Allied Critical boosts tungsten plans with $40M backing

Tungsten developer Allied Critical Metals (CSE: ACM) has secured $40 million (C$54.6 million) in two separate financings towards starting pilot-scale production in Portugal this year.

The first financing of $25 million is a private placement of common shares with an existing shareholder and a new investor, with shares priced at C$2.05 apiece, almost identical to the stock’s market open price on Friday. The company did not disclose the two investors.

The second is a $15 million bond or senior loan with the existing shareholder to fund the pilot plant at its Villa Verde project, where the company planned to begin construction and operations this year. Villa Verde is about 200 km north of Lisbon. 

“The pilot plant at Vila Verde is on track this year to bring online tungsten concentrates to a global market that is starved for the metal,” Allied Critical Metals CEO Roy Bonnell said in a release.

Tungsten rising

Tungsten, a critical mineral used in everything from chips and drilling equipment to armour-piercing weapons, has soared this year amid a tightening market that’s currently dominated by China, which had already placed export restrictions on the metal.

Chinese exports have fallen by nearly 40% since the new controls were implemented, according to data from tungsten consultancy Wolfram Advisory, while tungsten prices have surged to about $2,800 to $3,300 per metric tonne unit (mtu) for ammonium paratungstate, up more than 200% since the start of the year, according to Fastmarkets data. 

Allied Critical Metals’ stock jumped more than 7.2% to $2.10 apiece on the financing announcement on Friday, trading near the all-time high that it hit earlier this month. The company has a market capitalization of C$355.1 million.

Investor to buy tungsten

The existing investor has also committed to buy half of the tungsten concentrates that will be produced at the pilot plant, subjected to a floor price of US$1,000 per metric tonne unit. The facility is currently licensed to produce 150,000 tonnes per year of ore throughput over five years. Should the licensed capacity double, the investor can purchase an additional 25% of the product under the same terms.

“In a world where tungsten is a precious resource and with pricing above $3,000/mtu, this financing is strong support for our plan to fast-track tungsten concentrate production,” Bonnell said.

In addition to the pilot plant, the company also plans to use the funds to advance its Borralha project, one of the largest undeveloped tungsten resources within the European Union. A preliminary economic assessment for the project envisages an 11-year mine producing 1,708 tonnes of tungsten oxide (WO₃) annually.

Located at a former tungsten mine 60 km east of the city of Braga, the project’s Santa Helena deposit hosts 13 million measured and indicated tonnes grading 0.21% WO₃ and 7 million inferred tonnes at 0.18% WO₃.