Annual
Report
2021
Corporate Directory
Directors
Oliver Kleinhempel
Non-executive Director
Non-executive Chairman
Stephen Layton
Non-executive Director
Richard Morrow
Non-executive Director (Appointed 16 March 2021)
Zhui Pei Yeo
Non-executive Director
Company Secretaries
Melanie Leydin
(Appointed 15 February 2021)
Patricia Vanni de Oliveira
(Appointed 15 February 2021)
Suzanne Irwin
(Resigned 1 March 2021)
Registered Office
Level 4, 100 Albert Road
South Melbourne VIC 3205
T +61 (0)7 4094 3072
W www.eqresources.com.au
info@eqresources.com.au
E
Principal Place of Business
6888 Mulligan Highway
Mount Carbine QLD 4871
Share Register
Automic Pty Ltd
Level 5 126 Philip Street
Sydney NSW 2000
T (International): +61 (0)2 9698 5414
Auditors
Nexia Melbourne Audit Pty Ltd
Level 12, 31 Queen Street
Melbourne VIC 3000
T +61 (0)3 8613 8888
F +61 (0)3 8613 8800
Stock Exchange Listing
Listed on the Australian Securities Exchange (ASX)
ASX Code: EQR
ACN: 115 009 106
ABN: 77 115 009 106
Contents
1
2
Chairman’s Address
Chief Executive Officer’s Letter
4 Operating and Financial Review
16 Tenement Schedule
17 Mineral Resources and Ore Reserves Statement
20 Our Purpose
22 Directors’ Report
35 Consolidated Statement of Profit or Loss and Other Comprehensive Income
36 Consolidated Statement of Financial Position
37 Consolidated Statement of Cash Flows
38 Consolidated Statement of Changes in Equity
39 Notes to the Consolidated Financial Statements
65 Directors’ Declaration
66 Auditor’s Independence Declaration
67
Independent Auditor’s Report
71 Shareholder Information
74 Forward Looking Statements
EQ Resources Limited Annual Report 2021
1
Chairman’s Address
EQ Resources aims for
a leadership role in the
sustainable development
of critical mineral projects.
Dear Shareholders
Welcome to the 2021 Annual Report for EQ Resources Limited. In the past 12 months we have seen with great
pleasure how the Company has further progressed towards being a responsible and industry-recognised producer
of tungsten – a critical metal for industrialised nations and with emerging importance in the New Economy.
I applaud the Leadership Team for its tireless work and for continuously strengthening the operational team with
the required competencies to ensure that development milestones are being met. Throughout the last year the
COVID-19 pandemic has still resulted in tremendous disruptions to everyday life and required the Company to be
agile, creative and enduring along the way. Despite all these challenges the Company’s transformation continued.
Mineral and metal consumption correlates with economic growth and urbanisation. Improved resource efficiency
along value chains will reduce negative environmental and social impact and therefore plays an important role in
building sustainable societies. Through the Company’s Purpose Statement, EQ Resources articulated concrete
commitments to managing the economic, social and environmental challenges related to mineral resources
development. ESG related matters are not hidden in a single department or being outsourced to an external
advisor, they actually build the core of the Company’s DNA.
The Leadership Team continues to work on initiatives around energy efficiency and possible integration of
renewable energy around the Mt Carbine site, assessing participation in critical minerals traceability initiatives
and coordinating with other Australian tungsten developers on what are suitable routes for down-streaming and
value-adding in the critical minerals sector. These activities will become more visible as the Company progresses
with its Mt Carbine project.
EQ Resources aims for a leadership role in the sustainable development of critical mineral projects. The Company’s
flagship project at Mt Carbine - as a blueprint for a potential corporate expansion - has the following very strong
value proposition:
Mt Carbine Value Proposition
Critical Mineral Focus
Set For Cost Leadership
First Class Infrastructure
By-Product Revenue
World Class Resource
Strong ESG Credentials
We are on the finish line in getting the once prestigious Mt Carbine tungsten mine back into operation. We invite
you to continue to support us in our journey to realise the full potential of EQ Resources.
