F-10: Almonty Files $500M Shelf, Seeks Option/Warrant Reclass

Almonty Industries Inc. filed a base shelf prospectus for up to US$500 million in securities and seeks shareholder approval to amend option and warrant exercise prices for accounting reclassification.

Summary

• Almonty Industries Inc. filed a preliminary short form base shelf prospectus for up to US$500 million in common shares, preferred shares, debt securities, warrants, subscription receipts, and units, which may be offered over a 25-month period.
• A special meeting of shareholders is scheduled for September 29, 2025, to consider and approve amendments to the exercise price of 6,558,336 outstanding options exercisable for CHESS Depositary Interests (CDI Options).
• The CDI Option Amendment proposes to replace the existing AUD denominated exercise price with a CAD denominated exercise price, calculated using the January 2, 2025 AUD:CAD exchange rate of 0.8947.
• Shareholders will also vote on amending the exercise price of 1,481,480 outstanding warrants exercisable for Common Shares (Warrants).
• The Warrant Amendment proposes to replace the existing USD denominated exercise price with a CAD denominated exercise price, calculated using the January 2, 2025 USD:CAD exchange rate of 1.4418.
• The primary rationale for both amendments is to enable the CDI Options and Warrants to be classified as equity under International Accounting Standard 32 (IAS 32), rather than derivative financial liabilities.
• This reclassification aims to remove non-cash accounting distortions, such as the C$63,894,000 non-cash loss on valuation of warrant liabilities recognized for the six months ended June 30, 2025, which resulted from an increase in Common Share price from C$1.37 (December 31, 2024) to C$6.72 (June 30, 2025).
• Shareholder approval for both resolutions requires a majority of disinterested shareholders, with specific exclusions for optionholders/warrantholders and their respective associates.
• The proposed CDI Option Amendment would result in a slightly lower effective exercise price than if based on the current AUD:CAD exchange rate of 0.8984.
• The proposed Warrant Amendment would result in a higher exercise price than if based on the current USD:CAD exchange rate of 1.3756.
• As of August 28, 2025, there were 217,252,675 Common Shares issued and outstanding.
• Global Tungsten & Powders Corp. beneficially owned 30,156,474 Common Shares, representing 13.88% of issued Common Shares, as of the Record Date.
• As of October 22, 2025, there are 230,928,191 Common Shares issued and outstanding, along with 9,917,747 Warrants, 7,597,973 Options, and 3,277,773 Restricted Share Units (RSUs).
• The company completed a 1.5-to-1 share consolidation on July 3, 2025, with trading on a post-consolidated basis commencing July 7, 2025.
• Almonty closed its initial public offering of 20,000,000 Common Shares in the United States on July 15, 2025, at US$4.50 per share, raising gross proceeds of US$90 million.
• Approximately 85% of the net proceeds from the IPO are allocated to fund the development of a nano tungsten oxide downstream processing plant in South Korea, with the remainder for working capital, corporate expenses, business development, and potential acquisitions.

Sentiment

Score: 7

Explanation: The filing indicates a proactive approach to financial reporting clarity and strategic capital planning. The proposed accounting changes are a significant positive, removing distortions and improving financial transparency. The shelf prospectus provides substantial future financing flexibility for growth initiatives like the Sangdong Mine and the Tungsten Oxide Facility. While dilution risk exists with future capital raises, the overall strategic direction and operational progress (Sangdong commissioning, Panasqueira extension) are positive indicators for long-term value creation.

Positives

• The filing of a base shelf prospectus provides the company with significant financial flexibility to raise up to US$500 million in capital over the next 25 months, supporting future growth and strategic initiatives.
• Proposed amendments to CDI options and warrants will remove non-cash accounting distortions, leading to financial statements that are more reflective of the company's business operations and actual profitability.
• Reclassification of CDI options and warrants as equity will prevent future non-cash losses on valuation that arise from increases in Common Share price, improving reported net profit and retained earnings.
• The company is a leading producer of tungsten concentrate, primarily for the defense industry, with strategic plans for vertical integration into oxide production.
• The Sangdong Mine, one of the world's largest tungsten deposits by Inferred Mineral Resource, is in soft commissioning and expected to begin production in Q4 2025, positioning the company as a key Western supplier.
• The Panasqueira Mine is a long-producing, high-grade, low-impurity tungsten mine, providing a stable operational base and technical expertise.
• Secured long-term, floor-priced offtake agreements with blue-chip customers in critical sectors like national defense, aerospace, and high-technology manufacturing.
• The recent US$90 million IPO provides substantial capital, with a significant portion dedicated to the development of a Tungsten Oxide Facility, indicating a clear strategic path for value-added production.

