Shares of Almonty Industries plunged 10.5% to $14.72 on Monday as the tungsten miner's massive US$700 million convertible notes deal settled — and investors began doing the math on what a potential flood of new shares could mean for their holdings.
The Deal Is Enormous Relative to the Company's Size. Almonty priced an oversubscribed offering of US$700 million in 2.25% convertible senior notes due 2031.
The company currently has roughly 283.7 million common shares outstanding.
At the initial conversion price of approximately $27.40 per share — a rate of 36.495 shares per $1,000 in principal — full conversion would create roughly 25.5 million new shares, an approximately 9% increase. That figure could grow if the initial purchasers exercise an option to purchase up to an additional US$100 million in notes.
Capped Calls Soften the Blow, But Only Up to a Point. Almonty entered into capped call transactions with a cap price of $41.36 per share, representing a 100% premium over the June 4 closing price. These are options contracts designed to limit the number of new shares actually issued if the stock rises. However, if the stock price exceeds that $41.36 cap, dilution kicks in beyond that level — meaning the hedge only works in a band. At today's $14.72, the protection is irrelevant because the notes are far from convertible; the real risk is that the stock stays depressed and the company eventually must refinance.
Where the Cash Goes Matters. Almonty intends to use roughly US$50 million to refinance existing debt and approximately US$543 million for working capital and general corporate purposes, which may include acquisitions. That is a staggering amount of dry powder for a mid-cap miner. Q1 revenue surged 221% to $25.4 million, with positive EBITDA , but the company is still scaling up. Its flagship Sangdong Mine in South Korea, alongside operations in Portugal and projects in the U.S. and Spain, positions the company as a key non-China tungsten source — a strategic pitch, but investors want proof the capital will earn a return before they stop selling.
A Russell Inclusion Tailwind Meets a Dilution Headwind. Almonty is set to join the Russell 1000 and Russell 3000 indexes effective June 29, 2026 , which typically forces index funds to buy shares. That passive demand could provide a floor — but only if the dilution narrative doesn't scare off active buyers first. The stock has now fallen 29% from its June 4 close of $20.68, turning a credibility-boosting oversubscription into a credibility test for management.