Oliver Kleinhempel
Non-Executive Chairman
2
EQ Resources Limited Annual Report 2021
Chief Executive Officer’s Letter
Mt Carbine Clean Water Tailings Catchment Area
Dear Shareholders
The past year has been a year of targeted growth and
accretive value processes driving toward the long-term
growth of the Company using the Mt Carbine resource
and operations as a springboard to accelerate this
process. Since the release of last year’s Annual Report,
the EQR and Mt Carbine team have been working
toward the achievement of the strategic goals set out
in the four key development areas of Gravity Plant
operations, XRT Sorting, Quarry operations and Mt
Carbine Exploration activities:
1.
Working with our unincorporated joint venture
partner, CRONIMET Australia Pty Ltd (part of the
CRONIMET diversified commodities group), the
Gravity Plant has continued its optimisation now
achieving +1,000tpd throughput capacity, +80%
plant availability, and a tungsten recovery of +70%;
These were major milestones that have added
significant value to the operations and project and
will be critical for the sustained operations as the
project continues on its growth trajectory;
2. The XRT Pilot Plant has processed +70,000t of feed
material trial samples from all over the mineralised
stockpile; The results have been excellent with a
+90% tungsten recovery through the XRT Sorter
on a consistent basis, throughputs of +70tph and
on average a +/-10-times upgrade of the feed to
sorter concentrate grade; A significant amount of
the test work was completed under the successfully
completed METS Ignited grant program, which
was a joint effort by CRONIMET Australia Pty Ltd,
The University of Queensland – WH Bryan Mining
and Geology Research Centre, TOMRA Sorting
Pty Ltd, DAS Mining Solutions Pty Ltd and the
Company; The work completed over the past
year has proven the XRT Sorting technological
capabilities and benefits for the Mt Carbine project
and will have a tremendously positive financial
and operational impact over the life of project
through its consistency and capability of debulking
the majority of the Low-Grade Stockpile (“LGS”)
feed material;
3. We have better defined the Mt Carbine resource
focusing on reserve drilling under the open pit by
drilling an additional 16-diamond drill holes with
oriented core; This has resulted in the successful
redefinition of the mineral resource estimate
showing strong potential for both open pit and
underground mining activities to be better defined
in the ongoing Bankable Feasibility Study (“BFS”);
4. The Quarry has successfully completed one of
its largest ever projects, a $4-million contract for
the supply of road building materials to the Bama
Civils Group; All material supplied for this project
was inert waste rock recycled from the barren
stockpiled rock at Mt Carbine; This means low
energy intensity in production, a more competitive
cost base for provision of materials and a reduction
of the environmental footprint from historic mining
activities.
EQ Resources Limited Annual Report 2021
3
With the above strategic categories well defined, work
being completed in these key development areas is
all being used to generate site specific data to inform
the ongoing BFS currently underway. What sets the
Mt Carbine operation apart, is the in-depth, real time
operational data and experience gained over the past
18-months that is now being used to inform the BFS and
the detailed design of the associated processing plant.
This data and operational experience is supported by
a core operational team that will allow the Company
to successfully and rapidly grow operations at Mt
Carbine on completion of the BFS and process the
different resources at the Company’s disposal. The
institutional knowledge, infrastructure and systems on
site will be invaluable to the accelerated growth path
the Company is on.
I would like to take this opportunity to once again
acknowledge that this transition would not have been
possible without the ongoing efforts of the leadership
and site teams working together and the healthy
interaction of the EQR Board for their strategic input,
guidance, and involvement in bringing the Company
to where it is currently and the plans in place for the
future.
The Company continues to make measured progress
towards the short, medium and long-term goals, with
a diverse, collaborative and highly motivated team.
The team at EQR is grateful for the support of
all Shareholders of EQR and appreciate that our
Shareholders see the value in what we are doing and
where we are going. It is an exceptionally exciting
time for the Company and I believe the Mt Carbine
Project and the development and operational team in
place will put EQR in a prime position to continue the
accelerated growth path and leverage our position in
the market.
