Almonty CEO Lewis Black on 498% Revenue Growth and Tungsten’s Earnings Power Ahead

Today I have the pleasure of speaking with Lewis Black from Almonte Industries. And Lewis, your numbers from your Q2 are sensational. Your shareholders must love you. Up 498%. Would you like to explain to us why you did so well this year? Well, you know, I'd like to take the credit for it, but I have to uh, you know, I have to thank the fact that the powers that be have allowed tungsten to trade freely in the free market, and that has brought 30 years of pentup value suppression back into the into the picture. And to be perfectly fair and reasonable, Tungsten is really trading at levels that is really what it's worth. And we've been the beneficiary of that because we've been in this industry a long time. We survived a low price environment by innovating and all kinds of efficiencies that we introduced. The last credible man standing I've been heard we've been called. And I think what you're seeing from our, you know, our mine in Portugal, which is 136 years old, which has 1/5if of the grade of uh Korea, you can see the kind of performance that you would now expect to see in Korea if we maintain these levels of efficiencies of how we operate projects. So I think that was the most exciting point. We made over a 60% margin which is unheard of for a mine and what I find very interesting and rather you know soul destroying in many ways. How can I with this old rickety mine that's been going for five generations running on one of the lowest grades currently in production in the world? how can I elicit greater margin in earnings than other mines that we don't actually own uh that that are operating with higher grades uh in this price environment? And I think that highlights the fact that price should not be used as a mask for inefficiency. Everyone can be heroic in a high price. The key here is can you elicit the margin that you should due to the fact that you know what you're doing? >> And of course, unlike many of those that are out there, this is not an overnight success. I found the the quote I wanted to use here. You stated, "The second quarter of 2026 demonstrated a first look at the perspective earnings power that alanti has spent more than a decade building toward." Now, in the same uh in the same news release, you announced that you ended the quarter with approximately 1.23 billion in cash. Obviously, that has to be interesting to our audience. Can you explain how you managed to do that? >> Well, I mean, we we obviously had done a a follow-on uh equity raise back in December, but then we took advantage right before the SpaceX uh liquidity event in in June. We took we took advantage of a an extraordinary convert market in the US where where in 30 years no one's seen a convertible market that is so buoyant as as you see right now. And it's very interesting because it's not for everyone. So not everyone can run in and just oh I'm going to do one of these converts. But these converts are almost zero yield. I mean we've got a 2.25% 25% unsecured rate over five on a 5-year bond that will almost certainly roll if we so chose. And we took a capped call with Bank of America and Goldman to ensure that no dilution occurs, you know, before $41 US. And if you then look at at at $41 US, it's just over a 7% dilution in its entirety if if it's actually paid back through the convert. And I think it's very important for people to remember that I'm first and foremost a shareholder. And I know some shareholders are always banging their head against the wall that I don't make press releases every two minutes and I'm not explaining what underwear I'm wearing on Mondays. But but the fact of the matter is is that I'm valuedriven. Rest assured that as long as you keep seeing my happy face and I'm not dumping stock quicker than I I can imagine and not fleeing for the Bahamas, everything is fine. There's a way of working in in mature democracies and you have to understand that it's shareholders are the key reason I do this because I'm I'm the sh I'm the largest individual shareholder but I also have to understand the level of discretion that sometimes making lots of noise is not politically good is not a politically good decision. We have a lot of bureaucrats, a lot of people that we have to work with and deal with who ask themselves, how is it possible that the formerly world's largest tungsten mine is owned by an American company and its first lot of of output is all going to the US whilst we have to import all of our tungsten as an example of the kind of discretion you have to maintain. So even though I understand everyone is saying why haven't we got a press release you know I mean because sometimes discretion is a better word of valor the numbers will speak for themselves patience my friends >> and of course as the Brits like to say they always say schemes they like to use the term schemes and with this update can you give us some more details on your $300 million share repurchase program. >> Firstly, I'd like to point out I'm an English American. So, so you know, even though I use the word scheme, I use it in the American term and not the English term. The buyback is merely a functional decision to further reduce the dilution on the consequence of this convert. So, we can buy up to 5% of the issued stock if we're facing just over a 7% dilution on on conversion at $41. I did the convert at $21 when the convert's actually I think at $27 on a