update research from Pac Partners CompanyEQ Resources |...

update research from Pac Partners

Company		EQ Resources | EQR
Capitalisation Recommendation		MCap $106m Price $0.036/share BUY – was Speculative Buy Price Target $0.062/share was $0.07/share	Date: 27th MAY 2025
EVENT / THEME		Transitioning to profitability and leveraged to China’s export restrictions
Author		Lawrence Grech – Resource Analyst
Link to this note: EQR_PAC_27May2025(14-pages); Previous reports: EQR_PAC_19Mar2025(3-pages); EQR_PAC_RR_11Feb2025(13-pages); Tungsten & peers report: Tungsten_PAC_Report_6Feb2025(27-pages);
EQ Resources Ltd is the premier ASX listed tungsten producer. We have upgraded our recommendation to Buy. In May 2025 EQR successfully raised A$18.8m at $0.035/share. This enables repayment $9.5m in debt and remainder for capital works and creditor payments. A SPP at $0.035/share now aims to raise up to $3m. KEY OUTLOOK DRIVERS We see Mt Carbine as an advanced development project at final pre-strip to access high-grade ore. Rapidly de-risking, Mt Carbine has proven plan and vastly increased mining rate, soon to access high-grade ore feed. 1.EQR is poised to accelerate waste mining with pit integrity benefits and stronger output finish to 2025, though it delays by ~3 months the big cashflow rise. We see this as a key re-rerating event ~Sep-Oct 2025. 2.Saloro boosted crushing and concentrator capacity utilization with WO₃ recoveries over 60%. Further optimization could see recoveries nearing 70%. Addition of wet screen soon and 3rd XRT sorter by Sep 2025 adds a significant 90kt per quarter capacity to the 116kt sorted in MarQ 2025. We increase our risked Saloro valuation by 16% from Mar 2025 review. 3.Debt funding options from Export Financing, private debt and equipment leasing for Mt Carbine’s doubling plant capacity are advanced and assisted by recent re-capitalisation. Plant is onsite for quick connection. INVESTMENT VIEW – BUY 12-Month Price Target $0.062/share Share price catalysts include significantly rising EBITDA at both mines. 1.Securing Oaktree loan refinance by year-end, capital for Mt Carbine plant upsize plus underground expansion aided by securing US$17m US grant. Completing projects commissioning is a prelude to big EBITDA. 2.A sustained 10% tungsten price rise boosts valuation by 42%. Tungsten market is currently tight with spot pricing rising both in EU and China. 3.EQR is cheap at one-quarter the relative value to peer Almonty Industries Incorporated, based on respective Reserves and current market pricing.
EARNINGS PROFILE – FY2026 transformational year
DISCLOSUREPAC Partners has received fees in the past 12 months by the EQ Resources as Lead Manager of the May 2024 $9.5m placement and also Joint Lead Manager for the $4m December 2024 placement as well as Joint Lead Manager for the May 2025 capital raising and the current Share Purchase Plan. The information contained in this report is provided by PAC Partners to Wholesale Investors only. See full disclaimers below and in our Full Report.
TUNGSTEN PRICES Now moving up strongly – EU and US prices running ahead of China pricing Source: Fastmarkets and Bloomberg
Capital Structure as at 26th May 2025 includng full A$18.8m placement and debt conversion Sources: EQR Announcements
Some risks of investment – see full report page 10 Exploration and Resource upgrade drilling is risky, and programs may be costly and fail. Saloro has positive indications along strike/at depth for added resource. It’s early to judge whether this will be of sufficient volume/grade. Tungsten prices can be volatile and market forces can be influenced by industry and export policies of China. Tungsten mines are modest grade. Care is needed in mine planning and execution to supply sufficient ore grade for processing to generate positive earnings margins. Access to capital is not assured but as cash generation increases this risk should lessen. Environmental and safety performance is vital.

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 PERTH Suite 2.1, 9 Havelock Street, West Perth +61 8 6372 7900
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. 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%		Risk Rating 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 The views expressed in this research report accurately reflect the personal views ofabout 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
	Disclaimer PAC Partners Securities Pty Ltd. (“PAC Partners”, “PAC” or “PPS”) is a Corporate Authorised Representative of PAC Asset Management Pty Ltd holder of an Australian Financial Services Licence (AFSL No. 335 374). The information contained in this report is provided by PAC Partners to Wholesale Investors only. Retail investor and third-party recipients should not rely, directly or indirectly, on this report. Users of this research report should not act on any content or recommendation without first seeking professional advice. Whilst the report has been prepared with all reasonable care from sources which we believe are reliable, no responsibility or liability is accepted by PAC Partners, for any errors or omissions or misstatements however caused. Any opinions, forecasts or recommendations reflect our judgement and assumptions at the date of publication or broadcast and may change without notice. This report is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. This publication contains general securities advice. In preparing our Content it is not possible to take into consideration the investment objectives, financial situation or particular needs of any individual user. Access of this report does not create a client relationship between PAC Partners and the user. Before making an investment decision on the basis of this advice, you need to consider, with or without the assistance of a securities adviser, whether the advice in this publication is appropriate in light of your particular investment needs, objectives and financial situation. PAC and its associates within the meaning of the Corporations Act may hold securities in the companies referred to in this publication. PAC believes that the advice and information herein is accurate and reliable, but no warranties of accuracy, reliability or completeness are given (except insofar as liability under any statute cannot be excluded). No responsibility for any errors or omissions or any negligence is accepted by PAC or any of its directors, employees or agents. Any content is not for public circulation or reproduction, whether in whole or in part and is not to be disclosed to any person other than the intended user, without the prior written consent of PAC Partners. Disclosure of Corporate Involvement PAC Partners has received fees in the past 12 months by the EQ Resources as Lead Manager of the May 2024 $9.5m placement and also Joint Lead Manager for the $4m December 2024 placement as well as Joint Lead Manager for the May 2025 capital raising and for the current Share Purchase Plan. PAC Partners does seek to do business with companies covered in the research. PAC may receive commissions from dealing in securities associated with the Company. As a result, investors should be aware that PAC Partners may have a conflict of interest that could affect the objectivity of this report. If you would like to be removed from this distribution list, please click here: UNSUBSCRIBE. If you would like to update your details please click here: MODIFY. For more information about PAC Partners please visit www.pacpartners.com.au