Kevin MacNeill
Chief Executive Officer
4
EQ Resources Limited Annual Report 2021
Operating and Financial Review
The 2021 financial year has been a progressive year for EQ Resources Limited (“EQR”
or “the Company”) and its flagship projects at Mt Carbine in Far North Queensland.
Highlights
The highlights in the year were:
− Consistent and ongoing production at the Mt Carbine Gravity Plant, operated under an unincorporated joint
venture between EQR and CRONIMET Australia Pty Ltd and trial shipments to leading tungsten consumers in
Europe, the US and across Asia;
− Improvements to the Mt Carbine Gravity Plant during the year have led to the plant capacity now being able
to achieve the targeted 1,000 tonnes per day of feed processed, a tungsten recovery average of +70% and a
operational availability of +80% for the months of June, July and August 2021;
− The Mt Carbine Quarry fulfilled approximately 90% of its $4 million contract with Bama Civil for a major road
construction project in Far North Queensland with the balance of the contract being fulfilled during the first
quarter of the 2022 financial year. This contract utilised recycled inert waste rock from a historical waste pile
considered an environmental burden at site;
− Significant progress made on the development of the XRT Sorter operational capacities and bulk trials of the
Low Grade Stockpile (“LGS”) which has seen +70,000t of material now processed through the pilot unit, the
algorithm optimised and a consistent +/-10 times upgrade of the feed to sorter concentrate showing the benefit
and viability of the technology for the project;
− High-Definition drilling allowed a concise reinterpretation of the geology allowing high grade lenses to be
connected; Hole EQ012 extension successfully intersected a new postulated extension of the Iron Duke System
and opened up large areas to add further resources; EQ015 showed exceptional grade in the Bluff and Iolanthe
zones that were not known before.
A further review of the Company’s operating and financial activities for the 2021 financial year up until the date
of this report is set out in this section.
Health, Safety and Environment
Health & Safety
Injury Frequency Rates for Mt Carbine
Q1 2021 FY
Q2 2021 FY
Q3 2021 FY
Q4 2021 FY
TIRFR
0.020.040.060.080.0100.0120.0140.0160.0180.0200.0Q1 2020 FYQ2 2020 FYQ3 2020 FYQ4 2020 FYFrequency per million man hoursMonthMt Carbine Rolling Frequency Rates 2020-2021LTIFRTRIFR EQ Resources Limited Annual Report 2021
5
Injury frequency rates continue to improve as shown
in the Figure above. The rolling 12-month Lost Time
Injury Frequency Rate (“LTIFR”) has been affected by
3 Lost Time Injuries over the year (one in March and
two in June).
Total Injury Recordable Frequency Rates (“TIRFR”)
have halved since the corresponding period in the
previous year.
This is a result of management focus on proactive
activities such as a positive reporting culture, Safety
Resets, Toolbox Talks, development and improvement
of the Safety Management System and increased
focus on the quantity and quality of risk management
tools such as Job Safety Analysis and “Take 5” tools.
Impress Solutions have been engaged as the
Continuous Improvement Leader and for external
validation process on site for the Safety Management
System.
A total by quarter of the proactive safety measures
completed on site is summarised below.
Proactive Safety Measures per Quarter - Mt Carbine
This includes:
− 21 First Aid and CPR tickets
− 12 G1/G8/G9 Supervisory Tickets
− 5 Lifting and Doggers Tickets
− 13 HR (Heavy Vehicle Licence)
− 1 Radiation Safety Ticket
− 2 Health and Safety Representatives Tickets
− 1 Rehabilitation and Return to Work Course
− 6 Spill Kit Tickets
− 3 Wheeled Loader Tickets
The Company is committed to upskilling its employees
to make sure it has a safe and productive operation.
Environment
t
n
u
o
C
r
o
t
a
c
i
d
n
I
125
120
115
110
105
100
95
Q1 2021 FY
Q2 2021 FY
Q3 2021 FY
Q4 2021 FY
Finally, the Company is pleased that there has been
continued engagement with the Mines Department
regarding the reopening of the historic decline on
site and is set to reopen the portal for inspection and
identification of a work program around the safety
management of the underground and working toward
exploration and bulk sampling of the underground
resource.
