Annual 2024 Report
Directors Oliver Kleinhempel Non-executive Director Non-executive Chairman Stephen Layton Non-executive Director Richard Morrow Non-executive Director Stephen Weir (Appointed 19 January 2024) Non-executive Director Zhui Pei Yeo Non-executive Director Company Secretary Melanie Leydin Registered Office Level 4, 100 Albert Road South Melbourne VIC 3205 T +61 (0)7 4094 3072 W www.eqresources.com.au E info@eqresources.com.au 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 Streett Melbourne VIC 3000 T +61 (0)3 8613 8888 F +61 (0)3 8613 8800 Stock Exchange Listing Listed on the Australian Securities Exchange (ASX) ASX Code: EQR ACN: 115 009 106 ABN: 77 115 009 106 Corporate Directory 1 Chairman’s Address 2 Chief Executive Officer’s Letter 4 Operating and Financial Review 4 Corporate & Financing Activities 11 Sustainability 20 Mt Carbine Operations 50 Saloro/Barruecopardo Operations 66 Competent Persons Statement 69 Directors’ Report 81 Consolidated Statement of Profit or Loss and Other Comprehensive Income 82 Consolidated Statement of Financial Position 83 Consolidated Statement of Cash Flows 84 Consolidated Statement of Changes in Equity 85 Notes to the Consolidated Financial Statements 121 Consolidated Entity Disclosure Statement 122 Directors’ Declaration 123 Auditor’s Independence Declaration 124 Independent Auditor’s Report 129 Shareholder Information 133 Forward Looking Statements Contents
Chairman’s Address Our teams deliver on the synergies, driven by the diverse expertise and everybody’s commitment to have both operations strive and succeed. Dear Shareholders and Friends of EQR, It is my great pleasure to present to you the 2024 Annual Report for EQ Resources Limited. To reflect on the past 12 months, allow me to rewind with a personal note. Back in 2018, I had my first interactions with Saloro’s management team. This was not at all related to the later transactions between the Companies. Instead, it was a joint effort with several European research institutes to develop technologies that would allow the recovery of critical raw materials from challenging mineral deposits and old mine waste stockpiles – it goes without saying that our laser-like focus was on Tungsten! To collaborate efficiently on such topics and towards a tangible outcome, one needs to share the same vision on how our sector could generate value and contribute to society in a sustainable way! Teamwork Above All Since my first interactions referred to above, mutual respect, trust and transparency formed the basis of many discussions. This has fully transpired into the leadership teams and are defined principles of the collaboration between both sites which now form the EQ Resources Group. Weekly team meetings between the senior members from both locations continue to forge the relationship and already started to deliver on the synergies driven by the diverse expertise and everybody’s commitment to have both operations strive and succeed. Continue Developing an Ecosystem We continue engaging with key customers and partners, truly believing in the value that strong ecosystems can deliver to all its members. We have built a solid relationship with one of our key customers, Masan HighTech Materials. Both sides believe in win-win-constellations. The Companies exchange technical information to effectively allow for a better utilisation of the tungsten resources mined at our sites and shipped to Vietnam. We recently announced a strategic collaboration with Elmet Technologies, a leading US tungsten manufacturer “far down our value chain”. This was intentional; we need and want to be closer to the end-users. Discipline at the Core The general outlook and recent performance of the Company look promising. Nevertheless, (cost) discipline and governance must remain at the core of our operations. As the Company grows, the management and board competencies need to expand in parallel. The Company has attracted incredible talent, as a key ingredient for any successful Company. Strategic optionality can be best played with a strong balance sheet. Our priorities are, therefore, clearly defined, and we are looking positively into the coming 12 months! On behalf of the Board, I would like to thank all shareholders for their continued support. . Oliver Kleinhempel Non-Executive Chairman EQ Resources Ltd EQ Resources Limited Annual Report 2024 1
Chief Executive Officer’s Letter Dear Shareholders, As we reflect on the past year, I am proud of the extraordinary progress EQ Resources (“EQR”) has made. This past year has been transformative for the Company, driven by a series of strategic milestones that have fortified our position as the leading primary tungsten producer outside of Asia and Russia. With each step forward, we have demonstrated our commitment to operational excellence, continuous improvement in safety, sustainable growth, and value creation for our shareholders. Saloro Acquisition: A World-Class Asset One of the most exciting developments this year was the acquisition of Saloro’s Barruecopardo mine, a world-class tungsten project with high-quality equipment and an exceptional team of professionals. This acquisition is a gamechanger for EQR. It not only expands our portfolio of premium tungsten assets but also enhances our production capacity and bolsters our standing in the global tungsten market. The integration of Saloro into our operations hasn’t been without its challenges, but it is starting to bear the fruits of our labour and we are confident that this asset will contribute significantly to our growth in the near term. Unlocking the Potential of Mt Carbine Mt Carbine continues to demonstrate its tremendous potential. Over the past year, we have made significant strides in open-cut mining operations growing our production profile along with operational outputs. The underground mine has a promising future, with the majority of Resources yet to be converted to Reserves with several highvalue and high-priority mining areas identified as great underground mining targets. This presents a substantial opportunity for resource expansion and value realisation as we progress with our conversion efforts. Moreover, we are now mining zones rich in high-grade tungsten, with grade increasing at depth. Our latest rounds of drilling have confirmed this, and we are confident that as we continue to expand our operations at Mt Carbine, the best is yet to come. I believe the quality of the ore we are encountering positions us well to deliver strong production volumes and increase shareholder value over the next 12 months. Leading the Western Tungsten Market With the continued growth of Mt Carbine, the addition of Saloro and the grant of the Wolfram Camp exploration permit, EQR has solidified its position as the largest primary tungsten concentrate producer outside of Asia and Russia. This achievement is particularly significant given the strategic importance of tungsten in global supply chains. Tungsten is critical mineral for modern technologies, and our operations ensure a stable and secure supply of this essential material to industries globally. In an environment where global demand for critical minerals is increasing, our leadership in tungsten production places EQR at the forefront of the industry’s future. We remain committed to scaling our operations responsibly and sustainably to meet this demand. EQ Resources is focused on long-term growth, leveraging our expanding operations and sustainable practices to strengthen our leadership in the tungsten market and deliver lasting value for our shareholders well into the future. 2 EQ Resources Limited Annual Report 2024
