Almonty’s $700M Tungsten Offensive: Sangdong Mine Expansion Triggers Dilution Fears and a 21% Stock Slump

Almonty Industries is placing one of the biggest bets in the tungsten sector, raising $700 million through a convertible note to fund the expansion of its Sangdong mine in South Korea — a project the company believes can supply 40% of the West’s tungsten demand outside China. But the financing triggered a sharp selloff on Friday, with shares plunging as much as 21% to C$22.70 before closing at C$23.45, a daily loss of 18.43%.

The 2.25% convertible notes, due 2031, were placed with institutional investors and priced at a conversion premium of 32.5% above the June 4 closing price, equating to roughly US$27.40 per share. The offering was oversubscribed, and the underwriting banks hold an option to add another US$100 million. Net proceeds are expected to reach US$675.9 million, potentially rising to US$772.7 million if the over-allotment is fully exercised. Closing is scheduled for June 9.

How the War Chest Will Be Deployed

Almonty plans to use about US$83 million of the proceeds for capped-call transactions, designed to limit shareholder dilution from future conversions up to a cap of US$41.36. Another US$50 million will go toward refinancing existing debt, while the remaining US$543 million is earmarked for working capital and general corporate purposes, including potential acquisitions. The capped-call structure provides some comfort to existing holders, but the sheer size of the issue has kindled fears of earnings per share erosion.

The capital injection comes as Almonty’s flagship Sangdong mine ramps up production. Phase 1, which began operations in March, is currently processing about 640,000 tonnes of ore annually, yielding roughly 2,300 tonnes of tungsten concentrate per year at an average ore grade of 0.51% — well above the global average. Phase 2, targeted for 2027, will double processing capacity to 1.2 million tonnes and boost annual output to 4,600 tonnes. With a projected mine life exceeding 45 years, Sangdong is positioned as a pivotal asset in a market dominated by Chinese suppliers.

Should investors sell immediately? Or is it worth buying Almonty?

Operational Momentum Overshadowed

The stock selloff has obscured a solid operational turnaround. In the most recent quarter, Almonty posted a 221% surge in revenue to US$25.4 million, while adjusted EBITDA swung to a positive US$6.1 million. The driver: soaring tungsten prices. Ammonium paratungstate (APT), a key tungsten intermediate, averaged US$3,040 per tonne at the end of May, up from US$920 at the start of the year. A net loss of US$5.3 million was largely attributable to non-cash valuation losses on derivatives.

Despite the Friday drubbing, the shares remain heavily positive on longer timeframes. Year-to-date the stock is up about 95%, and the gap from the 200-day moving average at C$16.67 suggests an intact long-term uptrend. Measured from the 52-week low of C$4.67, the stock has more than quintupled. The annualized 30-day volatility has jumped to 96.5%, and the relative strength index sits at 40.8, indicating the pullback may have room to run.

Analysts Stay Constructive, Catalysts Loom

Wall Street has so far held its ground amid the turbulence. Oppenheimer raised its price target to US$25 on June 3 and maintained an “Outperform” rating. D.A. Davidson also reiterated a “Buy” with a US$25 target, pointing to Sangdong’s long-term potential as outweighing the near-term dilution risk.

Almonty at a turning point? This analysis reveals what investors need to know now.

Several catalysts could shift sentiment in the coming weeks. On June 9, Almonty will hold its annual general meeting — the same day the convertible note transaction is set to close. Newly appointed CFO Jorge Beristain, charged with overseeing Sangdong’s expansion, will need to convince shareholders that the massive capital raise will deliver returns that justify the dilution. A more immediate catalyst: on June 29, Almonty will be added to the Russell indices, forcing passive index funds to buy the stock in proportion to its weighting — a move that could provide a floor under the share price.

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