Employee Training
Due to the local workforce having limited experience
working in the mining industry the Company has
embarked on an extensive training program over
the last year.
Mt Carbine Tailings Dam
Mt Carbine Tailings Dam
There were no reportable environmental incidents
recorded in the period. A major achievement for the
Company over the period was the receipt of approval
for the handling of up to 1 million tonnes of material
from the waste rock stockpile. This is a significant step
forward in maintaining environmental compliance and
meeting planned production targets for the operation.
As part of the BFS work underway, the Company is
in the process of updating and consolidating the
Environmental Processes and Management Plans in
line with the Company’s forward planning.
Over the period the Company has continued its
sponsorship and involvement with the Mitchell River
Catchment Group for management of invasive species
in the area of the mine lease, and supporting social
activities within its community.
6
EQ Resources Limited Annual Report 2021
Operating and Financial Review continued
Mt Carbine Project Timeline
The Company has continued to implement the operational and execution strategy for its Mt Carbine assets, this
has seen continuous bulk trialling of the LGS through the XRT Sorter, combined with the environmental approval
to process up to 1,000,000tpa of LGS material through the crushing, screening and XRT Sorter. It has also seen
the successful completion of the diamond drill program focusing on an updated resource estimate and reserve
statement. The Company initiated the Bankable Feasibility Study (“BFS”) and completed the appointment of its
lead contractors on target for completion of the BFS in Q4 of 2021.
Gravity Plant Activities
During the 2021 financial year, the Mt Carbine Gravity
Plant operated on a continual basis processing
mainly historic tailings material and trialling LGS fines
material and sorter concentrate during Q3 and Q4 of
the financial year. After EQR’s capital raising in March
2021, further plant improvements were completed on
the Gravity Plant targeting increased running time
capabilities, higher overall tungsten recoveries and
higher-grade concentrate product.
Feed Grade % WO3
e
g
a
t
n
e
c
r
e
P
0.18
0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
Q1 2021 FY Q2 2021 FY Q3 2021 FY Q4 2021 FY Q1 2022 FY
Improvements in the process design included the
installation of a separate feed system for the XRT
Sorter concentrate, removal of the historic and
maintenance intensive scrubber from the circuit,
electrical circuit upgrades throughout the plant and
new piping of shaking table tailings for re-jigging. It
was decided in June to focus on the processing of at
least 50% LGS fines with XRT Sorter concentrate and
tailings material. It was therefore decided to reduce
head feed processing to focus on the higher grade
feed blend and re-allocate staff to the crushing and
screening operations using the quarry equipment
on site. The reduced tonnage throughput has led to
higher concentrate outputs due to the higher-grade
nature of the feed material along with higher running
time on completion of the plant upgrades.
A summary of the major plant upgrades during the
2021 financial year are set out below:
− Installation of a separate feed system for XRT
Sorter Concentrate;
− Rubber lining of all sumps, slurry tanks, and pipe
inlets to reduce wear and tear;
− Removal of the historic and maintenance intensive
scrubber from processing circuit; and
− Rerouting of piping to reduce WO3 losses to tailings.
EQ Resources Limited Annual Report 2021
7
Tungsten Concentrate Loaded for Export to the US
A summary of the results of the plant upgrades during
the 2021 financial year are set out below:
− Feed throughput increase to a consistent 1,000t
per day;
− Increased gravity plant availability to +80%;
− Increased tungsten recovery to +70%; and
− Improved concentrate product quality.
Operational Availability %
e
g
a
t
n
e
c
r
e
P
100
90
80
70
60
50
40
30
20
10
0
Q1 2021 FY Q2 2021 FY Q3 2021 FY Q4 2021 FY Q1 2022 FY
The operation of the Gravity Plant occurred during
these unprecedented times caused by the global
COVID-19 pandemic which led to certain challenges
over the period. Whilst the operation was not directly
affected by any enforced shut-downs, certain logistical
challenges for the delivery of spare parts and additional
equipment continued to be experienced over the
period and led to delays for some of the operational
activities. This has led to the operational team at site
significantly increasing their parts and equipment
supplier base along with list of logistics contractors.
