Notes to the Consolidated Financial Statements continued ANNUAL REPORT June 2026 Notes to the Consolidated Financial Statements Deferred Stripping costs Stripping costs are capitalised in "Property, plant and equipment" as a stripping activity asset when the stripping activity has future economic benefit by providing improved access to an identified ore body and when the costs associated with the activity can be measured reliably. Cost includes those that are directly attributable to performing the stripping activity that improves access to the identified component of the ore and an allocation of directly attributable overhead costs. When the cost of stripping which has a future benefit, is not distinguishable from the cost of producing current inventories, the stripping cost is allocated to each of these activities based on a relevant production measure using a life-of-component strip ratio. The ratio divides the tonnage of waste mined for the component for the period either by the quantity of ore mined for the component or by the quantity of minerals contained in the ore mined for the component. Subsequent to initial recognition, the stripping activity asset is carried at its cost less depreciation and impairment losses. The stripping activity asset is depreciated on a systematic basis, over the expected useful life of the identified component of the ore body. This best reflects the consumption of the economic benefits from the stripping activity. The UoP method of depreciation is applied. Mine development expenditure Development expenditure incurred by or on behalf of the Company is accumulated separately for each area of interest in which economically recoverable reserves have been identified to the satisfaction of the Directors. Such expenditure comprises net direct costs and, in the same manner as for exploration and evaluation expenditure, an appropriate portion of related overhead expenditure having a specific connection with the development property. All expenditure incurred prior to the commencement of commercial levels of production from each development property is carried forward to the extent to which recoupment out of revenue to be derived from the sale of production from the relevant development property, or from the sale of that property, is reasonably assured. No amortisation is provided in respect of development properties until a decision has been made to commence mining. After this decision, all subsequent development expenditure is capitalised and classified as assets under construction, provided commercial viability conditions continue to be satisfied and the previously recognised costs are amortised over the life of the area of interest, to which such costs relate, on a unit of production (UoP) basis. (j) Intangible Assets Intangible Assets Acquired Separately Intangible assets acquired separately are initially measured at cost. Intangible assets with finite useful lives are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over the estimated useful life of the asset. The estimated useful lives and amortisation methods are reviewed at the end of each reporting period, with any changes accounted for prospectively as changes in accounting estimates. Intangible assets with indefinite useful lives are carried at cost less accumulated impairment losses. These assets are not amortised but are tested for impairment annually and whenever there is an indication that the asset may be impaired. The assessment of whether an intangible asset has an indefinite useful life is reviewed at the end of each reporting period. EQ Resources Limited Annual Report 2026 53
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