A Sustainable Path Forward As we look to the future, sustainability remains at the core of everything we do. Our approach to environmental stewardship, safety and community engagement ensures that we operate in a manner that benefits not only our shareholders but also the broader communities in which we operate. Both operations are corresponding on ESG initiatives and evolving as a Company. Outlook for 2025 and Beyond As we move into 2025, we are positioned for another year of robust growth. Our focus will remain on delivering consistent production from Mt Carbine, advancing the underground potential, and optimising Saloro production outputs and plant recoveries. With ongoing exploration and development, we believe that EQR will continue to grow as a leader in the critical minerals sector, delivering long-term value for our shareholders. I would like to extend my gratitude to our dedicated team, whose hard work and expertise continue to drive our success. I would also like to thank our shareholders for your continued support and confidence in our vision. Together, we are building a stronger, more resilient future for EQ Resources, and I am excited about the opportunities that lie ahead. Thank you. Kevin MacNeill Chief Executive Officer EQ Resources Ltd Aerial view of Saloro’s Barruecopardo mine, Salamanca Province, Spain. EQ Resources Limited Annual Report 2024 3
Corporate & Financing Activities EQR Completes Acquisition of Saloro S.L.U. and $25 Million Placement with Oaktree On 18 January 2024, EQR and Oaktree Capital Management, L.P. (“Oaktree”) satisfied all conditions precedent for EQR’s acquisition of Saloro S.L.U. The transaction also comprised a $25 million placement to Oaktree at 9c per share, resulting in Oaktree now holding a 15% stake in the Company. To further streamline Saloro’s key banking relationships, the Company agreed to reduce third-party bank debt by €10 million, compared to €5 million as per the initial transaction agreements. The transformational acquisition strengthens EQR’s relevance in the global tungsten industry, with the Company becoming the largest independent tungsten concentrate producer outside of China. Oaktree’s investment in EQR enhances the Company’s shareholder register and capital market positioning, supporting the further expansion of both the Mt Carbine and Barruecopardo operations. Production ‘key performance indicators’ at Saloro strongly improved since collaborative work was first established between EQR and Saloro. Since acquisition, a further debottlenecking program, including the doubling of XRT sorting capacity, has been undertaken with initial efforts focused on improving the jigging plant and ongoing enhancements in the spirals and shaking table sections, leading to significantly better metal recoveries. Another key area of production expansion involves XRT ore sorting. Saloro’s Barruecopardo Mine, with its coarse scheelite, is well-suited for this technology. Following successful trials and results from the first TOMRA XRT Ore Sorter, introduced in August 2023, Saloro and EQR purchased a second unit, which arrived in December 2023. This addition aims to positively impact costs, utility consumption, and overall metal recovery at the Barruecopardo operation. See ASX Announcement 18th January 2024: ‘EQR Completes acquisition of Saloro S.L.U. and $25 Million placement with Oaktree’. Operating and Financial Review 4 EQ Resources Limited Annual Report 2024
Changes in EQR Board & Leadership Team • Non-executive Director since August 2019, Chair since April 2020. • Experience in project development, finance, commodity trading. • Previous roles at Outotec, Ferrostaal Group, CRONIMET. • Executive director at CRONIMET Holding GmbH. Oliver Kleinhempel - Non-Executive Chairman • Appointed in November 2017. • 35+ years in equity capital markets in the UK and Australia. • Experience in ASX listings, corporate advisory. • Directorships at Mithril Silver and Gold Limited and Pursuit Minerals Limited. Stephen Layton - Non-Executive Director • Appointed in August 2019. • Background in executive management, project planning, resource management. • Works in system integration in telecoms in South-East Asia. • Executive director at a steel-product manufacturer. Zhui Pei Yeo - Non-Executive Director • Appointed in March 2021. • Over 30 years as a sharebroker, interested in resources sector. • Chairman of Melbourne Mining Club. • Investment roles at Lowell Resources Fund Management; Fellow of AusIMM. Richard Morrow - Non-Executive Director • Background in mining, finance; former CEO of Magnetite Mines Ltd. • Experience in corporate advisory, project finance, construction management. • Member of the Australian Institute of Company Directors, GBA Capital Advisory Board. Stephen Weir - Non-Executive Director Board of Directors Stephen Weir was appointed to the Board of Directors of EQR on 19th January 2024 as Oaktree’s nominee Director and Chair of the Audit & Risk Committee. Mr Weir is a former Chief Executive Officer of Magnetite Mines Ltd (ASX:MGT), a company focused on the development of the Razorback Iron Ore Project in the Braemar region of South Australia. Mr Weir’s prior fields of expertise and senior executive roles span the mining, industrial services, energy and infrastructure sections. He has a 20-year career in corporate advisory with RFC Ambrian where he was a Managing Director, preceded by project finance (Bankers Trust), general management (Brambles) and construction management (John Holland Engineering). See ASX Announcement 19th January 2024: “Stephen Weir joins EQR’s Board of Directors”. Another change in the leadership team is the appointment of Evren Ören as Chief Operating Officer for the Saloro Operations in February 2024. With an academic background in Mining Engineering, Mineral Processing, and Business Administration, Evren brings global experience in optimising mineral processing plants, operations, and EPC management. Proficient in Spanish and English, his cross-cultural skills strengthen operations and foster collaboration within the group. A$20M Funding Facility from QIC for Mt Carbine Mine Expansion The Company and Queensland Investment Corporation (“QIC”) have entered into an agreement to establish a three-year funding facility. QIC will provide up to A$20 million from the Queensland Critical Minerals and Battery Technology Fund (“QCMBTF”). The fund’s main goal is to support the mining and refining of essential minerals and the development and production of battery technologies and advanced materials in Queensland. The 3-year loan facility will accelerate the Company’s 2 mtpa processing capacity expansion plan ongoing at the Mt Carbine Tungsten Mine with A$12M in Tranche 1. Tranche 2 of A$8M will enable the Company to push forward with the initial phase of the 2024 drilling program, aiming at defined underground targets, and to integrate these findings into a comprehensive underground feasibility study. The underground resource, which has been minimally explored, is accessible via a 1980s decline that was reopened after the quarter-end and presents higher grades and significant potential for resource expansion. This funding is contingent on meeting standard prerequisites, including project completion tests. See Announcement 8th May 2024: ‘QIC approves A$20M funding for Mt Carbine Tungsten Mine expansion’. EQ Resources Limited Annual Report 2024 5
