Notes to the Consolidated Financial Statements continued ANNUAL REPORT June 2026 Notes to the Consolidated Financial Statements 2. SIGNIFICANT ACCOUNTING JUDGEMENTS ESTIMATES AND ASSUMPTIONS The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below. (a) Determination of ore reserves, mineral resources, and units-of-production method of depreciation and amortisation The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons as defined in accordance with the Australasian Code for Reporting of Mineral Resources and Ore Reserves of December 2004 (the JORC code). Reserves determined in this way are used in the calculation of depreciation, amortisation and impairment charges/reversals, the assessment of mine lives and for estimating the timing of the payment of close down and restoration costs. When a change in estimated recoverable tungsten (WO₃) contained in proved and probable ore reserves is made, the change in amortisation and depreciation is accounted for prospectively. The Group applies the units-of-production method for depreciation and amortisation of its mine assets based on recoverable metal contained in ore tonnes mined. These calculations require the use of estimates and assumptions. Significant judgement is required in assessing the available reserves and the production capacity of the plants to be depreciated under this method. Factors that are considered in determining reserves, resources and production capacity are the Group’s history of converting resources to reserves and the relevant timeframes, the complexity of metallurgy, markets and future developments. When these factors change or become known in the future, such differences will impact pre-tax profit and the carrying value of assets. (b) Income taxes The Group is subject to income taxes in Australia and Spain where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. There are certain transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Management has to exercise judgement with regards to deferred tax assets. Where the possibility exists that no future taxable income may flow against which these assets can be offset, the deferred tax assets are not recognised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. When different tax rates apply, deferred tax assets and liabilities are measured using the tax rates that are expected to apply to the taxable profit or loss of the periods in which the temporary differences are expected to reverse. Income tax returns in Spain are reviewed in detail by the relevant authorities on a regular basis with reference to the tax legislation in Spain. EQ Resources Limited Annual Report 2026 65
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