Allied Critical fast-tracks tungsten production plans with $40M financing

Tungsten developer Allied Critical Metals (CSE: ACM) has secured $40 million in two separate financings in support of its plans to start pilot-scale production in Portugal this year.

The first financing is a private placement of common shares with an existing shareholder and a new investor for total proceeds of $25 million. The shares will be 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.

The same investor has also committed to buy 50% of the tungsten concentrates that will be produced at the pilot plant, subjected to a floor price of $1,000/mtu. The facility is currently licensed to produce 150,000 tonnes per year of ore throughput for a period of five years. Should the licensed capacity double, the investor can purchase an additional 25% of the product under the same terms.

Fully funded

With this financing package, the pilot project is expected to be fully funded to achieve initial production.

“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 press release.

Tungsten, a critical mineral used in everything from chips and drilling equipment to armor-piercing weaponry, 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. Since then, tungsten prices have increased more than five-fold, and related products are now trading at their ?highest level in nearly a century, based on USGS data.

“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 WO? (tungsten oxide) annually.

Allied Critical Metals’ stock jumped more than 7.2% on the financing announcement on Friday. At about C$2.10 apiece, it is trading near the all-time high that it hit earlier this month. The company has a market capitalization of C$355.1 million ($259.6 million).