Announcement PDF HALF YEAR REPORT DECEMBER 2024 EQ RESOURCES LIMITED ABN 77 115 009 106 DECEMBER 2024 i CORPORATE DIRECTORY Directors Oliver Kleinhempel Non-executive Chairman Stephen Layton Non-executive Director Richard Morrow Non-executive Director Stephen Weir Non-executive Director Zhui Pei Yeo Non-executive Director Company Secretary Melanie Leydin Principal Place of Business 6888 Mulligan Highway Mount Carbine QLD 4871 Share Register Automic Pty Ltd Level 5 126 Philip Street Sydney NSW 2000 T +61 (0)2 9698 5414 Auditors Nexia Melbourne Audit Pty Ltd Level 35, 600 Bourke Street Melbourne VIC 3000 T +61 (0)3 8613 8888 Registered Office F +61 (0)3 8613 8800 Level 4, 100 Albert Road South Melbourne VIC 3205 Stock Exchange Listing T +61 (0)7 4094 3072 Listed on the Australian Securities Exchange (ASX) W www.eqresources.com.au ASX Code: EQR E info@eqresources.com.au ACN: 115 009 106 ABN: 77 115 009 106 1 i CONTENTS OPERATING & FINANCIAL REVIEW................................................................................. 1 EQR GROUP HALF YEAR FY2025 – PRODUCTION SUMMARY ..................................................................2 HEALTH AND SAFETY .....................................................................................................................................3 Mt Carbine ..........................................................................................................................................................3 Saloro..................................................................................................................................................................3 MT CARBINE OPERATIONS ............................................................................................................................4 Open Cut Mining .................................................................................................................................................4 Processing ..........................................................................................................................................................8 Quarry Operations ............................................................................................................................................10 SALORO / BARRUECOPARDO .....................................................................................................................11 Open Cut Mining ...............................................................................................................................................11 Processing ........................................................................................................................................................14 FINANCIAL AND CORPORATE .....................................................................................................................18 Tungsten Markets .............................................................................................................................................20 SUSTAINABILITY ............................................................................................................................................22 EXPLORATION ACTIVITIES, RESERVES, AND RESOURCES ...................................................................24 Wolfram Camp ..................................................................................................................................................24 Mineral Resources & Ore Reserves Estimates ................................................................................................25 EQ Resources Tenement Interests ..................................................................................................................26 FINANCIALS ..................................................................................................................... 27 DIRECTORS’ REPORT ....................................................................................................................................28 Directors............................................................................................................................................................28 Operating Results .............................................................................................................................................28 Review of Operations .......................................................................................................................................28 Auditor’s Independence Declaration .................................................................................................................28 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .........29 CONSOLIDATED STATEMENT OF FINANCIAL POSITION .........................................................................30 CONSOLIDATED STATEMENT OF CASH FLOWS ......................................................................................31 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY..........................................................................32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...................................................................33 1. SUMMARY OF MATERIAL ACCOUNTING INFORMATION ......................................................33 2. REVENUE AND OTHER INCOME ..............................................................................................35 3. ACQUISTION OF SUBSIDIARIES...............................................................................................35 4. FAIR VALUE REVALUATION OF FINANCIAL LIABILITIES .......................................................36 5. INVENTORY ................................................................................................................................36 6. FINANCIAL ASSETS ...................................................................................................................37 7. TRADE AND OTHER RECEIVABLES .........................................................................................37 8. RECEIVABLES ............................................................................................................................38 9. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE ...........................................38 10. EMPLOYEE BENEFITS ...............................................................................................................39 11. TRADE AND OTHER PAYABLES ...............................................................................................39 1 ii 12. 13. 14. 15. 16. 17. 18. 19. 20. ISSUED CAPITAL ........................................................................................................................39 CONVERTIBLE NOTES ..............................................................................................................40 CONTINGENT LIABILITIES .........................................................................................................42 BORROWINGS ............................................................................................................................42 EQUIPMENT LEASES .................................................................................................................43 FINANCIAL LIABILITIES ..............................................................................................................43 NEW ACCOUNTING STANDARDS AND INTERPRETATIONS .................................................44 OPERATING SEGMENTS ...........................................................................................................44 SUBSEQUENT EVENTS .............................................................................................................45 DIRECTORS’ DECLARATION ........................................................................................................................46 AUDITOR’S INDEPENDENCE DECLARATION .............................................................................................47 INDEPENDENT AUDITOR’S REPORT ...........................................................................................................48 FORWARD LOOKING STATEMENTS ............................................................................................................50 2 resourcing the new economy for a better tomorrow OPERATING & FINANCIAL REVIEW 1 resourcing the new economy for a better tomorrow EQR Group Half Year FY2025 – Production Summary Operations Mt Carbine Saloro EQR Group Unit H2 FY24 H1 FY25 H2 FY24 H1 FY25 H2 FY24 H1 FY25 Waste kt 1,102 805 2,816 3,251 3,917 4,055 Ore kt 292 318 594 760 886 1,078 Total Tonnes Mined kt 1,394 1,123 3,409 4,011 4,803 5,134 Strip Ratio W:O 3.8 : 1 2.5 : 1 4.7 : 1 4.3 : 1 4.4 : 1 3.8 : 1 Closing Ore Stock kt 68 11 308 304 376 315 Gravity Plant Feed kt 125 132 448 453 573 Gravity Plant Grade % 0.412% 0.402% WO3 Produced* mtus 38,224 35,071 584 - 46,352 61,214 84,576 96,285 *Note: Metric Tonnes Unit, 1 mtu = 10kg WO3 The end of the First Half of the Financial Year 2025 that ended 31 December 2024 (H1 FY2025), marked a period of strong production growth across Mt Carbine and Barruecopardo, driven by higher material movement, increased ore processing, and efficiency improvements. At Mt Carbine, 1.12 million tonnes of material were mined, including 318,292 tonnes of ore, while 433,753 tonnes were crushed, with 331,424 tonnes from the Open Pit and 102,329 tonnes from the Low-Grade Stockpile (LGSP). The XRT Ore Sorter throughput increased by 18%, contributing to higher feed grades at the Gravity Plant, which set new processing records in Q1 FY2025, producing 26,028 mtu of concentrate, though low water levels in Q2 impacted production. Meanwhile, Saloro Operations at the Barruecopardo Mine saw over 4 million tonnes of material extracted (3.2 million tonnes of waste, 760,107 tonnes of ore), reflecting a 17.6% increase from H2 FY2024, while processing volumes surged, with 699,156 tonnes crushed and 452,739 tonnes fed into the Gravity Plant. XRT Ore Sorter product yield increased by 422%, supporting record recovery rates consistently above 60%. With higher-grade ore access expected in H2 FY2025, production is set to further strengthen. H1 FY2025 has demonstrated that the positive changes initiated since the Saloro operation’s acquisition in January 2024 are poised to maintain a solid trajectory of strong operational performance and favourable results driven by continuous optimisation and improvements. The consolidated EQR Group produced 96,285 mtu of tungsten concentrate (Mt Carbine 35,071 mtu; Saloro 61,214 mtu), and 5.13 million total tonnes mined (Mt Carbine 1.12 million tonnes; Saloro 4.0 million tonnes), reflecting a nearly 14% increase in total mtus produced and a 7% increase in tonnes mined compared to the previous Half Financial Year (H2 FY2024). 2 resourcing the new economy for a better tomorrow Health and Safety Mt Carbine Following the transition to an Owner-Operator model for mining operations at Mt Carbine, combined with the move from 12-hour to 24-hour mining activities, both staff numbers and overall man-hours worked have risen. Despite this increased workforce, Mt Carbine’s total recordable injuries (TRIs) remained the same at 9 occurrences for H1 FY2025. The Total Recordable Injury Frequency Rate (TRIFR) for end of H1 FY2025 was 74. The Mt Carbine Operations recorded several positive safety indicators during the quarter, including 7,132 “Take 5s” vs 3,483 in H2 FY2024, more frequent workplace inspections and safety meetings. Additionally, more Job Safety Environment Analysis were conducted. New automated breathalysers were installed on site and regular drug testing campaigns were conducted. Employees at Mt Carbine are all locals from the Cairns – Mossman - Mareeba region and encouraged to upskill and strengthen their competencies. During this period, several groups received specialised safety training including Working at Heights, Confined Space Entry, supervisory training, and diverse range of first aid courses (including CPR and Advanced First Aid). Saloro The Saloro Operations 37 employees attended training courses including mining risk and mobile machinery. Saloro operations also implemented 30 new safety improvements. Total recordable incidents (TRI) have dropped significantly from 16 for the calendar year ended 31 December 2023 (CY 2023) to a total of 9 for CY 2024, reflecting the impact of robust safety initiatives and cross-company collaboration of best practices initiatives and a strengthening of the Company’s overall safety culture. The Saloro team continues to conduct regular safety training sessions to reinforce proper procedures, focussed particularly on the importance of equipment isolation during maintenance. The introduction of the ‘Step Back Take 5’ Job Safety Environment Analysis (JSEA) early H1 FY2025 has been particularly impactful, with employees increasingly adopting it as a routine practice. This initiative is becoming ingrained in the workplace culture, thanks to continued procedural reviews, improved monitoring, and proactive engagement with staff. 3 resourcing the new economy for a better tomorrow Mt Carbine Operations Pictured: The Andy White Open Pit at Mt Carbine end January 2025, mining operations entered the Stage II Open Pit and focused on stripping waste in cutback area. Open Cut Mining In August 2024, after 14 months of contractor mining, the Company announced its transition to owner-operator mining at the Mt Carbine mine (See ASX Announcement: ‘Mt Carbine Mine Transition to Owner-Operator Mining’ dated 16th August 2024). The Operational team has since established baseline costs and new procedures, resulting in cost savings, enhanced operational control, improved mining flexibility, and upskilling of the local workforce. It also involved bringing key management and the bulk of the contractor workforce into the Mt Carbine operations, maintaining continuity and leveraging their expertise. All new fleet equipment was successfully commissioned promptly, including a CAT 90-tonne excavator, two 60-tonnes Volvo dump trucks, a CAT 745 Moxy water truck, and two bulldozers. This expanded fleet, coupled with round-the-clock operations, has already shown strong outcomes. In the first part of H1FY2025, mining continued in Open Pit Stage I at the 285m RL level, while stripping for Stage II advanced between 365m and 345m Reduced Level (“RL”), revealing initial signs of the Johnson, Wayback, and Iolanthe vein systems. 