EQ Resources Limited Annual Report 2021

EQ Resources Limited Annual Report 2021 33 ANNUAL Report June 2021 Directors’ Report 19 Financial Performance The loss for the consolidated Group for the financial year after tax amounted to $4,574,191 (2020: loss of $3,015,680). This result was primarily brought about by an increase in operating costs associated with the ramp-up of production at the Mt Carbine Retreatment Plant following the finalisation of its commissioning during the prior financial year coupled with the scaling up of activities for the fulfilment of the Quarry’s ~$4 Million Purchase Order with Bama Civil. The Group has created value for shareholders through:  its continued focus on optimising production and recoveries from the Mt Carbine Retreatment Plant with XRT Sorting testwork continuing across the Low-Grade Stockpile (LGS);  the fulfilment of ~90% of the Quarry’s ~$4 Million Purchase Order with Bama Civil. The balance of the order was satisfied in-full during the first quarter of the 2022 financial year.  Completion of 16-hole resource drilling program which hits bonanza grades under the Andy White Open Pit with average grades continuing to significantly exceed the previously reported resource grade; and  Initiation of a Bankable Feasibility Study to assess the potential for an open pit operation prior to commencement of underground mining at the Company’s flagship asset, the Mt Carbine Tungsten Mine. The Company also continues to evaluate its NSW Exploration Licences in conjunction with the development and commercialisation of its tungsten assets in Far North Queensland. Financial Position In accordance with the Company’s accounting policy, the recoverability of the carrying amounts of Deferred Exploration and Evaluation Expenditure were reassessed during the 2021 financial year with no impairments recognised, resulting in exploration and evaluation expenses of $1,559,397 being capitalised for the 2021 financial year. The carrying value of the exploration assets as at 30 June 2021 is $8,280,353 (2020: $6,896,994). At 30 June 2021, the Group had a net working capital deficit of $234,358 (2020: $2,571,385 surplus). This change was predominately brought about by the reclassification of the Offtake Contract Liability from non- current to current. As the Group is an exploration and development entity, ongoing exploration and development activities are reliant on future capital raisings. During the year, the Company raised $5,580,848 (after share issue costs) from placements. Indemnification and Insurance of Officers and Auditors Indemnification The Company has not, during or since the end of the financial period, in respect of any person who is or has been an Officer of the Company or a related body corporate indemnified or made any relevant agreement for indemnifying against a liability incurred as an Officer, including costs and expenses in successfully defending legal proceedings. Insurance Premiums During the financial period the Company has paid premiums to insure each of the Directors and Officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct whilst acting in the capacity of a Director or Officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The premiums paid are not disclosed as such disclosure is prohibited under the terms of the insurance contract .