• Tranche A: $12m will double processing capacity to 2mtpa and start underground drill testing • Tranche B: $8m to continue underground drill testing and start underground trial mining Deputy Premier, Treasurer and Minister for Trade and Investment Cameron Dick commented: “Our investment through the Queensland Critical Minerals and Battery Technology Fund provides a pathway for EQ Resources to extend the existing mine by further exploring tungsten resources accessible through underground mining. New plant equipment, drill testing and trial mining is forecast to increase capacity and extend the mine’s life by at least five years, ensuring global demand for tungsten continues to deliver local opportunities for Far North Queenslanders.” QIC - $20M Facility For Mt Carbine Expansion QIC’s State Chief Investment Officer Allison Hill commented: “Securing additional tungsten mineralisation will strengthen Queensland’s position as a significant contributor to global critical minerals supply chains. There are relatively few mines globally in a position to fill anticipated supplydemand gaps for tungsten as existing outputs are challenged and demand for clean energy technologies grows.” Queensland Investment Corporation (QIC) provides a $20million 3-year loan facility in two tranches from its Queensland Critical Minerals & Battery Technology Fund: Research and Development Tax Refund The Company received a cash refund of $2.17 million, in May 2024, following the submission and approval of its Research and Development (R&D) Tax Refund application for the 2023 financial year. This refund has been granted in recognition of various eligible R&D activities conducted during the year at EQR’s Mt Carbine Mine. See ASX Announcement 10th May 2024: ‘Mt Carbine Receives A$2.17M R&D Tax Refund’. Successful Placement of A$9.5M to Continue Mt Carbine Expansion In May 2024 EQR completed a A$9.5 million placement of new fully paid ordinary shares (New Shares) and options (New Options) to institutional and sophisticated investors (Placement). A broad range of high-quality institutional investors showed strong support for the placement. The issue price for the Placement was A$0.045 (4.5 cents) per share with 1-for-3 free attaching unlisted New Options, exercisable at A$0.0675 (6.75 cents). The Placement was conducted by Pac Partners Securities Pty Ltd (Lead Manager) and GBA Capital Holdings (Co-Manager). Funds managed by Oaktree Capital Management L.P. (Oaktree) retained 15% of the Placement to ensure its continued interest in EQR. On 29 May 2024, 205,940,008 million New Shares were issued at an issue price of $0.045 (4.5 cents) per share, along with 68,646,669 New Options, exercisable at A$0.0675 (6.75 cents) expiring on 29 May 2027. A further 20,000,000 New Options were issued to brokers on the same terms as the Placement Options. Directors subscribed for 5,111,111 New Shares and 1,703,704 New Options (equivalent to A$230,000). The Company has issued 39,304,733 New Shares and 13,101,577 New Options to Director Zhui Pei Yeo (or his nominee), plus withholding tax, as repayment of his A$1,798,570 loan to the Company. See ASX Announcement 21st May 2024: ‘Successful placement of A$9.5M to accelerate Mt Carbine Expansion’. Convertible Notes EQR announced on 28 September 2023 that investors holding the 4 million convertible notes issued in 2021 fully converted their notes into EQR ordinary shares. The 2-year interest-bearing convertible notes were partially converted in September 2021, for an amount of $2 million (equal to 2 million notes), with the balance $4 million (equal to 4 million notes) converted just before its due date. See ASX Announcement 13th September 2023: “Early Works Funding Secured for Mt Carbine Expansion Well Ahead of BFS Release” ; ASX Announcement 28th September 2023: “Investors Convert 100% of Convertible Notes as Mt Carbine Mine Ramp-up Continues”. A further issue of 750,000 convertible notes took place on 6th November 2023 with an aggregate principal value of $750,000. The notes are convertible at the option of the noteholders into ordinary shares at a conversion price of $0.100 per share at any time after issuance and up to the close of business on the maturity date. EQR Executes Definitive Agreement to Acquire Mt Carbine JV Interest from Cronimet On 21 May 2024, the Company executed the definitive agreement related to the Joint Venture Interest Transfer (Agreement) with CRONIMET Asia Pte Ltd (CR Asia) and CRONIMET Australia Pty Ltd (CR Australia) for the acquisition of CR Australia’s 50% joint venture interest in the Mt Carbine Retreatment Joint Venture (JV). Operating and Financial Review continued 6 EQ Resources Limited Annual Report 2024
The Agreement formalises the binding Heads of Agreement (HoA) entered into in October 2023, which was subject to financial and legal due diligence by the parties See ASX Announcement 18th October 2023: ‘Strategic Partner Cronimet Joins EQR Register, As EQR Acquires JV Interest From Cronimet’. In 2019, EQR, through its wholly owned subsidiary Mt Carbine Retreatment Pty Ltd (“MCR”), and CR Asia, through its wholly owned subsidiary CR Australia, embarked on a Joint Venture to reprocess the historic Mt Carbine tailings and low-grade ore stockpiles, known as the Mt Carbine Tungsten Operation. Under this arrangement, CR Australia and MCR each held a 50% interest in the JV. As part of that JV arrangement, CR Asia prepaid an initial US$3.5 million, subsequently increased by an additional US$3 million (currently US$6.5 million), for a long-term offtake agreement for 25,000 tonnes of tungsten concentrate from the Mt Carbine Tungsten Operation (Offtake Agreement). CR Australia loaned US$2.2 million in working capital into the JV and a further US$3.2 million for equipment leases, including one XRT Ore Sorter and various material handling equipment. EQR will assume 100% of these liabilities under the Agreement. With the successful operation of the processing plant and the expansion of operations to include the Andy White Open Pit, EQR and CR Australia have agreed to a streamlined JV structure with EQR purchasing CR Australia’s 50% interest in the JV subject to conditions precedent. See ASX Announcement 21st May 2024: ‘EQR executes definitive agreement to acquire Mt Carbine JV interest from Cronimet’. Strategic Partners Endorsement Through Fundings and Grants EQ Resources Limited Annual Report 2024 7
