Note out from Pacpartners - an important statement. - would be...

Note out from Pacpartners - an important statement. - would be generating positive operating cashflow at his rate.

EQResources | EQR | MCap $112m sh price $0.05/share | SepQ24 up 31% on JunQ24nearing cash flow positive operations

China-UStrade tensions impacting tungsten market

PACPARTNERS DESK NOTE – 2 Oct 2024

PACPartners’ view – the twin themes:

• Mt Carbine tungsten mine is moving from a scale-up development that is commissioning to an fully operational phase.
• The Spanish Saloro operation is moving from chronic loss-making to operationally cash generative mine.

SeptemberQuarter 2024, the EQR Group recorded a 31% increase, from 41,188 mtu in Q4FY24 to53,876 mtu.

• This level means that EQR’s operations are close to breakeven EBITDA level for the past quarter.

EQR Grouprecorded a new monthly production record of 20,721 mtu* (WO3 in concentrate)for September, up 14.7% and 37.3% on August and July 2024 respectively.

• with daily production records at both its operations (641 mtu at Mt Carbine and 518 mtu at Barruecopardo)
• With production/ WO3 recovery consistency, at the September Quarter 2024 production rate EQR would be generating positive operating cashflow in our opinion.

Run-ratefor Sept month equates to a 51% increase of tungsten output on EQR Group level,compared to JunQ2024average monthly output.

*1mtu= 10kg WO3

Productionincrease coincides with China tightening export control measures for a range ofcritical minerals (incl. tungsten) and the US imposing a 25% tariff on Chinesetungsten products, effective from end of September.

In May2024, the US Department of Defense (DoD) issued a final rule implementingSection 844 of the National Defense Authorization Act (NDAA), which restrictsthe DoD from acquiring tungsten from China and Russia (which together representapproximately 87% of the world supply) and prohibits even earlier inputs in thesupply chain from these countries.

EQR iswell placed to supply Western World demand – US and EU with its two mines.

• In early September 2024 EQR and Elmet Technologies LLC,have agreed to a strategic collaboration involving a multi-year offtake contract.
• This not only opens up EQR to US market, but also enables new grant/funding sources to be available to EQR to expand operations.

DISCLOSURE PACPartners has received fees in the past 12 months by the EQ Resources as LeadManager of the May 2024 $9.5m placement.

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. For more information about PAC Partners please visit www.pacpartners.com.au Please also refer to full disclosure on the final pages of this report.

The information contained in this report is provided by PAC Partners to Wholesale Investors only.

Lawrence Grech

Senior Research Analyst