Almonty Industries – European Tungsten Production
Overview
The principal business of Toronto, Canada based Almonty Industries (TSXV:AII) is the mining, processing and shipping of tungsten concentrate from their tungsten mine at the Los Santos Project. The Los Santos Project was acquired by Almonty in September 2011 from a gold organization that lacked the necessary experience and expertise of tungsten extraction. The mine was originally opened in 2008 and commissioned in July 2010 by its former owner. The Project is located approximately 50 km from Salamanca in western Spain and within 200 km of Almonty Industries management team’s former Panasqueira tungsten mine in Portugal and Ormonde’s past producing Barruecopardo project in western Spain.
Investment Highlights
- On target with operational improvements, increased tungsten recovery rate to 64.8% in December 31, 2012 with an average feed grade of 0.32% during the month
- Exploration upside with a 28,000 metre drilling campaign over the next four years
- Turn-key mine and processing facility
- Only open pit Tungsten mine in operation in the west
- Alignment of interests through significant management and insider ownership
- 33% increase in the quoted tungsten price as a result of China approaching a supply deficit and serious tightening of global supply
- Achieved Q1 year to date 2013 revenue of $5.032 million and EBITDA of $1.645 million
Key Projects
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Los Santos Project
Located in the western Iberian Peninsula in the province of Salamanca, the Los Santos Project is situated in a historical scheelite producing area and is the only open pit tungsten mine in the west. The Project is located approximately 50 km from Salamanca, in western Spain and within 200 km of Almonty Industries’ management team’s former Panasqueira tungsten mine in Portugal and Ormonde’s past producing Barruecopardo project in Spain. The mine opened in 2008 and was commissioned in July 2010.
In 2010 the Los Santos Project had an annual output of approximately 225,000 tonnes of ore (at 0.25% WO3) and in 2011, the mine had an annual output of approximately 441,976 tonnes of ore (at 0.27% WO3). Tungsten is a unique metal due to its high temperature properties and exceptional high density. The metal also has widespread uses with approximately half of all tungsten used in the production of hard materials, namely tungsten carbide, with the remaining major uses being in alloys, steels and chemicals. Tungsten occurs primarily as wolframite ore and scheelite ore within massive pyroxene skarns.
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Los Santos Mine View
The Los Santos Project produces tungsten concentrate from scheelite ore. The project is currently the only open pit tungsten mine in operation in the west. The open pit nature of the Los Santos Project helps Almonty control its costs as it allows for greater flexibility in mining and the planning/production process.
Almonty Industries is currently engaged in a 28,000 metre exploration campaign (7,000 metres per year over the next 4 years) with a view to extending the mine life and further delineating the resource at the Los Santos Project. Underground mining at the Los Santos Project may be an option in the future in order to target the recovery of additional higher grade veins of ore after the open pit mining has recovered all the economically viable ore using this mining process.
Almonty updated the Los Santos resource and mine plan in October 2012.
Summary
Almonty Industries is focused on acquiring distressed and underperforming tungsten mining operations and assets that can benefit from its in-house operating and management expertise. Almonty Partners, the 37% shareholder in Almonty Industries Inc., has a solid track record of past performance making money for investors in tungsten mining. In March 2005, Almonty Partners purchased a 55% interest in Primary Metals, owner of the Panasqueira tungsten mine in Portugal, at $0.12 per share. Almonty’s team optimized operations at the project and sold it to Japanese company Sojitz Corp. for$3.65 a share in October 2007.
Almonty Partners is known as a very hands-on, turnaround investor-operator that is most effective in situations regarded as too complex or difficult for the average, pure “financial investor”. In the past, Almonty management has been known to focus on “value added projects.” These projects were acquired at a reasonable price and, through Almonty’s expertise, recoveries were optimized and the life of mine extended, generating significant returns for all shareholders. The net result is a long-term alignment of the interests of Almonty Partners with those of all shareholders of Almonty Industries Inc.
Management
Lewis Black – Director, President, and Chief Executive Officer
Mr. Black is currently a Partner of Almonty Partners LLC and has over 10 years of experience in the tungsten mining industry. From June 2005 to December 2007, he was Chairman and Chief Executive Officer of Primary Metals Inc., an Exchange listed tungsten mining company, and he was formerly head of sales and marketing for SC Mining Tungsten Thailand.
Mr. Black holds a B.A. (Honours) from Manchester University and is a former Vice President of the International Tungsten Industry Association. As Chairman, President and Chief Executive Officer of Almonty Industries Inc., Mr. Black has overall management responsibility for the Company.
Dennis Logan – Director and Chief Financing Officer
Prior to joining Almonty as Director and CFO, Mr. Logan was a Managing Director, with Investment Banking at Desjardins Securities Inc. from June 2007 until September 2011. From May 2005 to June 2007, he was Director, Investment Banking at Westwind Partners Inc. and was formerly a Partner at Loewen, Ondaatje, McCutcheon Limited. Mr. Logan is a Chartered Accountant and a member of the Institute of Chartered Accountants of Ontario.
Mr. Logan also holds a B.A. (Honours) and an M.B.A. from the University of Toronto. As Chief Financial Officer and Corporate Secretary, Mr. Logan has primary responsibility for management of financial, administrative and investor relations functions at the Company.
Daniel D’Amato -Director
Mr. D’Amato is currently a Partner of Almonty Partners LLC and has over 20 years of experience in the finance industry specializing in portfolio management and private equity. He began his career on Wall Street with Bear Stearns where over nearly a decade he became Managing Director. In 2005, with business partner Lewis Black, Mr. D’Amato co-founded Almonty.
From June 2005 to June 2007, he served on the board of directors of Primary Metals Inc., an Exchange listed tungsten mining company, of which Almonty was the majority owner. Mr. D’Amato holds a B.Sc. from Siena College and holds several securities and insurance licenses.
Andrew McIlwain – Director
Mr. McIlwain, with over 25 years of experience as a mining engineer, currently acts as an independent mining consultant providing consulting services to resource companies in relation to mergers, acquisitions, corporate restructuring and improvements. He is currently Non-Executive Chairman of Emmerson Resources Limited and Verus Investments Limited.
From June 2002 to April 2006, he was Managing Director and Chief Executive Officer of Lafayette Mining Ltd. (a public Australian mining company). Prior to this he held technical, senior management and executive roles within Mount Isa Mines Limited, Central Norseman Gold Corporation (COO) and WMC Resource. He is a past Non-Executive Director of Aspire Mining (formerly Windy Knob Resources) and Non-Executive Chairman of Tusker Gold Limited. Mr. McIlwain holds a B.Eng. from the University of Melbourne and is a Member of the Australasian Institute of Mining and Metallurgy.
Mark Trachuk – Director
Mr. Trachuk is a lawyer and is a Partner in the Business Law Group at Osler, Hoskin & Harcourt LLP in Toronto. He practices in the area of corporate and securities law with an emphasis on mergers, acquisitions and strategic alliances. Mr. Trachuk is the chair of Osler’s International Practice Group and is the former chair of Osler’s Corporate Practice Group and Corporate Finance Practice Group.
Mr. Trachuk holds a B.A. from Carleton University, an LL.B. from the University of Ottawa and an LL.M. from the London School of Economics. He also holds the ICD.D designation from the Institute of Corporate Directors. Mr. Trachuk is called in Ontario, British Columbia and England and Wales.
