UK SP AngelInternational attention may bring more investors. EQ...

UK SP Angel

International attention may bring more investors.

EQ Resources (EQR AU) A$0.079, Mkt Cap A$110m –Acquisition of Barruecopardo to create a major western world tungstenconcentrate producer

• EQ Resources which operates the Mt Carbine tungsten mine in Queensland, has announced a binding agreement with the investment company, Oaktree Capital, to acquire the Spanish tungsten producer, Saloro, which operates the Barruecopardo tungsten mine in Salamanca Province.
• EQ Resources will acquire Saloro for “a nominal consideration of EUR1 and the benefit of all of the intercompany loans owed by Saloro to the Oaktree group (which is approximately EUR80,000,000) for EUR1”.
• In addition, EQ Resources will issue 278 million shares to Oaktree at an issue price of A$0.09 per share (approximately A$25m) and grant 78 million Options at A$0.10 per share, exercisable within a period of 2 years.
• As a result, Oaktree will own 15.86% of EQ Resources.
• The A$25m will be deployed to repay A$8.34m of Saloro’s debt, for A$8.34m of additional capital investment at Barruecopardo and for additional working capital.
• EQR says that key operational improvements which will be part of its initial focus include:
  • the installation of X-Ray sorting; and
  • improving metallurgical recovery through optimisation of feed to the jigs, spirals and tables; and
  • “Installation of a new fines recovery circuit”; and
  • “Pit mapping of alteration and fluid flow vectors to understand potential mineralisation extensions” and “gaining a better understanding of the potential strike extent and repetition of jog structures”
• The company says that the transaction will make it “the largest tungsten concentrate producer in the Western World, with a robust growth pipeline across two top-tier mining jurisdictions”.
• The historic Barruecopardo mine was reopened in 2019 “after nearly 40 years of shutdown” and is currently producing “approximately 140 tons/month of high-grade (>65% WO3) tungsten concentrate, with various minor plant expansion projects ongoing for higher recovery and throughput”.
• With world supply dominated by China, tungsten features as a critical mineral commodity in a number of jurisdictions including the US, EU, Australia and Japan. The emergence of a sizeable western world producer is likely to be a welcome development for intermediate processors and end-users in these areas.

Conclusion: The acquisition of anestablished, Spanish, tungsten producer in addition to its Australian operationestablishes EQ Resources as a significant force in the supply of western-worldtungsten.