Macroeconomics and Market Trends The tungsten market is highly responsive to the global commodity market, known for its volatility in both price and demand, with macroeconomic conditions and geopolitical risks being major factors contributing to this instability. Rising geopolitical tensions around the world, exemplified by the ongoing conflicts between Russia and Ukraine and the unrest between Israel and Palestine, are heightening risks in international markets. These conflicts not only disrupt local economies but also have far-reaching effects on global trade and resource distribution, posing significant challenges for industries reliant on stable international relations. Due to political instabilities, the demand for tungsten in the defense industry has been rising, driven by its applications in military products such as projectiles, armor-penetrating ammunition, and other hardware, where its density and hardness are highly valued. The defence industry has witnessed the sharpest rise of all the segments of the tungsten market, but represents only around 15% of the market and has not been a critical enough influence on the global demand to be the main driver of the rise in prices witnessed in the last quarter of FY2024. Market movements are largely fuelled by the supply and demand for high-performance, wear-resistant materials in diverse industries such as automotive, aerospace, and electronics. The widespread application of tungsten in manufacturing cutting tools, drill bits, and components that must endure high temperatures, highlights its critical role in sectors that demand materials with exceptional durability under extreme conditions. Moreover, tungsten’s increasing utilisation in the electronics sector for making electron emitters and electrical contacts also contributes significantly to the market’s growth. 2 Global Relevance ult m Tungsten Market dominated by non-OECD members ◼ China accounts for over 83% of world Tungsten primary (mining) production ◼ Unique properties make Tungsten an essential industrial metal ❑ Highest melting point of all metals and highest tensile strength, high density, hardness close to diamond, thermally and chemically stable, excellent conductor, and environmentally benign ❑ End-market application for light and heavy industrial, energy and military uses include in heavy metal alloys such as high-speed steel, from which cutting and pressing tools are manufactured ◼ Benchmark pricing continues upward trend considering tungsten’s strategic relevance and precarious supply / demand situation Primary Tungsten Production by Country Tungsten Reserves by Country 83.3% 5.7% 3.0% 1.8% 1.5% 1.2% 1.1% 1.1% 0.8% 0.5% Total World – 79kt Total World – 3,700 kt 51.4% 32.5% 10.8% 2.7% 1.4% 0.8% 0.3% 0.1% China Portugal Other Countries Korea, North Russia Spain Vietnam Rwanda Austria Bolivia For tungsten market dynamics update, see: "Inverstors Update/Webinar". Operating and Financial Review continued 8 EQ Resources Limited Annual Report 2024
Tungsten Uses Aviation Aerospace Military Heavy Machinery Heavy Industry Tools & Construction Medical EV Battery Development Automotive Science & Tech Green Energy Micro Electronics Tungsten Uses Critical Alloy Element, Unsubstitutable in Many Applications Demand was low during the first half of the past year due to significant destocking driven by the high-interest rate environment, and recovered later in the second half of the financial year, primarily due to an environmental audit of tungsten producers in China. However, the price recovery was primarily driven by demand for concentrate due to low stockpiles at production facilities, rather than by downstream demand, as end-product demand recovery has yet to materialise. Economic Importance Supply Risk Tungsten – A Material of Global Critical Significance Source: European Commission list of critical raw materials, 2023. EQ Resources Limited Annual Report 2024 9
Currently, the low availability of tungsten concentrate persists, with strong demand from both Western and Chinese consumers, all of whom are trying to secure long-term material supply to cope with production uncertainties. In addition, recent tariffs implemented in the US are also pushing Western tungsten consumers to secure non-Chinese and sustainable supply, which remains quite scarce. This aligns with EQR’s strategy to support the redevelopment of Western mines in favourable jurisdictions. While numerous projects have been announced in the recent years to provide new Western supply, very few are currently operating, and even less are able to reach their nameplate capacity, putting more pressure on the supply side, a favourable factor for EQR’s own production. However, a few projects are due for completion in the next year or so, and this additional supply, pending that commissioning goes as per announced plans, may have a detrimental impact on the APT price. In China, while the government is limiting the export of non-processed material, there is currently no indication that a total export ban could be considered. Should this ever happen, EQR would be in a leading position to support the Western strategic supply. In line with global industry trends, the tungsten market is set to experience changes in supply allocations. According to Fastmarkets, ‘The total tungsten (tungsten trioxide content 65%) mining quota in China will be 114,000 tonnes in 2024, which was up by 3,000 tonnes from 111,000 tonnes in 2023,’ as reported in August 2024. This increase in the mining quota reflects a growing demand for tungsten, which is pivotal for the strategic planning and operational adjustments moving forward. As the largest producer of tungsten, China’s production levels are significant indicators that directly influence global supply and pricing strategies. 44 43 54 53 70 70 71 79 86 80 80 64 102.3 114.7 122.7 122.0 139.1 140.7 134.7 149.5 149.4 143.8 136.0 120.2 0 0 0 0 0 0 0 0 0 0 1 2 58.4 71.7 69.0 68.6 69.6 70.4 63.4 70.8 62.9 63.9 56.0 56.1 0 20 40 60 80 100 120 140 160 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 FREQUENCY Rolling Frequency Rates 2024 LTIFR Average QLD Quarries (LTIFR) TRIFR Average QLD Quarries (TRIFR) CIFR MTIFR 280 290 300 310 320 330 340 350 360 370 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 US$ / mtu APT Price CIF Rotterdam - (US$/mtu WO3) High Mid Low APT price changes 12 months High, Mid & Low. Source: Fast Market APT Price CIF Rotterdam. APT CIF Rotterdam prices rose to US$335-360 per mtu by the end of June, reaching a two-year high as increasing demand coincides with tightening supply. Given the range of factors which contribute to the price of tungsten, and the fact that pricing is subject to negotiation, it is difficult for EQR to predict with certainty the prices at which tungsten will be sold. The effects of changes in assumptions about future prices may include, among other things, changes to Mineral Resources and Ore Reserves estimates, as well as the assessment of the recoverable amount of EQR’s assets. Operating and Financial Review continued 10 EQ Resources Limited Annual Report 2024
