EQ Resources Limited Annual Report 2021

Operating and Financial Review continued Mt Carbine Project Timeline The Company has continued to implement the operational and execution strategy for its Mt Carbine assets, this has seen continuous bulk trialling of the LGS through the XRT Sorter, combined with the environmental approval to process up to 1,000,000tpa of LGS material through the crushing, screening and XRT Sorter. It has also seen the successful completion of the diamond drill program focusing on an updated resource estimate and reserve statement. The Company initiated the Bankable Feasibility Study (“BFS”) and completed the appointment of its lead contractors on target for completion of the BFS in Q4 of 2021. Gravity Plant Activities During the 2021 financial year, the Mt Carbine Gravity Plant operated on a continual basis processing mainly historic tailings material and trialling LGS fines material and sorter concentrate during Q3 and Q4 of the financial year. After EQR’s capital raising in March 2021, further plant improvements were completed on the Gravity Plant targeting increased running time capabilities, higher overall tungsten recoveries and higher-grade concentrate product. Improvements in the process design included the installation of a separate feed system for the XRT Sorter concentrate, removal of the historic and maintenance intensive scrubber from the circuit, electrical circuit upgrades throughout the plant and new piping of shaking table tailings for re-jigging. It was decided in June to focus on the processing of at least 50% LGS fines with XRT Sorter concentrate and tailings material. It was therefore decided to reduce head feed processing to focus on the higher grade feed blend and re-allocate staff to the crushing and screening operations using the quarry equipment on site. The reduced tonnage throughput has led to higher concentrate outputs due to the higher-grade nature of the feed material along with higher running time on completion of the plant upgrades. A summary of the major plant upgrades during the 2021 financial year are set out below: − Installation of a separate feed system for XRT Sorter Concentrate; − Rubber lining of all sumps, slurry tanks, and pipe inlets to reduce wear and tear; − Removal of the historic and maintenance intensive scrubber from processing circuit; and − Rerouting of piping to reduceWO 3 losses to tailings. Percentage 0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 0.18 Q1 2021 FY Q2 2021 FY Q3 2021 FY Q4 2021 FY Q1 2022 FY Feed Grade % WO 3 6 EQ Resources Limited Annual Report 2021