4 resourcing the new economy for a better tomorrow Pictured: Left, the new 90T CAT 395 Excavator on its first day; Right, one of the new 60t Volvo Articulated Dump Truck, part of the new fleet. By the close of Q1 FY2025, Mt Carbine had fully switched to a 24-hour mining roster, boosting monthly tonnage, reducing unit costs. Building on this momentum, Q2 FY2025 marked the first full quarter under the owner-operator model and the mining team extracted 572,905 tonnes of material—a 4% increase over the previous quarter and 15% higher than Q2 FY2024. A new mining schedule was introduced shortly after the transition, with a priority changed to kickstarting the Stage II Pit with the planned waste stripping and a modification of the blast sequence, allowing earlier access to higher-grade veins. Previous mining schedules included several small blasts at the bottom of the Stage I pit until the end of H1 FY2025, but management determined it would be more cost-effective to recover those deeper ore bodies once the pit is widened and under drier conditions. Pictured: The Southeast corner of the Open Pit, initial focus of the Stage II pit stripping and cut back with the Iolanthe and Bluff vein package as main targets with drilling progressing at 345-335 RL. 5 resourcing the new economy for a better tomorrow The waste stripping on upper levels in the pit’s south-east section 355m RL–345m RL advanced well, with the upper portion of the ore body reached in January 2025 in the level 345-335 RL as seen above. The upcoming 325m RL level will be accessed in H2 FY2025 and is expected to yield a significant grade increase, as indicated by extensive RC drilling in 2024 and January 2025 (See RC Drilling Section below). Mt Carbine also switched to its own drilling operations and two Sandvik drill rigs were mobilised. With drilling operations shifted in-house, new staff with specialised skills have been successfully integrated into the team. Blasting is now managed by a newly appointed contractor to further optimise costs. Meanwhile, the Terex Finlay 893 Scalper continues processing the historic LGSP in parallel, which is then upgraded through the Ore Sorter plant to maintain a steady feed for the Gravity Plant whenever stripping activities temporarily reduce ore deliveries. In H1 FY2025, 15 blasts were conducted, 1.12 million tonnes of material were extracted with 318,292 tonnes of ore and 805,000 tonnes of waste for a strip ratio of 2.5 : 1. Since the Open Pit’s reopening, a total of 2.43 million tonnes of waste have been stripped. Pictured: The new Sandvik drill rigs arriving at MtCarbine on commission day. Mt Carbine RC drilling campaign In early H1 FY2025, the Company completed 37 additional infill Reverse Circulation (RC) drill holes, totalling 1,437 meters, targeting the main Ore Bodies of the Stage II Pit. Drilled from the current pit floor at approximately 295–305 meters RL, these holes delineated four principal zones of mineralisation spanning a 100-meter strike length and an 80-meter width. This area forms part of an extensive main vein system stretching 1.2 kilometres along strike, which also includes the parallel Iron Duke Vein system to the north. Both systems are believed to continue further west, and this confirmed continuity is expected to significantly contribute to the Company’s underground ore body. 6 resourcing the new economy for a better tomorrow Pictured: Orthomosaic image of the Pit I floor showing drill location for the 37 holes completed in July 2024. Building on these outcomes, the Company wrapped up its Eastern Cut Back RC drilling campaign in December 2024, totalling another 28 drill holes (741 meters) from the higher up 345-meter RL bench. This aimed to identify the emergence of main ore loads in the Eastern Cut Back Program, supported by a 1.2-million-tonne waste stripping initiative between October and December 2024. These efforts enabled early access to the main ore body at the Andy White Open Cut during Stage II. Drilling targeted three key zones—the Dazzler, Johnson, and Iolanthe ore bodies and confirmed significant high-grade mineralisation at the 345-meter bench, marking the top of the Iolanthe ore body. Initial blasts in H2FY2025 are expected to provide enhanced volumes of high-grade ore from this zone. Pictured: The location of the drilling campaign in December 2024 with an outline of the main vein packages targeted in Stage II with the ore blocks in red. 7 resourcing the new economy for a better tomorrow The decision to prioritise stripping in the mine’s eastern section has proven advantageous, with increased ore availability now realised as the operation enters the primary ore zone. Although stripping can be challenging, the benefits are becoming evident. Looking ahead, EQR remains focused on fully exploring the potential of the Mt Carbine tungsten deposit to ensure long-term resource stability and to reinforce its position as a leading tungsten producer. Pictured: Block model showing main high grade ore body relative to Open Pit Stage I (In white, currently mined) and Open Pit Stage II (in blue, next stage that has started) For more information on the RC drilling campaigns of 2024: − ASX Announcement 30th April 2024: ‘Mt Carbine Infill