Below is cut and paste of the last PAC Partners research. TP 7c but under review. Allowing non risk share price is 11.3c
COMPANY CAPITALISATION RECOMMENDATION EVENT / THEME AUTHOR Flash Desk Note. EQ Resources | EQR MCap $103m Price $0.044/share Speculative Buy $0.07/share Price Target – under review DATE: 19TH MARCH 2025 EQR Signs 5 Long term Tungsten Concentrate Offtake Agreements 24 months contracts come with advance payments to assist funding expansion Lawrence Grech – Resource Analyst For Link to previous report: EQR_PAC_RR_11Feb2025 (13-pages) Tungsten commodity & peers report: Tungsten_PAC_Report_6Feb2025 (26-pages) EQR Signs 5 Long term Tungsten Concentrate Offtake Agreements for 24 months • Agreements cover production from both its tungsten operations in Australia and Spain over 24-month period. • The agreements’ total value is ~US$124m at current prices, representing volumes of 470 containers, each container holding 20 metric tonnes of 50% WO₃ concentrate. • Individual contracts are commercial-in-confidence with well-known counterparties that are top 3 producers of tungsten related products in their home markets covering APT (Ammonium Paratungstate), tungsten oxide and tungsten carbide materials These products are subject to the recent export restrictions from China, making EQR globally significant supplier. EQR’s product allocations will supply ~25% into Europe, 25% into North America, with the balance supplied to Asia. This excludes to EQR’s proposed acquisition of the ferrotungsten smelter in Vietnam – the Tungsten Group. Positives – production, sales, cash & debt funding • Production: A vitally important term is the 50% Tungsten trioxide (WO₃) concentrate grade. This moderate grade increases saleable WO₃ (as delivering higher Conc. Grade necessitate recovery losses). • Cash up front: Each long-term offtake contract has an advance payment component, payable against the attainment of certain conditions and milestones. EQR expects final milestone for the outstanding advance payment to be reached latest by the end of JunQ’2025. • Pricing: Fastmarket index of weekly pricing. We are bullish tungsten price given China’s export restrictions and growth in tungsten demand. On our current estimates the offtake agreements take 2/3rd of saleable output, leaving remainder to provide for value-added ferrotungsten production and grow into additional contracts as EQR achieves production milestone. • Marketing: Cementing marketing bonds assists in logistics benefits and overall reduced stock levels. • Assists Debt Refunding: on good terms as EQR seeks to replace Saloro debt facility by mid-2025. KEY OUTLOOK DRIVERS • Recent rainfall and bridge damage meant delays to explosives deliveries vital to access to high grade ore. However, Mt Carbine’s stripping activities have belatedly exposed higher-grade ore for mining. • The announcement of Offtake agreements comes with advance payments can offset the cashflows delays at Mt Carbine. It also provides funding to double process throughput at Mt Carbine by year-end. • Saloro operations are well positioned to maintain excellent mining, processing rates and higher cash flow. We expect a positive and bigger EBITDA from Spanish operations in the MarQ2025. INVESTMENT VIEW – SPECULATIVE BUY $0.07/share PRICE TARGET – under review Speculative Buy rating is unchanged. For now with 12-month Price Target $0.070/share is under review. We are working through the implications of lower-than-expected production at Mt Carbine on weather related issues. We note that mining high grade ore has begun and should be fully available during this month. EQR is tungsten price leveraged - A sustained 10% tungsten price rise boosts our Price Target 40% to $0.098/share. Price catalysts: significantly rising EBITDA at both mines, likely to occur from the JunQ’2025 onward. Refinancing strategic loan will enable Mt Carbine process doubling and potential to go underground for more growth.
Tungsten prices poised for more upside Tungsten prices (here shown APT price) are trending up. Full impact of China’s export restrictions has yet to be felt in European Tungsten market and PAC Partners is confident of near-term price appreciation. Europe’s very recent announcement of a step-up in defence spending will necessitate securing long term supply for Tungsten well above business-as-usual case.
EQR is a minerals exploration development and production company. At this stage it has yet to establish enough cash generating capacity to sustain all its efficiency and expansion capital programs. Please view disclaimers below and in the full report. SYDNEY Level 26, Governor Phillip Tower, 1 Farrer Place, Sydney +61 2 9134 9133 MELBOURNE (Head Office) Level 29, 360 Collins Street, Melbourne +61 3 9114 7400 Recommendation Criteria Investment View PAC Partners Investment View is based on an absolute one-year total return equal to capital appreciation plus yield. A Speculative recommendation is when a company has limited experience or early project stage from which to derive a fundamental investment view. Risk Rating PERTH Suite 2.1, 9 Havelock Street, West Perth +61 8 6372 7900 PAC Partners has a four tier Risk Rating System consisting of: Very High, High, Medium, and Low. The Risk Rating is a subjective rating based on: Management Track Record, Forecasting Risk, Industry Risk and Financial Risk including cash flow analysis. Disclosure of Economic Interests Speculative buy = We expect the stock’s total return (nominal yield plus capital appreciation) to exceed 20% over 12 months. The investment may have strong capital appreciation but also has a high degree of risk and there is a significant risk of capital loss. Speculative Buy >20% Buy Hold Sell >20% 20% – 5% <5% The views expressed in this research report accurately reflect the personal views of about the subject issuer and its securities. No part of the analyst's compensation was, is or will be directly or indirectly related to any recommendation or view expressed in this report. The following person(s) does hold an economic interest in the securities covered in this report or other securities issued by the subject issuer which may influence this report. • The author of this report – Lawrence Grech. • A member of the immediate family of the author of this report
EQR Price at posting:
4.4¢ Sentiment: Buy Disclosure: Held
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