convertible basis. So anything below $21 makes sense and even above that it reduces my dilution. Remember I'm a shareholder. I don't want dilution. I want to have a situation where I have probably some of the cheapest debt in the world that's unsecured and that has a nominal effect on my shareholding. So that's what's going you know behind the thinking and also this buyback I've given myself up to three years to do it. So you know we're not saying we're doing it right now. We may be we could we may not but there's a plan and in a perfect world it'll come from earnings from you know from from Samsung as well as of course money we have on hand. So it's it's a very practical reason for doing it. I'd like to point out though, it's very important. Nobody in Almonte has a contract that's linked to share price performance. If there's one thing that drives me nuts as an investor is when I see management teams stuff the quarter to take a victory lap and put their hands in our in in the pocketbook. Batman and Ammonti. This is done merely to protect my holdings from dilution and as a consequence protect everyone else's. Well, I I dare say this seems insignificant, but for those of you that are shareholders of Elmonte or interested parties, you may not be aware of the fact that you've also recently delisted from both the ASX and the TSX. I'm certain you've done that to save money and of course the majority of your share trading is now taking place in the US. Would you like to comment on that? Well, the TSX, we've been there a long time and and you know, I love the guys there and and our guys in Montreal who looked after the account. All good people. But we saw since we did the IPO on the NASDAQ from last year, the liquidity drop significantly on the TSX. Most of it migrated onto the NASDAQ. And once I got to less than 20% of my liquidity, it made no really compliance, you know, reason to remain on the TSX. So, that was the the point of the dellisting. The ASX was was slightly different. It was a function that we did uh some time ago to raise capital and to be honest, you know, there's some interesting companies down there in Tungsten. It's uh it was probably time to make a exit left, you know, stage left, I think, with the ASX and the liquidity was very small there. But yes, sometimes it's it's best to really work in the areas that uh have a you know a good quality shareholder base and and companies and the NASDAQ of course if you can if you can you know as they say in the song if you can make it there you can make it anywhere and so that's that's really the TSX there was a ping of sadness because we've been there so long and I like the guys and I like the TSX but our liquidity had dropped so dramatically that it it made no sense to than you >> and your Sang Dong offtake agreement it's extended from 15 to 21 years what is this what is the significance of this Lewis >> well you know I think as I get older I've always said that I want to make sure I'm alive when that contract finishes so this is a way of keeping me alive for another five years uh I think the most important part was they wanted to extend it and I wanted more money And and I think you know the the company that we work with the offtaker like all of our customers are not in the money giving business. This is not something which is their natural habitat. I think what what we saw what that said to me because they were prepared to pay significantly more money for the for the entire contract which is you know they didn't have to because the contract was already fixed at a price. They agreed to increase that. I think that was testament to their expectation and they're the biggest producer of oxide in the west. So they're they're the big daddy. I think that's really their outlook is they don't have an enormous amount of optimism of new projects coming online. I think that's why they paid more money. Um I think their view is if you can get the supply and it cost us more, so be it. So I I think it's not something they said to me. They didn't say, "Oh, we're giving you more money because we don't believe anyone else is going to open." But they are also very aware of the procedural hurdles that have to be jumped through permits through, you know, how much conviction the government's going to have in two or three years. You know, there's a whole series of unknowns and they figured, well, if we're going to get an extra 6 years, we'll give you more money for the whole contract. And so that that was really the basis of that. But it was I think it what it says is how many times have we seen in tungsten an existing offtaker increase the price they're going to pay over the entire length of duration and for all of the tonnage for the contract before they've even received a shipment. It's ne it's never happened. So this is I think a good indictment of what's going on in the market. Al Montei Industries is is by far one of the leading uh supply chain critical mineral success stories. And of course, we've been tracking all the news about President Trump and President Xi's upcoming meeting in September because Critical Minerals are going to be front and foremost on their negotiating table. We're dying to know what uh advice you would give President Trump in dealing with President Xi. Well, I wouldn't I wouldn't I wouldn't give advice, but it's not my you know, he's the president of the United States, so he doesn't need my advice. But I don't expect China to provide raw materials