Negatives

• The shelf prospectus introduces the potential for future dilution for existing shareholders as new securities may be issued.
• The proposed CDI Option Amendment, while beneficial for accounting, could result in a slightly lower effective exercise price for optionholders compared to the current AUD:CAD exchange rate.
• The company has experienced negative cash flow from operations, indicating a reliance on external financing for its ongoing activities and development projects.
• Economic dependency on a few key customers poses a concentration risk.
• Fluctuations in foreign currency exchange rates and interest rates can adversely impact financial performance.
• There is a risk of default under the company's credit agreements.
• The company has not paid dividends recently and anticipates not paying them in the immediate future, which may not appeal to income-focused investors.

Risks

• **Dilution Risk:** Future issuance of additional securities under the shelf prospectus may dilute existing securityholders' holdings and voting power.
• **Market Price Volatility:** Issuances of a substantial number of additional Common Shares, or the perception that such issuances could occur, may adversely affect prevailing market prices for the Common Shares.
• **No Established Trading Market for New Securities:** Preferred Shares, Debt Securities, Warrants, Subscription Receipts, and Units (other than Common Shares) may not have an active trading market, affecting liquidity and pricing.
• **Foreign Currency Fluctuations:** Exchange rate movements between Australian, United States, and Canadian dollars can impact the effective exercise price of CDI options and warrants, and overall financial performance.
• **Accounting Distortions (if amendments not approved):** Failure to approve the CDI option and warrant amendments would require continued recognition as derivative financial liabilities, leading to non-cash losses/gains based on share price fluctuations, potentially confusing financial reporting.
• **Going Concern Risk:** The company's ability to continue as a going concern is a risk.
• **Negative Cash Flow:** Operations currently generate negative cash flow.
• **Metal Price Volatility:** The price of tungsten and other metals is subject to world market fluctuations.
• **Economic Dependency:** Reliance on a few key customers.
• **Financing Risk:** Requirements for additional capital and ability to raise sufficient debt or equity.
• **Development Risk (Sangdong Mine):** Risks associated with completing Phase I, starting production on time, and proceeding with Phase II expansion.
• **Operational Risks:** Availability of infrastructure, skilled labor, supply chain disruptions, energy supply, water management, and equipment failure.
• **Regulatory and Permitting Risks:** Timely receipt and maintenance of governmental and third-party approvals, licenses, and compliance with environmental, health, and safety regulations.
• **Geopolitical Risks:** Instability, nationalization, terrorism, social activism in operating regions.
• **Redomiciling Risks:** Potential Canadian tax consequences and regulatory approvals for the proposed move to Delaware.
• **Enforcement of Civil Liabilities:** Difficulty for U.S. investors to enforce judgments against the company or its non-U.S. directors/officers.

Future Outlook

Almonty expects the Sangdong Mine (Phase I) to begin production in the fourth quarter of 2025, targeting an ore throughput capacity of 640,000 tonnes per year, with a planned Phase II expansion to 1.2 million tonnes. The company is also planning an extension of the Panasqueira Mine to increase production capacity and extend its life. Proceeds from the recent IPO are largely earmarked for the development of a nano tungsten oxide downstream processing plant in South Korea, indicating a strategic move towards vertical integration. The company is continuously seeking additional potential offtake partners and evaluating new opportunities to expand commercial partnerships.

Management Comments

• "The Company is concerned that accounting distortions caused by the classification of the CDI Options... and the reported non-cash loss resulting therefrom, may result in confusion regarding the Company's profit or loss in each reporting period."
• "The rationale for the proposed CDI Option Amendment is therefore to remove such accounting distortions created by the CDI Options each reporting period."
• "Following the CDI Option Amendment, the CDI Options can be recognized as equity, ensuring that the Company's financial statements are more reflective of the Company's business operations going forward and remove non-cash distortions."
• "The Board has determined for the reasons discussed above that the CDI Option Amendment is in the best interests of the Company and unanimously recommends that Shareholders vote in favour of the CDI Option Amendment Resolution."
• "The Board has determined for the reasons discussed above that the Warrant Amendment is in the best interests of the Company, and all members of the Board (other than Daniel D'Amato, who has an interest in the outcome of the Warrant Amendment Resolution) recommend that Shareholders vote in favour of the Warrant Amendment Resolution."