Sustainability As an early adopter of Environmental, Social, Governance (ESG) practices, EQ Resources is committed to responsible resource development, aligning its values with sustainable operations to drive economic growth while protecting the environment. EQR’s ESG strategy, built on the Turner and Townsend framework, aligns with global Sustainability Standards, including International Council on Mining and Metals (ICMM), Global Reporting Initiative (GRI), United Nations Sustainable Development Goals (UN SDGs) and Australian Climate Related Financial Disclosures. The program focuses on key areas important to the business and stakeholders, with a commitment to ongoing development of both environmental and social initiatives. For more details, visit the Sustainability page of EQR’s website. EQR Core Values Act Safe. Feel Safe. Embrace Difference Tread Lightly Dig Deep Buddy Up Lead with Integrity Act safe at work. Care and respect each other. Feel safe to be yourself. Diversity of thinking, skills and background creates value and drives innovation. Embed resource efficiency to minimise environmental footprint & deliver positive societal impact. Go one better. Strive to continuously learn and improve. Challenge the status quo. Collaboration is key to realising shared value. Have courage to do the right thing. Be accountable. WHAT WE CARE ABOUT “Step Up, Stand Out: Own Our Impact” ESG Achievements The year 2023-24 has been a productive year for EQ Resources’ ESG progress, below are the key milestones: 2023 Q4 Published sustainability section in Annual Report 2023 Q4 Finalist in Project Controls Expo Sustainability project of the year 2023 Q4 Commenced communicating ESG through our Values in quarterly update 2023 Q4 Second Stakeholder Sentiment Survey disseminated to key EQR stakeholders 2024 Q1 Sustainability incorporated into Quarterly reports 2024 Q1 ARTEH engaged to continue GHG emissions tracking at Mt Carbine 2024 Q2 Review of sustainability metrics carried out, high-level alignment to ICMM principles completed. Updated alignment to UN SDG’s. 2024 Q2 Completed 2024 Stakeholder ESG Engagement Survey, results analysed 2024 Q2 Review completed of ESG workbook and EQRs initiatives updated 2024 Q3 Gain understanding of how incoming EU and Australian Sustainability Reporting Standards impact EQR and commence forward-planning for future reporting requirements 2024 Q4 Planned Sustainability Risk Assessment 2024 Q4 Planned Decarbonisation planning to commence EQ Resources Limited Annual Report 2024 11
ESG Showcase Mt Carbine and Saloro Genuine initiatives are driven by EQR’s core values and stakeholder sentiment surveys. Highlighted ESG initiatives are displayed on the ESG Showcase page on the EQR website and are updated regularly: Operating and Financial Review continued 12 EQ Resources Limited Annual Report 2024
Decarbonisation – Mt Carbine Net Zero Readiness Assessment EQR initiated its decarbonisation roadmap in 2023 with a Net Zero Readiness Assessment, guided by ESG consultants and aligned with the Task Force on Climate-Related Financial Disclosures (TCFD). The assessment covered key indicators to evaluate assets, operations, and general awareness, providing a clear direction for EQR’s decarbonisation strategy at Mt Carbine. Emissions tracking and reporting EQR actively tracks greenhouse gas emissions at Mt Carbine, focusing on Scope 1 and 2 emissions, with limited Scope 3 categories, in partnership with ARTEH. Although emissions levels do not trigger the thresholds for the National Greenhouse and Energy Reporting Scheme (NGERS) or the Safeguard Mechanism, EQR is aligning with Australian Climate-Related Financial Disclosure requirements. EQR is committed to enhancing its emissions data collection and optimising decarbonisation opportunities across its operations. Facility Threshold Corporate Threshold Safeguard Mechanism Threshold 25 kt or more of Scope 1 and 2 emissions and / or production or consumption of 100 TJ or more of energy. 50 kt or more of Scope 1 and 2 emissions and / or production or consumption of 200 TJ or more of energy. 100 kt of more of Scope 1 emissions at the facility. Decarbonisation Strategy and Future Planning In Q4 2024, EQR will continue developing its Decarbonisation Strategy, with a roadmap expected by Q1 2025. This plan will use 2023-24 emissions data as a baseline and will be informed by the outcomes of the Sustainability Risk Assessment, focusing on climate change mitigation, energy and water efficiency, and technology adoption. Stakeholder Engagement and Workshops To support decarbonisation efforts, EQR will conduct a workshop to engage internal stakeholders on emissions reduction strategies. Originally scheduled for Q3 2024, this workshop was deferred to accommodate the transition to owner-operated mining at Mt Carbine. EQR remains pragmatic, applying practical decarbonisation solutions across both Australian and Spanish operations. nd 1 Resources | Net Zero Readiness 2023 end undertook a Net Zero Readiness Assessment with EQ Resources on 9 May 2023. t process is guided by Turner & Townsend's net zero methodology, developed in line work set out by the Task Force of Climate-Related Financial Disclosures (TCFD). ed 23 questions, covering four key indicators – see Figure 1. The session allowed us he business’ current position and begin mapping out the direction of travel on EQR’s zero emissions. cluded criteria across assets, operations and general awareness. The broad scope of is also helpful for managing wider environmental impacts beyond emissions, which work that the organisation has already done to establish its ESG approach. diness position has been provided below in Table 1: Current position (score out of ten) 3.2 3 ment 2.75 e 3 core is reflective of a growing business that has developed its net zero awareness notably onths. t further progress can be made in the next 12 months, particularly by structuring existing tion activities through the development of a net zero strategy. This will provide a platform these activities with wider programs and measuring emissions alongside other key tors. t indicators, as guided by the TCFD panying assessment spreadsheet provides two sets of current scores. We have amended EQR’s initial n light of the context around its stage of business and current circumstances. The scores provided in gn with Column F in the ‘WorkshopNotes’ tab. EQ Resources Limited Annual Report 2024 13
