Social Risks EQR is exposed to social risks as a result of the many stakeholders who are involved in its operations including but not limited to employees, contractors, local community members residing in areas where the Company operates, governments and government agencies (local, state and federal) as well as customers and suppliers. EQR is subject to reputational damage as well as potential claims for damages as a result of any harm or loss sustained by any stakeholder as a result of the actions by the Company and/or and its representatives. There is a risk that the Company may not be able to achieve the financial performance or outcomes disclosed herein if it incurs reputational damage or significant claims for damages. EQR seeks to manage and minimise this risk through its existing risk management framework, including Board approved policies on stakeholder management and through established stakeholder consultation processes. At its Mt Carbine operations, EQR manages and minimises risks through an Integrated Health and Safety Management System, designed to protect employees’ physical safety and mitigate operational risks. This system is guided by the Integrated Management System (IMS), which aligns with the intended outcomes of ISO 9001:2015 Quality Management Systems. Saloro’s operations are accredited to ISO 45001, the occupational health and safety management system that provides an internationally recognised framework for managing health and safety risks. It enables organisations to systematically assess hazards and implement risk control measures, resulting in fewer workplace injuries, illnesses, and incidents. Governance Risks EQR must comply with a range of governance requirements which are conditions of its listing on the Australian Securities Exchange (ASX) and of its mineral exploration and mining activities. There is a risk that the Company may not be able to achieve the financial performance or outcomes disclosed herein if it fails to comply with those governance requirements or if the requirements change in the future and the Company is no longer able to comply with the requirements or must incur material unplanned expenditure in order to remain compliant. EQR seeks to manage and minimise this risk through its existing risk management framework including Board approved governance policies which are subject to regular review. Financial risks The financial risk management strategy seeks to ensure EQR can fund its corporate objectives and meet its obligations to stakeholders. The Audit and Risk Committee and the Board carry out financial risk management to address overall financial risk, including specific financial risks such as tungsten price risk, foreign exchange risk, interest rate risk, credit risk, and liquidity management. At present, EQR does not hedge any of these risks. Interest Rates – EQR is exposed to interest rate risk arising from its borrowings. Borrowings issued at variable rates expose it to cash flow interest rate risk, and borrowings issued at fixed rates expose it to fair value interest rate risk. Increases in interest rates, either through increases in base rates or borrowing margins, may reduce EQR’s cash flow and profitability. Foreign currency – EQR is exposed to foreign currency risk principally from commercial transactions and valuations of assets and liabilities that are denominated in a currency that is not EQR’s functional currency, Australian Dollars. EQR’s exposure to foreign currency risk arises principally through selling tungsten products denominated in currencies other than EQR’s functional currency, principally the US dollar, and capital and operating expenditure incurred in other currencies, principally the Euro. Credit – EQR is also exposed to credit risk through investments in cash and cash equivalents, financial instruments and deposits with or undrawn committed liquidity from banks and financial institutions, and credit exposures to customers, including outstanding receivables and committed transactions. EQR may be exposed to potential financial loss if the counterparties to those investments and transactions fail to perform as contracted. EQR monitors its exposure to credit risk on an ongoing basis through the management of concentration risk and ageing analysis. Access to capital and liquidity – EQR has debt obligations and relies on access to debt and equity financing to conduct its business, particularly the Spanish finance to support the purchase of Saloro and the proposed expansion of the crushing capacity at the Mt Carbine mine. There is a risk that EQR may not be able to access equity or debt capital markets to support EQR’s business objectives or successfully refinance debt facilities on commercially favourable terms or at all. The ability to secure financing or refinancing on acceptable terms may be adversely affected by ESG factors and the Company’s financial position or volatility in the financial markets. Operating and Financial Review continued 64 EQ Resources Limited Annual Report 2024
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