Drilling Reveals High Garde Zones in Stage II Pit’ − ASX Announcement 3rd June 2024: ‘Mt Carbine Infill Drilling Reveals Additional High-Grade Ore In Stage II Waste Cutback Area’ − ASX Announcement 29th July 2024: ‘High-Grade Drilling Results Confirm Main Mineralised Level at MtCarbine’, − ASX Announcement 28th January 2025: ‘Results of the Eastern Cutback RC Drilling Campaign’ Processing In H1 FY2025, a total of 433,753 tonnes of ore were crushed, comprising 331,424 tonnes from the Open Pit and 102,329 tonnes from the historic LGSP. The Gravity Plant feed increased from 125,093 tonnes to 131,524 tonnes while the lower feed grade and low water levels in Q2 impacted the concentrate production that witnessed a small decrease with 35,071 mtus produced in H1 FY2025 from 38,224 mtus in H2 FY2024. Q1 FY2025, has been a record quarter at Mt Carbine across all processing plants. 259,709 tonnes of ore have been crushed, and 165,779 tonnes of crushed ore have been processed through the XRT Ore Sorters, reflecting an 18% increase from the prior quarter. This rise in Sorter product is attributed to the newly commissioned ejection system at Tomra XRT Ore Sorter #2 (completed in mid-June 2024), and combined with a solid yield of over 10%, contributed to an increase of feed grade at the Gravity Plant from 0.438% WO3 for Q4 FY2024 to 0.545% WO3 for Q1 FY2025. 8 resourcing the new economy for a better tomorrow Pictured: XRT Ore Sorters at Mt Carbine: A key driver of efficiency and economic success, playing a crucial role in maximising the economic viability of operations by optimising ore processing, increasing feed grades, and reducing waste—ensuring sustainable and efficient production. The Gravity Plant at Mt Carbine Mine recorded several new production records in the quarter with a new daily record of 641 mtus in 24hrs; a new monthly record of 10,702 mtus in September; and achieved a quarterly record of 26,028 mtu in Q1 FY2025. Improvements in concentrate production were due to: - Increased feed grade thanks to the additional Sorter Product processed - Increased recovery following the installation of the scavenger jig - Increased overall Plant feed volume from 60,197 tonnes to 70,284 tonnes During Q2 FY2025, water levels in the dam remained low, with Mt Carbine receiving just 130mm of rain, significantly lower than both the 808mm recorded in the same quarter of the previous year and the 10-year area average of 250mm. Although this wet season’s rainfall was below expectations, EQR anticipates substantial precipitation in the March quarter, given historical norms (636mm average). Should these rains materialise, they are expected to replenish dam levels sufficiently to support operations for the remainder of CY2025. In response to the low water levels, the Crushing, Screening, and Ore Sorting operations shifted from wet to dry processing in early November, prioritising water allocation to the Gravity Plant. Despite continued work on raising the dam, inadequate rainfall forced the temporary shutdown of the Gravity Plant in December. The focus thus shifted to mining operations and stripping, while crucial water recycling enhancements and maintenance were undertaken across all plants. Modest rainfall in early January allowed the Gravity Plant to restart in the second week of the month, with stockpiled ore ensuring a multi-day feed buffer for potential maintenance or further interruptions. This initial ore blend, sourced from the top level of the ore body and the LGSP, has a relatively modest grade; however, higher-grade material from the next levels down should be accessed soon. Looking ahead, plans are in place to double processing capacity in 2025. All equipment and supporting structures for the new Sandvik Crushing and Screening Plant have arrived on site, and preparatory work for assembly will commence shortly. The strong ore grade from the 305 RL level in the Iolanthe vein package was a key factor in achieving the September 2024 processing record. Recent RC drilling campaigns have validated the block model, reinforcing 9 resourcing the new economy for a better tomorrow confidence in the resources. Combined with record production from processing ore blocks sourced from the targeted main ore body, these results indicate a promising outlook for future production, particularly as mining progresses deeper to the 325 RL level and beyond in H2 FY2025, where grades are expected to further improve. Quarry Operations Quarry sales saw steady growth in Q1 FY2025 following a successful tender for disaster recovery work in the aftermath of Tropical Cyclone Jasper. Ongoing bank retention remedial efforts throughout August and September restored road access for local residents. During the quarter, Mt Carbine Quarry also submitted multiple tenders and collaborated closely with local civil contractors, aiding additional recovery projects from restoring access to local farms and cattle stations to rehabilitating key roads extending to the Daintree River. This positive trajectory continued into Q2 FY2025, with quarry sales further strengthened by civil construction firms rushing to complete projects ahead of the wet season. Mt Carbine Quarry maintained its close partnerships with local companies and Councils, supporting ongoing disaster recovery initiatives. The Company also awaits the outcome of a recently lodged Standing Offer Arrangement application with the Department of Transport and Main Roads, covering the supply and delivery of quarry materials. 