Industry Context

Almonty operates in the highly concentrated global tungsten market, with limited production outside of China, Russia, and North Korea. Tungsten is a critical material for the defense, aerospace, semiconductors, and batteries sectors due to its extreme hardness, density, and high melting point. The company aims to build a secure, Western-focused tungsten and molybdenum supply chain to reduce reliance on these regions. Market demand for tungsten concentrate remained stable in fiscal 2023 and 2024, with Ammonium Paratungstate (APT) prices showing a significant upward trend from approximately US$330 per metric tonne unit (MTU) in early January 2025 to US$462.5 per MTU by June 2025. The company's strategic focus on the Sangdong Mine and Panasqueira Mine, coupled with vertical integration plans, positions it as a key supplier for Western defense programs and high-tech manufacturing.

Comparison to Industry Standards

• Almonty's Sangdong Mine is described as one of the world's largest tungsten deposits by Inferred Mineral Resource and provides tungsten of superior grade compared with global peers.
• The Panasqueira Mine is noted as one of the world's longest-producing tungsten mines, operating for over a century, renowned for its high-grade, low-impurity tungsten concentrate.
• The company's competitive position is determined by its costs relative to other global producers and its ability to maintain financial strength through commodity price cycles, operating in a market with a limited number of Western competitors.
• The company competes with other mining companies for mineral properties and for skilled labor and mining supplies in the Iberian Peninsula and European Union.

Corporate Governance

Related Party Transactions

• The amendment of warrants held by Daniel D'Amato, a director and insider of the company, may be considered a related party transaction under Multilateral Instrument 61-101.
• The company is relying on an exemption from minority shareholder approval under section 5.7(1)(a) of MI 61-101, as the fair market value of the transaction does not exceed 25% of the company's market capitalization.
• Daniel D'Amato and Alfonse D'Amato, along with their respective associates, will be excluded from voting on the Warrant Amendment Resolution, representing 19,980,409 Common Shares (9.2% of outstanding shares).

Stakeholder Impact

• **Shareholders:** Potential for future dilution from shelf prospectus offerings. Improved financial clarity if option/warrant amendments are approved. Exercise of voting rights at the special meeting on key corporate governance matters.
• **Optionholders/Warrantholders:** Exercise prices of their instruments will be amended, potentially affecting their future returns. Specific optionholders/warrantholders and their associates are excluded from voting on the respective amendments.
• **Customers:** Continued secure supply of tungsten concentrate from Panasqueira and future supply from Sangdong, supported by long-term offtake agreements, enhancing supply chain reliability.
• **Investment Professionals/Analysts:** Improved financial reporting clarity will aid in analysis and valuation. New capital raising flexibility provides opportunities for investment and growth assessment.
• **Regulatory Authorities:** Compliance with ASX and TSX listing rules for amendments. SEC oversight for the F-10 registration statement and ongoing disclosure requirements.

Next Steps

• Shareholders are to vote on the CDI Option Amendment Resolution and the Warrant Amendment Resolution at the special meeting on September 29, 2025.
• If approved, the company will proceed with amending the CDI options and warrants to reclassify them as equity.
• Continued development and soft commissioning of the Sangdong Mine, with production expected to begin in the fourth quarter of 2025.
• Planning for Phase II expansion of the Sangdong Mine to increase throughput capacity up to 1.2 million tonnes per year.
• Planning for an extension of the Panasqueira Mine to extend its life and significantly increase production capacity.
• Development of a nano tungsten oxide downstream processing plant in South Korea using proceeds from the recent IPO.
• Ongoing efforts to seek additional potential offtake partners and evaluate new opportunities to expand commercial partnerships.
• Potential redomiciling to the State of Delaware, subject to the Board's decision and regulatory approvals.
• The F-10 registration statement will become effective from time to time after filing, allowing for future offerings of securities.

Key Dates

Recommendation

The filing presents a mixed but generally positive outlook. The base shelf prospectus provides crucial flexibility for future capital raises, which is essential for funding the Sangdong Mine development and the Tungsten Oxide Facility. The proposed accounting amendments are a clear positive, as they address significant non-cash losses that have distorted financial reporting, making the company's performance more transparent and reflective of its operations. The company's strategic positioning in the critical tungsten market and progress on key projects (Sangdong commissioning, Panasqueira extension) are encouraging. However, the potential for future dilution from the shelf offering, the company's current negative cash flow, and the inherent risks associated with mining development and commodity price volatility warrant a cautious approach. While the strategic direction is sound and the accounting improvements are beneficial, the execution risks and the need for further capital suggest a 'hold' position until more concrete operational and financial milestones are achieved post-production commencement at Sangdong.

Keywords

Tungsten, Molybdenum, SEC Filing, F-10, Shelf Prospectus, Capital Raise, Options, Warrants, Shareholder Meeting, IAS 32, Financial Reporting, Mining, Almonty Industries, ALM, AII, Defense Industry, South Korea, Portugal, Canada Business Corporations Act, Nasdaq, TSX, ASX, Frankfurt Stock Exchange