Almonty’s Tungsten Boom Meets Convertible Note Dilution as Russell Index Inclusion Looms

Almonty Industries' $700M convertible note offering triggers 18% stock selloff despite tungsten price surge. Russell index inclusion and Sangdong mine expansion offer catalysts.

Tungsten prices have more than quintupled since Beijing began requiring export licenses for strategic minerals in early 2025, a list it expanded at the start of this year. That macro tailwind places Almonty Industries’ Sangdong mine in South Korea at the center of a global supply squeeze — and the company moved quickly to capitalise by raising US$700 million through a convertible note offering. The announcement, however, triggered a sharp selloff that wiped more than 18% off the stock in a single session.

Almonty priced the private placement of 2.25% convertible notes due 2031 on June 4 and disclosed the terms the following day. The issue was oversubscribed, with initial purchasers also holding an option to take down an additional US$100 million. Settlement is scheduled for June 9. The conversion price of roughly US$27.40 per share represents a 32.5% premium to the preceding day’s closing price, while the company spent approximately US$83 million on capped-call transactions with a cap price of US$41.36 to limit dilution. Net proceeds stand at US$675.9 million, rising to US$772.7 million if the option is fully exercised. Management plans to deploy US$543 million toward working capital, general corporate purposes and potential acquisitions, US$50 million to refinance existing debt, and the remainder to fund the capped-call hedge.

Shareholders reacted by sending the stock down 18.43% to close at C$23.45 on Friday, a near-20% drop that dragged the weekly performance to minus 14.23%. Despite the pain, the stock still trades roughly 95% higher year-to-date and has nearly quintupled over the past twelve months. The current price sits just below its 100-day moving average of C$23.62 but well above the 200-day line at C$16.68. The relative strength index of 40.8 hints at oversold conditions without crossing that threshold. Institutional interest remains robust: FMR LLC boosted its position by 128.8% during the first quarter, while Goldman Sachs raised its stake by 487.2%.

A significant structural catalyst lies just ahead. On June 29, Almonty will join both the Russell 1000 and the Russell 3000 indices, benchmarks that track roughly US$12.2 trillion in assets. Analysts estimate the resulting rebalancing could generate net buying demand of about 13 million shares — roughly three times the average daily trading volume. That influx of passive flows could help offset dilution fears from the convertible note. Meanwhile, the company’s flagship Sangdong asset is ramping up. Phase 1 is already running at an annual capacity of 640,000 tonnes of ore, and a Phase 2 expansion aims to double tungsten concentrate production to 4,600 tonnes by 2027. At full capacity, Sangdong is expected to supply over 80% of the world’s tungsten output from outside China, granting Almonty a strategic position that eight analysts collectively rate as a buy, with an average price target of C$26.77.

The stock’s 30-day annualised volatility of nearly 99% underscores just how turbulent trading in Almonty has been. From a 52-week low of C$4.67, the shares surged to an April peak of C$33.35 — a roughly 400% advance — before retreating about 31% from that high. The convertible note’s oversubscription suggests that institutional conviction in the company’s role as a critical non-China tungsten supplier remains intact, even if the immediate market reaction reflected unease about equity dilution. With index inclusion and a production ramp-up converging in the coming weeks, the tug-of-war between near-term dilution and long-term strategic value looks set to continue.