* feature article Tungsten. EQR, page-5

The transcript

Hot metals

It is against that backdrop thatthere has been a resurrection of a tungsten sector on the ASX, limited as it isto two producers – EQ Resources (ASX:EQR) from the Mt Carbine mine near Cairns, and Group 6 Metals (ASX:G6M) on King Island.

Both have been producing minesin the past. Group 6 has just recently officially opened its high-grade KingIsland operation so Garimpeiro will come back to it at a later stage, making EQtoday’s focus.
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EQ has spent three or so yearsbringing Mt Carbine back in to production, initially from low-grade stockpiles.An increasing portion of higher-grade hard-rock ore from a re-developed opencut is now part of the mix.

When in full flight theoperation will be a significant earner for a company with a $100 million marketcap (6.4c a share mid-week), given the margins to be had on the currenttungsten price (around $US310 a metric tonne, or 10kg).
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But EQ has recently taken itselfto the next level by securing a deal to acquire the Barruecopardo tungsten minein sunny Spain. The deal is yet to complete on standard conditions but when itdoes, EQ becomes the world’s biggest source of non-Chinese tungsten. Olé!
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Barruecopardo has had someissues in the past but the transfer of EQ’s technical nous in using ore sorters(less mass and a higher grade) at Mt Carbine is being banked on to make theoperation hum, as has been the case at Mt Carbine. Early use of an ore sorterat the Spanish operation has been hitting targets, and more are on the way.
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The powerful global investmentmanager Oaktree is the seller of Barruecopardo for a nominal sum and theassumption of debt by EQ. But as a fan of the tungsten thematic, Oaktree isrecycling $25 million back in to EQ by taking up a 15.8% placement at a premiumto the market price.
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Morgans and PAC Partners likethe EQ story. They have price targets on the stock of 13.1c and 15crespectively. So potentially at least, they see EQ as a doubler inside of 12months thanks to what is has been achieving at Mt Carbine, and what is to comefrom Barruecopardo.