again. I I expect them to provide finished components downstream. They've been building out that downstream for more than a decade. It's well advanced. It's mature and its quality. They don't they don't innovate, but their replication ability and their quality is as good and sometimes better than we can do in the West. I would imagine that components in the less uh sexy parts of this whole story because national security is is the one that we will focus on defense semiconductors but in tungsten there's all kinds of really boring mundane stuff like I don't know inserts for car manufacturing or plows for fields for farming or you know things that we wear parts and drill part drill bits we don't really think about those and we're not really paying attention to those I expect China to provide solutions for those less interesting or less sexy components uh as as it finished products. >> Well, we uh I was reading your August 30th market commentary and you said what kills tungsten demand is absence. Can you share a few more ideas on that with our audience? >> Demand destruction comes about through lack of ability not price. uh if I look at the at the performance of of customers who who buy tungsten consume tungsten who are public so you can look at their numbers their margins have not been significantly impacted by this higher tungsten price you use so little tungsten in the end process where the problem begins is when you can't actually produce because you don't have the tungsten and and that's where demand destruction comes about and so that's what I was trying to to say in the newsletter >> uh speaking of dates as we're counting down to a number of dates in the critical minerals that are significant Uh, beginning January 1st, US defense procurement rules will prohibit contractors from sourcing specified tungsten metal powders and heavy alloys from China and other designated countries. How is Elmonte Industries preparing for that? And is everybody from Washington calling you? >> Well, the designated countries are North Korea, Russia, China, and Iran. So, so all you know top destin holiday destination spots. I think there was an attempt earlier this year by by certain uh individuals to try to try and get a waiver on this because of course they were trying to leverage Chinese material to buy it cheaper and then sell it more expensively into the US. The Trump administration very proactively slam that door shut because everyone's had enough time to find solutions. And in part some companies um have much more vertical integration and are relatively wellprepared for this changeover. Others are not. Uh we have our customers our customers are well known. Uh I think Washington doesn't you know have to call us because we speak to them anyway directly or indirectly through our customers. So it's it's a joint effort but you know I think that the artisal elements from the small scale miners in in countries such as the central Africa or in central Africa and in South America they will offer a certain exit ramp for for this you know issue of procurement if we can find a way to pry that away from China because China is also a very active buyer of this material. So that's I think where where the main discussion is right now. How do you get in front of China in those territories to make this in fact happen properly? >> So what should shareholders of El Monty be looking forward to in this upcoming quarter? >> Well, I think firstly it's very important that shareholders keep giving me a hard time. I think keep reminding me that 500% on the share price is not good enough. We need better. We need more perform. Execute. It's fine. It's what it's what's expected. I expect that of myself. I think what we're going to see is finally after this long journey, we're going to see Sam Dong produce material and ship. And it's a very uh very comprehensive plant. We've done this before. It's not our first rodeo. Yes, commissioning there's always things that you know drop off, crack, you know, there's always something. But this is normal. This is a normal ramp up of of equipment that ultimately fails and then we just fix it in a matter of hours and we move on to the next element. I think you should also look to what solutions we've come up with to fix the short-term problem of this impending date at the end of this year. We have got a plan or actually a couple of plans and we are going to announce them shortly. We haven't been resting on our laurels. remember and despite I'll get the abuse I'll get from some of my you know competitors we've done this for five generations we know how to process and mine tungsten we invest heavily in our in our technology center in Portugal we have academics you know guys in lab coats working in a lab just constantly trying to refine processes look for alternate efficiencies this is what we do we're not guys who just roll up raise some money and say look at us we're mining tungsten we're we're obsessed with margin. We're upset innovation because that's what's kept us alive and that's what's going to distinguish us from everyone else for the next decade. We are going to provide a band-aid or some band-aid solutions to the market at the request request of the industrial base. I think that's news you should also look out for. That's coming. >> And for those of you interested in finding out more about Elmont Industries, please go to the following website. Thank you so much, Lewis, for updating us today. >> Thanks, Tracy.