others have started drinking. But either way, this problem doesn’t go away. Now China has put into a mechanism with these export permits regarding dual use, which is military use, which pretty much covers every customer I have, even if they’re not directly involved with the military, they may supply braking parts for armored vehicles that counts under Chinese rules. So I think China has a mechanism to basically say no tungsten for you if they so choose, and they’ll use our own rules, WTO rules against us. And this must be a terrifying predicaments that some of the biggest corporations on the planet now find themselves in. They got rich from cheap raw materials, and now the source of those raw materials are saying, you know what? You’re not treating us the way we want to be treated, so no more for you. And I think this is outside of my pay grade, but this is not easy for them to be honest.
Lyndsay: So how is that shaping the outlook for producers like Almonty then?
Lewis: We’ve got a lot more friends than we used to, that’s for sure. Until we don’t, because we’re have to say no to somebody at some point. I think the people who got behind us, like the Plansee Group who really supported us from years ago they would say by judgment, some would say by luck. But they called this many years ago, and they gave us an opportunity to build the world’s largest tungsten mine. And they were instrumental in us being able to convince KfW IPEX the premier, tier one project finance lender in the world to back us. And I think for us, geopolitics is a great positive, but there’s also a negative side. And I think it’s always important to look at that negative side. If my customers are starved to death, who do I sell to?
And I think China is a fierce competitor now for Western concentrate. They’re about to change a regulation in China to allow them to also feed from Western scrap the approach now rather than the collapse the price that they did in lithium or rare earths, which is to drive capital out of our sector is in fact to starve my customers from feed. And so it’s great for us. It almost certainly means that we are going to become irresistible to multiple suitors just for their survival. But it’s also quite terrifying that we’ve got ourselves into a place where we don’t have a plan B. And even with Trump’s announcement to develop domestic resources quicker, it takes years. I mean, whether we like it or not, this is not a widget factory. This is a mine. There’s a real process here that you have to respect and follow to build into democracy.
Lyndsay: We’ve reported a lot on one of your projects, the Sangdong Mine is receiving a great deal of attention around the globe and is expected to enter into production in 2025. I mean, the demand is obviously there and you mentioned maybe two to three months. So when exactly do you project actual production to begin from that?
Lewis: I’m an operator. You never want to jinx it. Two to three months you’ll see material coming out of there. And then 12 months after that, you’ll see phase two come online. So phase two is a doubling of our output. A lot of the work for phase two has already been done in phase one. So it’s something we show KfW that you could actually build something bigger for the same money because the cost of grinding circuits is negligible. The difference between 1.2 million tons a year and 640,000 thousand tons a year is pretty much the same. So it took a while to get them over that hurdle because they’ve never actually financed a project that actually was built for a bigger capacity for the same money. But then we’ve always been a bit unorthodox in Almonty.
We’ve always been very nimble. We’ve stayed away from the funds and the traditional ways. We have one of the highest liquidities of a junior in Canada now. We are quoted by every tier one publication. We have guys like ADI and General Perna who are way above our pay grade, you know, who are happily joining us because we are unorthodox. And that’s why we’ve been successful. And I think one of the things I say to everybody, whether people like it or not, and I hate to blow my own trumpet, but I’m quite unique in the junior mining space because I’m a shareholder first and foremost, I put millions of dollars of my own money into this. And so when I get out of bed, I’m getting out of bed as a shareholder. And that’s why our stock has responded so well.
It’s why we have this liquidity, because I’m first and foremost a retail guy. That’s what I am. I mean, yes, I run the company because, well, someone had to do it and I care enough to keep the value. I mean, someone said to me earlier, what they found unique about Almonty was that we did an IPO what, more than 10 years ago in the TSX. And we still have those same shareholders, and they’re all in the money. I mean, normally with juniors 10 years in, you’ve burned through three or four sets of shareholders, but our guys are still there and they’re in the money, which is unheard of. So that’s, I think, a very long-winded answer to your question.
Lyndsay: What about politically speaking? You said that it is a bit of a benefit, but tell us the biggest challenges you’re facing right now and what Almonty is doing to navigate through the never ending moving targets right now.
Lewis: That’s why we’re trying to bring ADI in. We bring ADI in and general Perna to help us and the contacts and that we’re trying to navigate through it. I don’t pick aside in terms of, well, of course, obviously North Korea and China, you know, it’s a bit different. But ultimately, I’m trying to make sure that the defense sectors in the EU and the US have what they need if they want it.
I’m, I’m putting forward a solution that won’t require taxpayer money or risk. I have it, it’s available, it’s not tied to off takes and we’re just trying to find the best mechanism to ensure the distribution of that material to the people that it needs to get to. And this is uncharted waters. I’m going to do it slowly and methodically and correctly, but my plan is that we have a solution for these defense sectors in these territories. We don’t require 10 years to do it. It’s almost instantaneous. And this way it ensures that my legacy when I’m taken out in my pine box at one point in the future is that we at least provided an option for national security defense for a country that I’m a part of in America and the EU where we’ve operated for 136 years in Portugal.
Almonty last traded at $2.35 through this morning.
Join the discussion. See what HotCopper users are saying about Almonty Industries and be part of the conversations that move the markets.
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
