After the webinar I looked back at the research from Pacpartners...

After the webinar I looked back at the research from Pacpartners and Morgans. While they haven't updated their target prices of 12c and 10c respectively (interestingly Morgans value is 13c but discounted to 10c due allowing for inflation opex cost of $US140mtu. The updated BFS saw opex fall to $US$104, so maybe an adjustment is coming). I expect they will update their numbers when we start mining the open cut and get $$ in.

The table below is from PacPartners. Looking a little closer it says potential value 17c diluted, if 10 years is added.



This is based on a 1mtpa processing. The company announced in their latest BFS, moving to 2mtpa processing by 2025 which gives them time to assess the underground which is much larger than the open pit and I would suggest adds more than 10 years to the project. This is likely to surpass the $261m valuation, given the NPV is now $307m based on the Open Pit alone (or JUST 20% of KNOWN RESOURCE).

Tony keeps saying this is a multi-generational project and his geology assessment to date has been very good. The reason why this is important is

1. This was previously a successful mine. It stopped due to the fall in the tungsten price and not from falling grades or running out of resource. They previously only collected the wolframite and not scheelite and they left a reasonable amount behind (10mt in waste dumps). The cost of Chinese production has risen dramatically in recent years, so less risk from Chinese flooding the market and the US Defense has banned the use of Chinese tungsten from 2026.
2. EQR's revival has been a slow and sometimes painful process but the current team has been able to do it without too much dilution and very little debt. They have incrementally built this with only $26m of CAPEX when compared to other near term world class deposits - UK Hermerdon 200m+ pounds. King Island $180m+ ($40m+ debt) and Sandong $not sure but they have a $70m debt line. The project economics is head and shoulder above anyone else. IRR 477% and Payback less than 1 year and more to be added. Pacpartners believes the capex for the underground will be $13m which will be funded from less than 6 months of free cashflow.
3. There have been 47 tungsten areas identified using geo-mapping technology with only 3 being drilled. The geology team has been waiting for more $$ to drill and discover the real potential of the Mt Carbine deposit. They have a good understanding of the deposit and have delivered each time they drilled in the last year or so. Andy White always believed there was much more to find.

We aren't very far from a re-rating. Most of the project has been de-risked (grade, price, demand, supply, processing plant, labour, knowledge and expertise, costs, government support, interest rates) so investors should be growing in confidence that it's just a matter of time before the evidence is presented in more ton bags and $$ payments. Very little risk in selling all our product as Masan and Cronimet met want it.

The region has other potential deposits that can be added to Mt Carbine. I think the management are looking bigger than just one mine which helps diversify the business.

The real secret is the recoveries and grade. There have been a number of projects that have struggled to get their recoveries above 40%. Hermerdon, Mt Carbine (under previous management), a couple of the Portuguese and Spanish mines. King Island is about to face the same dilemma with gear that hasn't been well tested (apart from the lab). If they can't get the recoveries up, they are in trouble as their IRR is too low 28% and the debt will eventually get them.

Kevin and his team has been able to improve the recoveries to 75%-80%. This is what makes the project profitable rather than break even.

It looks like EQ Resources (with Masan and Cronimet) are going to be the flag bearers for the tungsten industry and to show the world that there is an important reason why tungsten is considered a critical metal by all the major economies in the world. It seems so far that it's not been taken seriously. Let's hope the light of the investment world will shine on EQR, so everyone will know it's true potential and capability.