Ann: UPGRADED POWER LINE COMMISSIONED LEADS TO RECORD PRODUCTION, page-11

Research flash from Morgans

1		EQ Resources Market Cap @ A6.4cps: A.7M Valuation & TP: Not formally covered In cashflow positive production
2	Positive cashflow from treating the stockpile – 50/50 with CRONIMET. • A successful debottlenecking strategy and Early Works investment targeting the crushing, screening and XRT sorting capacity contributed to the production of a record >40 tonnes of 50% WO3 concentrate in December 2021, showing the positive impact of the continuous improvements at Mt Carbine. • Treatment of the 12Mt stockpile is projected at a rate of 1Mtpy, in a 50/50 JV with European metal trader CRONIMET. The unmined open pit and underground resource – 9.21Mt @ 0.63% WO3 – and the exploration upside is 100% EQR’s. • EQR’s CEO Kevin McNeill - “With the Early Works being completed in the coming weeks, we see ourselves right on target with the production upgrade towards +/-90 tonnes of concentrate per month.” • “Mt Carbine is ramping up production into a firm market for tungsten concentrates and a strong, stable price for the major end product APT, currently around US$325/MTU, compared with US$230/MTU a year ago.” • The Iron Duke mineralization, not included in the Resource, and 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 EQR and its JV partner are optimizing the processing of tungsten ore using the TOMRA XRT ore sorters. The power supply, mining equipment, crushing and screening, conveyors and the sorter have been upgraded to support 24/7 operations. In December 2022, Mt Carbine produced 40t of tungsten concentrate, at a 50% grade. EQR now reports that it anticipates producing +/-90t per month of tungsten concentrate through 2022, processing the low grade stockpile ore in its 50/50 JV with CRONIMET. Given the current ammonium paratungstate (APT) price, and the discount for a 50% tungsten concentrate, which has to be to be converted to APT, we anticipate that Mt Carbine could generate A$1M per month for the JV. More significantly it will de-risk the processing route for the Mt Carbine hard rock mining operation, where we see the real value for EQR. A re-start of open pit mining – 100% to EQR – would generate production from a resource of 0.63% WO3, approximately 8 times the grade of the low grade stockpile currently being processed by the JV. Longer term, we’d expect to see EQR extend the resource base at Mt Carbine along strike and to depth, and to add Iron Duke mineralization to the resource base. Tungsten is now considered one of the “strategic” minerals.

Analyst Chris Brown