EQ Resources Market Cap @ A5.7cps: A$76.6MValuation & TP: Not...

EQ Resources Market Cap @ A5.7cps: A$76.6M Valuation & TP: Not formally covered In relatively small-scale production

Now THAT’s a Feasibility Study • This Feasibility Study evaluated treatment of the low grade stockpile (LGS – 50/50 JV with Cronimet)) and only approximately 15.5% of the Mt Carbine In-Situ Mineral Resource (100% EQR). The evaluated 12-year operation will focus on production from the high-grade open pit ore being processed only in years 3 and 4 where it is expected to produce operational pre-tax cash flow of $38 million and $95 million respectively. The balance of the resource, defined only to inferred status, is ignored for this study. • The Inferred Resource is yet to be adequately defined to Measured and Indicated status to JORC Code (2012) standards for incorporation into the FS, but the most recent phase of open pit mining (from 1973 to 1986) mined and processed approximately 22 Mt of ore and created the 12Mt of low grade stockpile. The continuity of mineralisation mined in the historic open pit operation, and the drilling now completed by EQ Resources, indicates that the mining will extend well beyond the resource incorporated for the Feasibility Study. • Mt Carbine previously reported a resource to JORC Code (2012) standards of 47Mt @ 0.13% WO3 with two benches proposed beneath the existing open pit when the mine was shut. Decline development had commenced for underground mining. EQR’s drilling confirms the continuity of the tungsten zones, and consistently reports higher tungsten grades than reported historically in the open pit, suggesting an increasing grade to depth. EQR’s project proposal develops the required infrastructure and processing capacity to support mining and processing the LGS and the In-Situ Hard-Rock Resource of 9.21Mt @ 0.63% WO3 , with drilling to depth, into the adjacent Iron Duke mineralisation, and along strike expected to add to this resource base. • The capital cost is projected at A$19M comprising: (1) Crushing, Screening & Processing Plant - $14.53M; (2) On-site Infrastructure - $1.24M; (3) Project Indirects - $1.44M; and (4) Owner’s Cost - $1.80M. Tungsten concentrate production has an estimated C1 Cash Cost of $155/mtu • The Iron Duke mineralization, not included in the Resource, is sited immediately east and north of the Mt Carbine resource – the brown zones in the cross section below. Should the Mt Carbine open pit be extended to depth, this mineralization would likely fall within the optimized pit shell. The XRT ore sorter would be expected to see the recovery of this mineralization, which is yet to be fully evaluated, recovered and processed during operations. Our view and interpretation The FS report appears to have underwhelmed the market. We reiterate that this study is based on the Measured and Indicated resources, and that the previous open pit operations and recent drilling point to a much longer mine life. Look at the cross section above. However even with this short lifespan, the grade and projected operating cost justify development, and further drilling, particularly from potential underground drill sites, would be expected to add substantially to resources, and extend the potential hard rock mine life. This is where you want to be on the cost curve – and EQR has an operating history at Mt Carbine. (the report had the cost curve chart from the BFS but I couldn't paste it in). Drilling to confirm resource quality at depth to meet resource definition standards at this time and from surface is not justified at this stage of operations on commercial terms. EQR offers good exposure to Tungsten with potential for a resource upgrade and more efficient processing. Access and logistics, power, water, and a potential workforce are available. Tungsten is now considered one of the “strategic” minerals. Disclosure: The Consultant involved in the preparation of this Research Flash holds shares in EQ Resources (ASX:EQR). Morgans Corporate Limited was Lead Manager to thePlacement of shares in EQ Resources Limited in March 2021 and received fees inthis regard. Regards, Chris Brown Senior Analyst

Research flash note from Chris Brown Morgans.

Hopefully he will put out a full blown research note soon.