Almonty's $700 Million Convertible Note Stings Shares, But Sangdong and Index Tailwinds Loom

Almonty shares drop 21% despite strong Sangdong tungsten mine output and an analyst upgrade, as a $700M convertible note offering sparks dilution concerns. Index inclusion looms.

Almonty Industries suffered a sharp 21% single-session decline on Friday, with its Nasdaq-listed shares closing at $16.31 and Toronto-listed stock at C$22.70. The sell-off came despite strong operational momentum and a bullish analyst call, as investors focused squarely on the dilution risk attached to the company's largest-ever financing.

The trigger was a $700 million convertible note offering, set to settle on Tuesday, June 9, 2026. The notes carry a 2.25% coupon, mature in 2031, and carry an initial conversion price of approximately $27.40 per share — a 32.5% premium to the reference price on June 4. The placement was oversubscribed, signalling institutional appetite even as the market priced in potential equity overhang.

Oppenheimer, meanwhile, raised its price target on Almonty from $22.00 to $25.00 on June 3, reiterating an "Outperform" rating. The upgrade reflected growing confidence in the ramp-up of the Sangdong tungsten mine in South Korea, the company's flagship asset.

Counterbalancing forces: dilution protection and a fresh war chest

Almonty has structured the convertible with capped-call transactions costing $83 million, which limit dilution up to a cap price of $41.36 per share — well above current trading levels. Net proceeds from the offering are expected to reach approximately $675.9 million, potentially rising to $772.7 million if the greenshoe option is fully exercised.

The bulk of the capital — around $543 million — is earmarked for working capital and general corporate purposes, including potential acquisitions of assets or entire companies. That signals Almonty's ambition to consolidate the tungsten market. Another $50 million will refinance existing debt, and the remainder supports the Sangdong ramp-up and global drilling programs.

The new capital structure is overseen by recently appointed CFO Jorge Beristain, who took the role on June 1.

Sangdong delivers, and a bigger stage awaits

Operationally, Almonty is accelerating rapidly. First-quarter revenue surged 221% year-over-year to C$25.4 million, while operating cash flow swung positive to C$9.7 million. Adjusted EBITDA came in at C$6.1 million — a meaningful milestone for a company transitioning from developer to producer.

The Sangdong mine reached commercial production in March, with Phase 1 processing capacity of 640,000 tonnes of ore per year, targeting roughly 2,300 tonnes of tungsten concentrate. A Phase 2 expansion is already planned, aiming to double capacity to 1.2 million tonnes by 2027. If successful, Almonty would significantly strengthen its position as a non-Chinese supplier of a strategically critical metal.

Beyond operations, a technical catalyst awaits. On June 29, Almonty is expected to join both the Russell 1000 and Russell 3000 indices. The Russell benchmarks track approximately $12.2 trillion in assets, and inclusion could drive fresh demand from index funds and ETFs. That prospect offers a potential counterweight to short-term dilution worries.

A defining Tuesday

June 9 packs two events: the convertible note settlement and the company's annual general meeting. The AGM will cover the re-election of directors and a review of last year's financial results. For investors, the settlement date will confirm the final size and terms of the financing, while the AGM provides a forum to address governance and strategy.

The stock's 21% plunge reflects the tension between near-term dilution and long-term growth. Yet the oversubscribed note, the Oppenheimer upgrade, and the upcoming index inclusion all underscore that the market sees significant value in Almonty's tungsten story — provided Sangdong delivers on its promise. The next few weeks will test whether the operational progress can outrun the capital structure concern.