2024 Stakeholder Sentiment Survey- Mt Carbine See: Sustainability Framework & ESG Strategy incl. 2024 Materiality Assessment and Decarbonisation Roadmap. The 2024 ESG Stakeholder Sentiment Survey helped gather insights into material ESG themes from a diverse group of stakeholders, including employees, community members, and board members. Feedback reflected positive changes in areas such as waste management, water security, and employee retention since 2021. resourcing the new economy for a better tomorrow 15 2024 Stakeholder Sentiment Survey- Mt Carbine See: EQR Stakeholder Sentiment Survey 2024 (link to be provided once live on website) Sustainability Framework & Materiality Assessment The 2024 ESG Stakeholder Sentiment Survey helped gather insights into material ESG themes from a diverse group of stakeholders, including employees, community members, and board members. Feedback reflected positive changes in areas such as waste management, water security, and employee retention since 2021. Stakeholder Quotes “EQR makes themselves available to stakeholders on request” “EQR are improving all the time” “Our tailings dams show how little impact the mine has on the surrounding environment with birds, fish and even fresh water crocodiles.” “EQR sets a good example in an industry that gets a bad rap” “EQR are proactive with community engagement, have a good reputation and should continue building trust with neighbouring landholders, Traditional Owners, local council and community” “EQR has a good reputation in the community. Keep doing what you’re doing” “Very proud of the Company's continued diligence & attention to ESG responsibilities” “Thank you for the opportunity to send our impressions on EQR's ESG commitments” “Being a growing mine, safety culture is always hard to build but I really feel like we are going in the right direction” “I have confidence in the Project leadership team” ESG Materiality Stakeholders rated top material themes as Water & Resources, Risk & Compliance, and Health, Safety & Wellbeing. External stakeholders also prioritised community engagement. Stakeholder Feedback EQR received positive feedback on its ESG efforts, highlighting transparency, environmental protection, community engagement, and safety culture. ESG Focus Areas Stakeholders prioritised Employment Attraction & Retention, Water & Resources, and Health, Safety & Wellbeing as key focus areas for future ESG efforts. EQR is committed to incorporating its stakeholders’ feedback into its future ESG strategy and program. EQR will continue to prioritise areas identified by stakeholders as of ‘material importance’ as well as those areas identified as an ‘opportunity for focused improvement’ in the survey. ESG Materiality Stakeholders rated top material themes as Water & Resources, Risk & Compliance, and Health, Safety & Wellbeing. External stakeholders also prioritised community engagement. Stakeholder Feedback EQR received positive feedback on its ESG efforts, highlighting transparency, environmental protection, community engagement, and safety culture. ESG Focus Areas Stakeholders prioritised Employment Attraction & Retention, Water & Resources, and Health, Safety & Wellbeing as key focus areas for future ESG efforts. EQR is committed to incorporating its stakeholders’ feedback into its future ESG strategy and program. EQR will continue to prioritise areas identified by stakeholders as of ‘material importance’ as well as those areas identified as an ‘opportunity for focused improvement’ in the survey. Operating and Financial Review continued be do be be but to g 14 EQ Resources Limited Annual Report 2024
Sustainability Plans for the Future Sustainability Reporting Australia EQR continues to evolve its sustainability reporting by collecting environmental metrics and social data in alignment with the Global Reporting Index (GRI) and the International Council of Mining and Metals (ICMM). The Company actively tracks health, safety, community engagement, and diversity metrics, highlighting them in the Annual Report. EQR has assessed its compliance with the upcoming Australian Sustainability Reporting Standards (ASRS), effective from January 2025. Based on its assets, revenue, and NGERS thresholds, EQR falls under Group 3, with reporting commencing on 1 July 2027. EQR is preparing by expanding emissions data collection and planning a Sustainability Risk Assessment. Spain With the European Sustainability Reporting Standards (ESRS) framework evolving and delays for certain sectors and non-EU companies, EQR is closely monitoring changes. Although full compliance may not affect EQR and Saloro until 2028, EQR is preparing for future obligations, particularly in supply chain sustainability. Wolfram Camp The award of a 488 km2 exploration permit at Wolfram Camp, North Queensland, strengthens EQR’s position within a key tungsten cluster, highlighting its potential to develop a critical mineral hub. This permit offers an opportunity to sustainably redevelop the pre-existing tungsten mine, following EQR’s proven approach. See QLD Government Statement, 18th June 2024: “Permit granted to unlock critical minerals and jobs at historic Far North Queensland mine site”. An ESG Desktop Analysis identified key areas for the project, highlights include: − Localised job creation and community initiatives, − Refurbishment and expansion of the tungsten processing plant, aligned with Mt Carbine operations, − Application of transferable technologies like TOMRA XRT Ore Sorting, tailings development, and robust environmental practices, − Programs for employee attraction and retention. EQ Resources Limited Annual Report 2024 15
Sustainability Risk Assessment EQR plans to conduct a Sustainability Risk Assessment in Q4 2024 as part of its proactive approach to prepare for ASRS compliance. Involving key management and operational employees, this assessment will help evaluate EQR’s sustainability risk profile, including climate change, and identify areas for development to meet emerging climate-related disclosure requirements. Operating and Financial Review continued INSIGHTS 231 Total EQR Staff as of end of June 2024 Growth 4.9 New starters per month Retention 100% employees live in the local region Buddy Up 23% Women employees across EQR Operations 7% Indigenous Mt Carbine employees Embrace Difference +131% Growth of Employees (with the integration of Saloro) Growth 53.0% Local suppliers (Queensland) (58.3% in $ value of total spending) Buddy Up 86.3% Australian suppliers (89% in $ value of total spending) Buddy Up 7 ESG related Governance policy reviews Lead with Integrity ~1x site tour per week Dig Deep 63 completed ESG initiatives ESG Initiatives in Progress 16 EQ Resources Limited Annual Report 2024
