D.A. Davidson reiterates Almonty Industries stock Buy rating By Investing.com

Almonty reported adjusted Q4 2025 sales of $8.4M (after $2.2M deferred revenue) and adjusted EBITDA of -$4.5M; delayed shipments shifted ~C$3M of revenue into January. D.A. Davidson maintained a Buy and raised its price target to $25 (following an interim $18 PT), Oppenheimer raised its PT to $19 while keeping Outperform. Management expects Sangdong Phase I to commercially ramp to initial nameplate in Q2 CY2026, and DA Davidson cites a tightening tungsten supply/demand backdrop with Fastmarkets tungsten expected to exceed $2,000/MTU. Shares trade at $17.18 (-12.7% one week), but remain up 95% YTD and 671% over one year.

Analysis

The market is pricing a near-term tightness in tungsten that disproportionately favors upstream producers over processors and fabrication-intensive industrials. A mine ramp that materially increases concentrate output typically takes 3–9 months to translate into smelted product on the market because of converter capacity, APT processing bottlenecks and logistics — that lag amplifies price volatility and creates windows where junior miners capture outsized cashflow.

Second-order winners include independent smelters/convertors with spare capacity and tungsten recyclers that can monetize higher scrap spreads; losers are toolmakers and OEMs that cannot pass through raw-material spikes quickly and face margin compression. A sustained run in spot prices will also pressure jurisdictions with thin permitting pipelines, which in turn raises geopolitical/regulatory upside for non-China supply but also invites short-term Chinese policy responses (stock release, production restarts) that can snap prices back.

Key risks: execution at the mine (sequencing, grade dilution), converter throughput availability, and demand elasticity in core end markets (machining, defense, semiconductors) — any of which can reverse the move within a single quarterly report. Watch three catalysts over the next 3–9 months that will reprice risk: verified throughput reports out of the ramping mine, Fastmarkets spot price crossing structural thresholds, and inventory/shipments disclosures from major consumers and Chinese producers.

Key Decisions for Investors

• Long specialist producer (equity): Initiate a tactical long in the listed producer (ALM / AII.TO) sized 1–2% NAV with a 6–12 month horizon. Use a 30% trailing stop and take-profit at 40–60% to lock gains if spot tungsten confirms structural tightness. Rationale: captures high operating leverage to spot and the short time-to-cashflow if ramp stays on schedule.
• Options leverage: If liquid, buy 9–12 month ALM call options (or a 1:2 call spread to limit premium) to obtain 3–5x upside with defined premium loss. Max loss = premium; target = 3x premium if Fastmarkets trends above key psychological levels within 6–9 months.
• Pair trade to isolate commodity move: Long ALM/AII.TO vs short Kennametal (KMT) equal dollar exposure for 6–12 months. Expect miner to benefit from price upside while KMT’s margins are pressured; set symmetric 25% stop-loss on each leg and target 2:1 asymmetric payoff driven by miner leverage to spot.
• Event-driven hedge: Buy a small hedge (2–4% notional) via an industrials ETF put (or KMT put if available) to protect against a demand shock or Chinese policy-driven price collapse within 90 days. This caps portfolio drawdown from a fast unwind of the tungsten spike.