Updated note from Morgans analyst Chris Brown. The missing...

Updated note from Morgans analyst Chris Brown. The missing pictures are the tungsten price

1	Just more positive resources news from SP Angel. They mention movement in the tungsten price in this note. We cover EQ Resources (ASX:EQR), which is languishing well below the A$0.09 per share at which Oaktree Capital invested. Above US$300/mtu of ammonium paratungstate – the traded commodity - the tungsten price is attractive. What’s an mtu – metric tonne unit equal to one one hundredth (1/100th) of a tonne, or 10kg. But to the positives: Gold jumps again, climbing to $2,400/oz as Chinese buying continues Gold prices have climbed again overnight in another strong Asian trading session. Spot prices hit $2,400/oz before easing $5/oz. Geopolitical tensions continue to mount, with the WSJ reporting Israel is bracing for another assault following an air strike on an Iranian compound last week. Silver prices are also extending gains, despite the US dollar strengthening again. Precious metals have impressed analysts with their ability to shrug off higher real yields, with the US 10 year rising over 4.5% on this week’s hot CPI data. Iron ore strengthens again despite more weak data from China’s property sector Iron ore prices have climbed again to $109/t, having touched $111/t for the 62% Fe benchmark in China. . Steel prices in China are also headed for gains. Copper prices strengthen again as base metals rally despite high inventories Copper prices have pushed past $9,551/t this morning, hitting 15-month highs alongside a series of base metals. Zinc prices have rallied 16% over the past two weeks after TC fees were cut between Teck and Korea Zinc. Tin prices have also rallied to yearly highs, over $32k/t. Base metals have rallied across the board despite elevated inventory levels leaving many futures curves in contango, a traditional sign of ample physical supply. This year’s metals rally contrasts with the surge in 2021/2022, when many metals sat in backwardation on supply chain disruptions. Tungsten – APT prices continue to rise on short supply European buyers are seen buying more intermediate tungsten products indicating the concentrate and scrap markets are relatively tight Long-term order quotations are seen rising in China with APT, tungsten concentrates and Sodium Tungstate prices rising. Tungsten concentrate (65%) prices are now at CNY130,000-131,000/t APT (88.5%) in Europe is at US$320-330/t Sodium Tungstate prices are now at CNY142,000-144,000/t We suspect much of the price rise relates to supply issues across the Myanmar border where the Chinese military appear suspiciously active. We also believe growth in the retooling of European automotive factories for Electric Vehicles and for military equipment and munitions may also be driving demand higher. Russia has also been ramping up munitions supply to feed its war in Ukraine. As always, the Chinese appear to be profiting from the situation with Yunan Tin reporting Q1 profits up 346% yoy
2	EQ Resources – ASX:EQR - Australia’s tungsten miner in operation at Mt Carbine, FNQ From 7 February this year. EQR acquired the European tungsten producer Saloro S.L.U., which operates the Barruecopardo tungsten mine in Spain. As part of the transaction, Oaktree Capital subscribed A$25M to EQR for the issue of EQR shares at A9 cents per share. The money is in the bank. Oaktree is a leading global investment manager with $183 billion in assets under management as of September 30, 2023. Oaktree has a value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. The EQR shareprice has weakened again, apparently with the release of this downgraded – but realistic and anticipated - resource for Barruecpardo. The resource released today – 7 February – is 24.4Mt @ 0.19% WO3, compared with the reported resource at the time of the acquisition – and treated with some scepticism by EQR at the time – of 27.4Mt @ 0.26% WO3. In the December 2023 Quarter, Mt Carbine crushed 122,839t (150,600t in the September Q). The sorters processed 89,488t (130,519t previously). I expect the Wet will have some effect on the March Quarter 2024 results. Saloro is still ramping up processing and commissioning the second TOMRA ore sorter, and it’s likely that they’ll need a third TOMRA to reach nameplate. I’m waiting for the June 2024 Quarter to confirm my expectations of the production potential for both operations. I’d expect the discount to my current Valuation – and to the price which Oaktree paid – to decrease as the operating results become evident.