10 resourcing the new economy for a better tomorrow Saloro / Barruecopardo Open Cut Mining In the first half of FY2025, operations at the Barruecopardo Mine focused on achieving production targets while optimising efficiency and preparing for future pit development. Key initiatives included trialing 10-metre bench blasting to improve cost-effectiveness, maximising water dam capacity through advanced evaporation systems, and advancing the Phase 6 Open Pit development in the Northern Zone. Operational Performance and Mine Development Throughout H1 FY2025, significant material movement was achieved, with over 4 million tonnes of material extracted, marking subsequent record quarter after quarter since EQR acquired the mine in January 2024. This meant a 17.6% increase from H2FY2024 and included 3.2 million tonnes of waste and 760,107 tonnes of ore, with production primarily focused on the central and southern areas of the pit between 590m RL and 575m RL. The same area was also the site for successful 10-metre bench blasting trials, a key operational efficiency project. Drilling and Blasting on 10-Metre Benches Traditionally, drilling and blasting at Barruecopardo were conducted on 5-metre benches due to the specific characteristics of the mineralised zone. However, during H1 FY2025, five experimental blasts were carried out on 10-metre benches to assess potential improvements in operational efficiency. Pictured: A 10-metre bench face with the mineralised zones marked 11 resourcing the new economy for a better tomorrow Pictured: Block model imported into the OREPRO 3D software confirming the field observations made by geologists. The results have been promising, particularly in the central zone of the ore body, where geological continuity is more consistent. Key benefits observed include: − Reduced drilling costs due to fewer drill meters required. − Lower blasting costs, benefiting from economies of scale. − Potential improvements in highwall stability. − Enhanced blast fragmentation for more efficient ore handling. − Overall, these trials resulted in an estimated cost savings of AU$0.16 per tonne, supporting the potential long-term adoption of 10-metre bench blasting. Development of the Barruecopardo Open Pit – Phase 6 (Northern Zone) Significant progress was made in the Northern Zone as part of the Phase 6 Open Pit expansion, which commenced following the end of the Black Stork and Egyptian Vulture breeding season, two protected species present at the site. Early works have progressed ahead of schedule, allowing the mining team to access mineralised zones sooner than initially anticipated. In the western area, the switchback was established at 700m RL to facilitate efficient haulage access. In the northern and eastern areas, mining activities advanced from 730m RL down to 700m RL to expose additional mineralised zones. The latest resource block model confirms that as mining operations progress to deeper levels, ore grades are expected to increase, following the natural continuity of Barruecopardo mine’s sheeted vein tungsten deposit. 12 resourcing the new economy for a better tomorrow Pictured: The Northern Area will be the target of Phase 6, next phase of the Open Pit. Pictured: The Northern Area of the open pit as of end of December 2024, Resources Block Model in Phase 6. Colours represent the grade of the ore. Red for high grade (>0.15% WO 3). Orange for lower grade (0.07-0.15% WO3). Blue for very low grade (0.055-0.07% WO3). The tungsten-bearing mineral deposit at Barruecopardo is composed of sheeted veins, and the pit development is designed to follow the continuity of the ore body. As mining operations progress to the lower levels, the ore grade is expected to increase. Water Management and Efficiency Enhancements Throughout H1 FY2025, operational efforts remained focused on maximising water dam capacity. Advanced evaporation systems were implemented alongside capacity enhancement measures to ensure a sustainable water supply for mining and processing operations. Despite currently low dam levels, these initiatives have positioned the operation better than in previous years, providing sufficient buffer capacity to handle any unexpected heavy rainfall events without risk of overflow or operational disruptions. 13 resourcing the new economy for a better tomorrow Barruecopardo Mine Ore Reserve Update In October 2024, EQR released an updated