ANNUAL Report June 2024 Directors’ Report 13 ▪ Securing funding for the Mt Carbine and Barruecopardo operations and undertaking activities to advance each project, including significant capital upgrades to plant and equipment. ▪ The execution of a definitive agreement to acquire the Mt Carbine Joint Venture interest from CRONIMET. ▪ The continuation of focused drilling programs to further define the Mt Carbine Tungsten resource. Financial Position In accordance with the Company’s accounting policy, the recoverability of the carrying amounts of Deferred Exploration and Evaluation Expenditures were reassessed during the 2024 financial year with no impairments recognised, resulting in exploration and evaluation expenses of $1,934,696 before amortisation and R&D Tax Offset, being capitalised for the 2024 financial year. The carrying value of the exploration assets as at 30 June 2024 is $14,922,119 (2023: $14,273,131). At 30 June 2024, the Group had a net working capital deficit of $55,567,286 (2023: $13,978,417 deficit). The deficit in net working capital is predominately due to: - The recognition of $40,226,904 of borrowings as a result of the acquisition of Saloro on 18 January 2024. All borrowings are classified as current due to their renewal extensions falling within 12 months of reporting date; and - The Company’s growth initiatives being funded via short-term financing facilities such as equipment leases, government grants and trade payables. It should be noted that: - Whilst the offtake advance facility of $4,906,401 is classified as a current liability, due to the Company not having an unconditional right to defer settlement for at least 12 months after the reporting date, it is scheduled to be repaid over the life of the Mt Carbine Mine rather than within the next 12 months as depicted on the Statement of Financial Position. During the year, the Company’s issued share capital increased by $42,162,613 (before share issue costs). Refer to Significant Changes on Page 70 for further details. 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. EQ Resources Limited Annual Report 2024 79
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