Pac Partners has put out an update note. EQ Resources | Price...

Pac Partners has put out an update note.

EQ Resources | Price $0.07 Mcap $100m | Buy, Target Price$0.12/share

Lowcost + risk growth… within sphere of geographical influence… and sphere ofmanagement competence

Adding Wolfram Camp to EQ’s portfolio ofopportunity

• EQ has been awarded an Exploration Permit over the Wolfram Camp area, a previously operational tungsten mine until 2018, located 60km to the south of EQ’s Mt Carbine.
• The subject area encompasses a vast area 477km² and includes a 5Mt tailings stockpile, old processing site (including gravity plant), and two potential economic mineral deposits - Wolfram Camp and Bamford Hill (20km from Wolfram Camp).
• This lower risk growth opportunity comes just as EQ is ramping up Mt Carbine to full scale open cut mining after a successful tailings reprocessing start-up.

A step-by-step growth opportunity

• The agreement with the Qld Govt commits EQ to methodically investigate the economic opportunity at Wolfram Camp by conducting over the coming 3 years:

• • A regional review of the commercial opportunity (next 12 months);
  • Testing the tailings stockpile for low-cost reprocessing suitability (EQ’s core competency);
  • A 10,000 meter exploration program, 4,000 soil samples and a 32 element XRF analysis (for potential primary mining production).

Low-cost spend commitment for a longterm development option

• In our view the permit and minimum commitment would cost EQ Resources less than $500k in the first year, and a little more than this over the subsequent 2 years that can be seen as a low cost option that may evolve into a longer term development strategy.
• We see this completely affordable for EQ in the context of our forecast $30m+ in FCF in FY24, and an opportunity for the company to continue to apply its lean processing and start up know how, just as Mt Carbine enters a mature phase of ramped up full scale production.

Modest grade historical deposit:

In 2015,Wolfram Camp had a resource statement included in a 43-101 Report meetingCanadian regulation standards:

• Indicated 514kt @ 0.23% WO3
• Inferred 1,879kt @ 0.31% WO3

Theseresource grades are comparable to Mt Carbine’s (0.3% WO3), and we expect the EQteam to confirm and possibly build on this potential resource over the next 3years as it investigates the possible commercial development of Wolfram Camp.

Investment View: Reiterate BUY rating

This lowercost lower risk step by step growth opportunity seems consistent with EQResource’s successful approach at Mt Carbine and adds to the longer term growthopportunities we see for the company that include:

• Further mine life extensions beyond the current 7 years open cut and 10 years low grade tailings, as the company can now afford a more full scale exploration program at Mt Carbine;
• Underground mining at Mt Carbine to capture recently explored higher grade ore opportunities;
• Other deposits such as Watershed nearby (28km from Mt Carbine);
• Other opportunities with the global critical minerals / tungsten industry.

We valueEQ Resources at $0.12c per share and see the realization of this target priceupside possible as the development risks at Mt Carbine are rapidly diminishingand further growth opportunities present themselves to a team that has beenknown for lower capex and lower risk incremental approach.

Appendix:

Wolfram Camp – summary andstatus

(Source: Qld Govt website)

Tungstenwas discovered around Wolfram Camp in 1891. While there were various miningoperations at the site in the 1970s, the most recent operation was commissionedin 2008 and abandoned in 2018.

WolframCamp mine was not decommissioned or rehabilitated before it was abandoned, andhazards exist that pose risks to public health and safety, and the environment.

Commodity:Tungsten, molybdenum

Miningtype: Open cut and historical underground

Dateof abandonment: December 2018

Status:Remediation ongoing and re-commercialisation is being investigated

Nativetitle interest: Djungan People, represented by the Nguddaboolgan Native TitleAboriginal Corporation (NNTAC)

Publicland registers: Listed on the Environmental Management Register

Thesite consists of:

• 2 open pits
• waste rock dumps
• tailings storage facility
• processing equipment
• mine water dam
• waste rock dump
• the Forget Me Not decline
• processing plant
• a waste hydrocarbon storage area.

Source:Qld Govt WolframCamp remediation project | Environment, land and water | Queensland Government(www.qld.gov.au)