Christopher Ecclestone a highly regarded global resource analyst has added EQR to his Hallgarten+ Company model resource portfolio.
He provided a few pages, but I've taken exerts. He hasn't updated for the most recent BFS. That makes 3 analysts that are paying attention with all having similar valuations.
EQ Resources
We have known this stock, and watched it from the corner of our eye, since the days when it was known as Speciality Metals International.
While a past producer the deposit is still relatively unexplored and there is believed to be considerable potential for new Tungsten mineralisation in the Mining Leases and surrounding exploration tenements.
Funding
The AUD$25mn budget for reactivation of the Mt Carbine mine has two principal funding components. The first of these is the $10 million royalty-based funding package arranged with the Regal Resources Royalties Fund. The other main funding source is the Federal government’s Critical Minerals Accelerator Initiative (CMAI) grant of $6mn which was awarded in late April of 2022.
BFS
The revised BFS was published in November of 2022 with the following key metrics:
Mt Carbine BFS - November 2022
$AUD Capital $21.4mn
Pre-Tax NPV @8% $210mn
IRR $397mn
Cash cost - USD/MTU US$118
Payback 1.5 years
Strip Ratio 3.1:1
Concentrate Produced 30,960 tonnes (50% WO3)
The capital is clearly an unchallenging number and the pre-tax NPV a vast multiple of the
Investment Thesis
We are long term fans of Tungsten’s potential. A number of companies have been engaged over the last decade in trying to break China’s hold on this metal, and surprisingly they have succeeded. As we have written in the past, China’s efforts to grab control of the machine tool industry by first grabbing its key input was thwarted by the coordinated actions of the likes of Almonty, Sandvik and Wolfram Bergbau.
The price of APT per MTU (metric tonne unit) has crept up over recent years. Its performance can best be described as stolid, and solid, unlike more
mercurial (pardon the pun) metals. We suspect that EQR management has soft-pedalled the project in recent years in the hope of a Tungsten price surge, which has not happened. Our long-held opinion hasbeen that metals that spike inevitably plunge (as Tungsten did in the Supercycle years) and that in fact the gradual rise scenario is the most attractive trend to look for.
We have looked at other Australian prospects in Tungsten in the past (particularly King Island Scheelite), but EQR certainly takes the prize for persistence.
We have added a LONG position in EQ Resources to the Model Resources Portfolio with a 12-month
target price of AUD 13 cts.
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