Ann: EQR to Acquire 100% interest in Tungsten Metals Group, page-28

UK Broker SP Angel - commentary on today's deal. Hopefully we see some buying from Europe.

I like the summary - In the context of Chinesedomination of global tungsten supply the transaction is likely to be welcomedby western consumers.

• EQ Resources, the operator of the Barruecopardo tungsten mine in Spain and the Mt. Carbine tungsten mine in Queensland reports that it has reached agreement to acquire the Tungsten Metals Group which operates the world’s largest, non-Chinese, ferrotungsten (FeW) plant in Vinh Bao, Vietnam.
• The plant, which has a “potential production capacity of 4,000tpa FeW … will allow for diversification and vertical integration of EQR’s upstream operations”.
• The plant was built in 2011 and, in “recent years … has mainly operated as a toll treatment facility for third-party customers, converting primary and secondary tungsten raw materials into high-quality FeW”.
• Today’s announcement explains that the Vinh Bao plant “represents >80% of FeW capacity installed outside of China and Russia”.
• EQ Resources says that its “scale and favourable cost structure in Vietnam, particularly with regards to electricity usage and cost of labour, the facility is regarded as one of the most competitive in the industry”.
• Subject to successful due diligence and shareholder approval, EQ Resources has secured Heads of Agreement to acquire 100% of unlisted Tungsten Metals Group and, “separately Mr. George Chen’s … interest … in Asia Tungsten Products … resulting in EQR obtaining a 100% ownership of TMG Group”.
• The company says that it assesses “the enterprise value of TMG Group is A$13.5 million … [and that it] … has agreed to issue an estimated 170 million new fully paid ordinary EQR shares (Consideration Shares) and make payment of A$2.5 million in cash … [funded] … through customer prepayments for FeW … while assuming TMG Group liabilities”.
• The company explains that “FeW pricing dynamics are partly decoupled from the tungsten concentrate market (currently being EQR’s sole product) and respective ammonium paratungstate (APT) markets, which are currently EQR’s main offtake industries. FeW prices over the recent 24 months have outperformed APT prices by approximately 19%”.
• CEO. Kevin MacNeill, said that the “Transaction aligns with EQR’s strategic initiatives to be the pre eminent western tungsten producer. Upon completion of the Transaction, EQR will have achieved a strategic diversification of products, customers and geography, and be proud 100% owner and operator of critical western tungsten operations on three continents. Additionally, EQR will have achieved vertical integration of our upstream operations”.
• Completion is expected 1H25, with the acquisition being valued at A$13.5m, paid in A$2.5m in cash and 170m new shares.

Conclusion: Securing a major ferrotungsten plant capable oftreating both primary mined and recycled material provides EQ Resources withdiversification within the global tungsten industry alongside its minedproduction from Spain and Queensland. In the context of Chinesedomination of global tungsten supply the transaction is likely to be welcomedby western consumers.