EQ Resources Limited Annual Report 2021

With the increase in LGS material a significant benefit that the Company has realised during this time is the ratio of feed tonnes to concentrate kilograms produced has increased significantly. While operating the gravity plant on tailings only material, the ongoing trend averaged around the 0.75 Kg/t of feed processed, however, as increasing levels of LGS fines and XRT sorter concentrate was processed, the positive effect is clearly seen in the first quarter of 2022. During the first quarter of 2022, the feed material to the gravity processing plant was still combinedwith approximately 50% tailings material due to the crushing and screening capacity constraints of the quarry equipment currently being used. The ratio of feed to concentrate kilograms produced will continue to increase as higher the ratio of LGS fines and XRT sorter concentrate increases against the historic tailings feed. The large majority of employees have been sourced from the local Mareeba Shire region, where possible, individuals were employed with mining industry experience, however, due to the location, several new recruits had complimentary skill sets or worked in other heavy industry outside of mining and therefore required training to bring their skill sets in line with the standard required for the operations at Mt Carbine. This investment in our employees, their training, up- skilling, and learning has created a core operations team that is local based, local focused and loyal to the operations. This will allow the operations to scale-up production. In June 2021, the Management team changed the Gravity Plant operational roster to have 1-week of processing and 1-week shut down to allow half of the staff to be allocated to crushing, screening and XRT sorting operations and produce higher grade feed materials for the operation. This has seen a significant reduction in the cost base from June to August 2021 and new record concentrate production levels reached. The Company is continuing to drive toward processing solely -6mm fines from the LGS and XRT Sorter concentrate as it has a far superior feed grade compared to the historic tailings. The Company has applied with the local authorities for an upgrade of the power supply to site, which enables the operational team to add additional screening capacity and running all plants (Quarry, XRT Sorter, Gravity Plant) in parallel on a 24/7 basis, which so far was limited by the site power network. Operating and Financial Review continued Mt Carbine Mixed Tungsten Concentrate Mt Carbine Mixed Tungsten Concentrate (under UV light) Kilograms (Kg) 0.0 0.5 1.0 1.5 2.0 2.5 Q1 2021 FY Q2 2021 FY Q3 2021 FY Q4 2021 FY Q1 2022 FY Ratio - Feed (t) to Concentrate (kg) 8 EQ Resources Limited Annual Report 2021