EQ Resources and UN SDG’s EQR is committed to operating in alignment with the United Nations Sustainable Development Goals. The below table is an updated representation of how EQR currently contributes to the Sustainable Development Goals. EQR Current ESG Position EQR is committed to operating in alignment with the United Nations Sustainable Development G SDG Target Current Alignment Summary Alignment with EQR Values SDG Target Current Alignm 2.5 • Rehabilitation of native flora through partnership with AWC using diversified indigenous seed stock • Beehives on mine sites • Controlled fires for flora management (reseeding) in partnership with MRWMG Tread Lightly 9.4, 9.5 • TOMRA XRT W • Participating in Campaign 3.6, 3.9 • Health & Safety Policy • Promoting physical and psychological wellbeing training of employees through implementation of appropriate wellness programmes Act Safe. Feel Safe. 10.2, 10.3, 10.4 • Modern Slaver Human Rights Anti-Bribery & Policy, 4.4 • Providing sustainable career paths and mentoring to graduate employees on long term futures in the mining industry. • Partnership with JCU to bring on PhD students. • Ongoing sponsorship and donations to local state schools Embrace Difference Buddy Up 11.4, 11.6, • Cultural Herita • Waste manage plan 5.5 • Diversity Policy • Bursary offered to female Uni participant Embrace Difference 12.4, 12.5, 12.6 • TOMRA XRT W • Stocking piling as aggregated • Repurposing a regional road r 6.3, 6.4 • Water management plan Tread Lightly 13.1, 13.3 • Continued par program with 7.2, 7.3 • Participation in pilot GHG tracking program- ARTEH • Climate change risk position statement • Investigation into IPP and solar farm Tread Lightly Buddy Up 15.1, 15.2, 15.5, 15.8 • Managing inva in Frogbit Sen Council. • Australian Wild • Mitchell River invasive anima 8.2, 8.4, 8.7 • TOMRA XRT Waste sorting system • Modern Slavery Statement, Whistleblower Policy, Human Rights Policy, Anti-Bribery & Corruption Policy, Corporate Governance Statement Embrace Different Tread Lightly Lead with Integrity 16.2, 16.5, 16.6, 16.7 • Modern slaver Human Rights Policy, ESG Po Policy, Whistle ion 4 United Nations Sustainable Development Goals Alignment with EQR Values SDG Target Current Alignment Summary Alignment with EQR Values Tread Lightly 9.4, 9.5 • TOMRA XRT Waste sorting system • Participating in AMECs ‘More Resourceful Than Ever’ Campaign Embrace Different Act Safe. Feel Safe. 10.2, 10.3, 10.4 • Modern Slavery Statement, Whistleblower Policy, Human Rights Policy, Diversity & Inclusion Policy, Anti-Bribery & Corruption Policy, Grievance Process Policy, Lead with Integrity Embrace Difference Buddy Up 11.4, 11.6, • Cultural Heritage Management Policy • Waste management plan, Air Quality management plan Tread Lightly Embrace Difference 12.4, 12.5, 12.6 • TOMRA XRT Waste sorting system • Stocking piling in quarry barren by- product for sale as aggregated Product • Repurposing and delivering material for use in regional road repairs and upgrades. Dig Deep Tread Lightly Buddy up Tread Lightly 13.1, 13.3 • Continued participation in pilot GHG tracking program with ARTEH Tread Lightly Buddy up Tread Lightly Buddy Up 15.1, 15.2, 15.5, 15.8 • Managing invasive freshwater aquatic weed species in Frogbit Sentinel Network with Mareeba Shire Council. • Australian Wildlife Conservancy (AWC) Partnership • Mitchell River Watershed Management Group – invasive animal management Tread Lightly Buddy Up Embrace Different Tread Lightly ead with Integrity 16.2, 16.5, 16.6, 16.7 • Modern slavery statement, Company Constitution, Human Rights Policy, Anti-bribery and Corruption Policy, ESG Policy, Communication & Disclosure Policy, Whistleblower Policy, Code of Conduct Lead with Integrity EQ Resources Limited Annual Report 2024 17
Mt Carbine Operations Operating and Financial Review continued 100 employees, as of June 2024 22.3% female employees 9 senior employees 60+ years old 40+ contractors 7% indigenous employees 99% of employees live in the Cairns region 12 Nationalities represented: South Africans, Canadians, Koreans, Germans, Irish, French, New Zealanders, Italians, British, and Spanish. Australian of course apprentices Cert III Surface Extraction, one school-based apprentice, one electrician apprentice, one maintenance apprentice 58% of spending in Queensland 10.9% of spending was international HR: PROCUREMENT/FINANCE: 18 EQ Resources Limited Annual Report 2024
750,000+ tonnes ore mined 650,000+ tonnes crushed 69,758 mtus recovered 43 blasts in FY2024 421,096 kilograms of explosives used in FY 2024 1,400,000 tonnes waste mined 10,160 holes drilled 90.9 kilometres drilled PRODUCTION: EQ Resources Limited Annual Report 2024 19
Mt Carbine Operations Mt Carbine Project Timeline Development Timeline – On schedule & On budget 6 Phased approach for early cash flow, with continuous Resource development Processing of Historic Mineralised Stockpile – increasing with plant capacitiy UG Resources Drill Out Secure Funding Facility 1 MTPA Plant Ordering & Construction 2023 2024 Q1 Q2 Q1 Q2 Q3 Q4 Q3 Q4 OC Mining – Stage 2 Jan-26 UG Mining Starts UG GeoTech & Refurbishment Q3 2025 Wolfram Camp Exploration Permit Granted Acquisition of Saloro, Spain ✓ $20M QIC Funding Facility ✓ Approval – Extraction Open Pit Mining Q2 Q4 Q1 2026 May 23 BFS Update Western Extension Reserve Update Saloro MRE Update Restart - OC Mining – Stage 1 Open Cut Infill Drilling ✓ ✓ Application - Wolfram Camp Exploration Permit UG ReOpening 2nd Egress Developt. Trial Mining UG BFS LGSP Mining 2 MTPA Plant Ordering & Construction Open Cut Mining Restart BFS Update Mt Carbine Tungsten Mine and Quarrying Operations, QLD, Australia, July 2024 1 Gravity Plant, Procurement, Geo Lab & Core Shed 2 Tailings Dam 3 Quarry & OOSR Stock-pile 4 XRT Sorters 5 LG Ore Stockpile 6 Open Pit 1 2 3 4 5 7 8 Pit Operations Offices 8 9 EQR Offices 9 6 7 Exploration Targets Operating and Financial Review continued 20 EQ Resources Limited Annual Report 2024
Health and Safety The employees at Mt Carbine continue to prioritise safety by proactively identifying and mitigating hazards before beginning work activities. This proactive approach has been instrumental in maintaining the company’s strong safety record. During this period, collaboration between contractors and employees has been highly effective. New policies and procedures have been implemented to ensure that the integration of Open Pit operations proceeds smoothly, accommodating the increase in staff numbers and on-site activities. Additionally, a new induction package has been introduced for new hires, and the training program has been enhanced to further support EQR’s workforce. The graph below illustrates the rolling frequency rate, calculated based on data averaged over one year. This rate is measured per million hours worked. Over the past year, the HSET team have logged 151, 027 man hours worked. 44 43 54 53 70 70 71 79 86 80 80 64 102.3 114.7 122.7 122.0 139.1 140.7 134.7 149.5 149.4 143.8 136.0 120.2 0 0 0 0 0 0 0 0 0 0 1 2 58.4 71.7 69.0 68.6 69.6 70.4 63.4 70.8 62.9 63.9 56.0 56.1 0 20 40 60 80 100 120 140 160 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 FREQUENCY Rolling Frequency Rates 2024 LTIFR Average QLD Quarries (LTIFR) TRIFR Average QLD Quarries (TRIFR) CIFR MTIFR 280 290 300 310 320 330 340 350 360 370 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 US$ / mtu APT Price CIF Rotterdam - (US$/mtu WO3) High Mid Low − LTIFR: Lost Time Injury Frequency Rate − Avg QLD Quarries (LTIFR): Average LTIFR for Queensland Quarries − TRIFR: Total Recordable Injury Frequency Rate − Avg QLD Quarries (TRIFR): Average TRIFR for Queensland Quarries − CIFR: Critical Injury Frequency Rate − MTIFR: Medical Treatment Injury Frequency Rate Other initiatives include: − Continuous communication through safety briefs and safety updates with reports of incidents on other mine sites across Australia. − A contractor has been on site to actively monitor the working conditions of employees at Mt Carbine over a two-day period. The monitoring involves collecting samples from identified Similar Exposure Groups (SEGs) to assess risks in accordance with relevant legislation and QGL02 guidelines. 6,726 Take 5 Safety Assessments 79 JSEA Job Safety Environment Analysis 22 Toolbox Talks 2 Prestart safety meetings per day PROACTIVE SAFETY INDICATORS EQ Resources Limited Annual Report 2024 21
