A comparison between EQR and G6M, page-69

Looks like the tungsten market is starting to tighten up as the article below suggests. This is the perspective of the Chinese. The European and US markets are even tighter and likely to remain that way for a while given the increase in defense spending and the likelihood the world enters a short mild recession.

It's important to have successful non Chinese producers of tungsten includes Australia as it widens the investors understanding of the market place and the opportunity. To date there is very little knowledge and a lack of successful producers. In the 15 years I've been looking at this area. Only Vietnam (Masan) and a couple of Spanish/Portugese deposits have made it to production with mixed results. EQR has joined them via a staged process of re-processing the low grade stockpile. We aren't far away from hard rock mining (Goldings already preparing) and further drilling will increase the resources which may include the underground.

Around the world others have been struggling - Tungsten West (having a third go) - funny that they have turned to ore sorting and quarry model.
Almonty have a couple on care and Maintenace and have been spruiking Sandong as the next big thing, but are running behind time and they have some environmental issues that the Korean want sorted first.

G6M is about to get started and probably will, which is great as there is room for more than one successful Australian producers. However, there are some issues that the market isn't fully understanding. There is active commentary on the HC G6M site, not wanting to post there.

However there are a couple of important points to raise.

1. In previous posts we had suggested that more capital ex was required (industry gossip). This has turned out to be true.
2. We suggested issues with Gecko (industry gossip). Looks like part of the 2nd cost blow relates to them.
3. There are questions about the ability to reach the recovery levels aimed at (75%-80%). This has been achieved in a lab but not in the real world. Why is this important? Recoveries is your tungsten production. If you can't extract from the deposit then you are in trouble. Unfortunately, SEI (previous Mt Carbine) couldn't get the recoveries high enough. Wolf (UK) - now Tungsten West failed as they couldn't get the recoveries. There are a couple of Spanish mines including Almonty that couldn't get the recoveries. EQR is now recovering 75% to 80% thanks to the improves implemented over the last 12 to 18 months by Kevin and his team (not as simple as turning on the machines). G6M are yet to get the recoveries in the real world?
4. There are massive questions about G6M ability to go underground, given they are effectively digging under Bass Strait (industry gossip). The EQR underground scoping study (that is not part of the current NPV) is more detailed than the G6M document which is included in their NPV. However, the capital for this is noted as being deferred and hasn't been upgraded. This would suggest more capital costs to come on this area (if they actually progress with it).
5. Pac Partners just undertook a cap raising for G6M but produced independent research for EQR 12c, but no research on G6M yet? Curious!!
6. Delay in commission and production coming (industry gossip).

EQR continues to have its issues in processing the low grade stock pile as they build the processing facility (which is really the pre-game, before the actual mining starts).

The main message for G6M - tungsten mining is tough, so expect some hiccups on the way. I'm not sure how much tungsten experience the G6M team has. Every project in recent years has battle issues. Don't be naive to think its a walk in the park.