Operating and Financial Review continued 22 EQ Resources Limited Annual Report 2024
Open Pit Mining Operations Geology The FY2024 marked significant milestones in commissioning, production, ongoing exploration, and grade control drilling. The mine initiated its first blast on June 28, 2023, and subsequently conducted 43 additional blasts, each involving approximately 45-50,000 tonnes of material. Orana Pty Ltd was responsible for conducting the drilling and blasting operations, while Orica Ltd supplied the necessary explosives, ensuring precise and effective execution of blasting activities at the site. Grade control measures have become a crucial aspect of EQR’s mining operations, guaranteeing uniform ore feed grades at the crushing plant and understanding the orebody. The EQR geology team is instrumental in mapping out ore zones within the open cut and ensuring that ore deliveries reach their specified bays before processing. Grade Control Drilling Grade control drilling using Reverse Circulation (RC) was carried out before the Open Pit operation in Q4 FY2023 on a 10 x 10-meter grid in 33-meter flitches ahead of mining operations to guide ore markups. A color-coded system was implemented to distinguish between different ore grades: High-Grade Ore (WO3 > 0.2%) was marked in pink, Low-Grade Ore (WO3 < 0.2%) in blue. A ROM (Run of Mine) pad was set up to store various grades of material when necessary. resourcing the new economy for a better tomorrow 21 Open Cut Mining Operations Geology The FY2024 marked significant milestones in commissioning, production, ongoing exploration, and grade control drilling. The mine initiated its first blast on June 28, 2023, and subsequently conducted 50 additional blasts, each involving approximately 4550,000 tonnes of material. Orana was responsible for conducting the drilling and blasting operations, while Orica Ltd supplied the necessary explosives, ensuring precise and effective execution of blasting activities at the site. Grade control measures have become a crucial aspect of EQR's mining operations, guaranteeing uniform ore feed grades at the crushing plant and understanding the orebody. The EQR geology team is instrumental in mapping out ore zones within the open cut and ensuring that ore deliveries reach their specified bays before processing. Grade Control drilling Grade control drilling using Reverse Circulation (RC) was carried out before the Open Pit operation in Q4 FY2023 on a 10 x 10meter grid in 33-meter flitches ahead of mining operations to guide ore markups. A color-coded system was implemented to distinguish between different ore grades: High-Grade Ore (WO₃ > 0.2%) was marked in pink, Medium-Grade Ore (WO₃ 0.080.2%) in blue, and Low-Grade Ore (WO₃ 0.05-0.08%) was transported to low-grade stockpiles. A ROM (Run of Mine) pad was set up to store various grades of material when necessary. Picture Above: ROM 1 showing the separation of Low-Grade Ore (Blue: WO₃ 0.08-0.2%) and High-Grade Ore (Pink: WO₃ > 0.2%). The ore extracted from this process closely matches the 10 x 10-meter infill RC drilling results. The ore "markup" system involves a combination of using the geological model for overall grade delineation and detailed mapping enhanced with UV light examination. During the Bankable Feasibility Study (BFS) phase, no new drilling was completed in the top 20 meters of the Stage I pit, relying on only three historical holes spaced 75 meters apart. This part of the pit revealed lower grades than those inferred in the model for this zone. It wasn't until mining reached the levels with recent drilling by EQR, conducted at 50-meter intervals, that better grade correlations were observed. The discrepancies were likely due to poor survey control of hole locations and downhole trajectories and resulted in 21% lower tungsten production for tonnage mined from the model in the top 20 meters of mining. For more information, see: ASX Announcement 12th May 2023 ‘EQR Begins Grade Control Drilling Ahead of Open Pit Restart’; ASX Announcement 19th July 2023: ‘Confirmation of Initial Ore Reserve Section at Mt Carbine’ Infill drilling reveals High Grade zones in Stage II Pit In the second half of FY2024, EQR completed 66 infill reverse circulation drill holes to confirm the consistency of high-grade vein systems in Stage I & II Pit and to provide data for accurate grade control of upcoming pit blasts. The drilling was initially conducted on the Iolanthe and the Johnson Vein Systems at the 350-340m level, complementing the 2024 diamond drilling campaign. The drill rig was then moved to the 305-295m level on the pit floor to complete a standard 10m x 10m spaced pattern. The results confirmed the transformation in the ore body from a thinner network to substantial veins exceeding 50 cm at the 315323m level, enhancing the understanding of the vein systems under UV light examination. The RC drilling conducted at the 345m level showed significant zones with a tungsten grade of 0.21% WO3, nearly double the expected grade according to the current Picture Above: ROM 1 showing the separation of Low-Grade Ore (Blue: WO3 0.08-0.2%) and High-Grade Ore (Pink: WO3 > 0.2%). The ore extracted from this process closely matches the 10 x 10-meter infill RC drilling results. The ore “markup” system involves a combination of using the geological model for overall grade delineation and detailed mapping enhanced with UV light examination. During the Bankable Feasibility Study (BFS) phase, no new drilling was completed in the top 20 meters of the Stage I Pit, relying on only three historical holes spaced 75 meters apart. This part of the pit revealed lower grades than those inferred in the model for this zone. It wasn’t until mining reached the levels with recent drilling by EQR, conducted at 50-meter intervals, that better grade correlations were observed. The discrepancies were likely due to legacy issues, including poor survey control of hole locations and downhole trajectories and resulted in 21% lower tungsten production for tonnage mined from the model in the top 20 meters of mining. See ASX Announcement 12th May 2023: ‘EQR Begins Grade Control Drilling Ahead of Open Pit Restart’; ASX Announcement 19th July 2023: ‘Confirmation of Initial Ore Reserve Section at Mt Carbine’. EQ Resources Limited Annual Report 2024 23
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