These challenges and streamlining of procurement
and inventory stock policies and processes will only
serve as a positive as the operation continues to grow.
This early development of the Gravity Plant and
processing of historical tailings while gradually
progressing into the processing of the LGS fines
material and XRT sorter concentrate has allowed a
detailed and structured approach to the processing
of the materials available to ensure the maximum
outputs were achieved at each step. The operation is
now functioning with a well-established organisational
structure that allows for the efficient flow of operations.
This will be of significant benefit to the operation
as it grows in the processing of LGS fines material
and XRT sorter concentrate on a consistent basis.
Processing LGS fines produced a significantly higher
ratio of tungsten to head feed when compared to the
tailings material due to the inherently higher grade
and recoverability of the tungsten in the primary fines
material.
8
EQ Resources Limited Annual Report 2021
Operating and Financial Review continued
Mt Carbine Mixed Tungsten Concentrate
Mt Carbine Mixed Tungsten Concentrate (under UV light)
Ratio - Feed (t) to Concentrate (kg)
)
g
K
(
s
m
a
r
g
o
l
i
K
2.5
2.0
1.5
1.0
0.5
0.0
Q1 2021 FY Q2 2021 FY Q3 2021 FY Q4 2021 FY Q1 2022 FY
With the increase in LGS material a significant benefit
that the Company has realised during this time is the
ratio of feed tonnes to concentrate kilograms produced
has increased significantly. While operating the gravity
plant on tailings only material, the ongoing trend
averaged around the 0.75 Kg/t of feed processed,
however, as increasing levels of LGS fines and XRT
sorter concentrate was processed, the positive effect
is clearly seen in the first quarter of 2022. During the
first quarter of 2022, the feed material to the gravity
processing plant was still combined with approximately
50% tailings material due to the crushing and screening
capacity constraints of the quarry equipment currently
being used. The ratio of feed to concentrate kilograms
produced will continue to increase as higher the ratio
of LGS fines and XRT sorter concentrate increases
against the historic tailings feed.
The large majority of employees have been sourced
from the local Mareeba Shire region, where possible,
individuals were employed with mining
industry
experience, however, due to the location, several new
recruits had complimentary skill sets or worked in
other heavy industry outside of mining and therefore
required training to bring their skill sets in line with the
standard required for the operations at Mt Carbine.
This investment in our employees, their training, up-
skilling, and learning has created a core operations
team that is local based, local focused and loyal to the
operations. This will allow the operations to scale-up
production.
In June 2021, the Management team changed the
Gravity Plant operational roster to have 1-week of
processing and 1-week shut down to allow half of the
staff to be allocated to crushing, screening and XRT
sorting operations and produce higher grade feed
materials for the operation. This has seen a significant
reduction in the cost base from June to August
2021 and new record concentrate production levels
reached. The Company is continuing to drive toward
processing solely -6mm fines from the LGS and XRT
Sorter concentrate as it has a far superior feed grade
compared to the historic tailings. The Company has
applied with the local authorities for an upgrade of the
power supply to site, which enables the operational
team to add additional screening capacity and running
all plants (Quarry, XRT Sorter, Gravity Plant) in parallel
on a 24/7 basis, which so far was limited by the site
power network.
EQ Resources Limited Annual Report 2021
9
In accordance with the Offtake Agreement between the unincorporated JV formed by the Company and
CRONIMET Australia Pty Ltd on the one hand and CRONIMET Asia Pte Ltd on the other, by the end of the financial
year CRONIMET has taken delivery of +200 tonnes of concentrate. Individual production lots are tested against
agreed quality parameters, upon which CRONIMET determines the acceptance of concentrate. Trial deliveries to
large tungsten consumers in Asia, the US and Europe were successfully completed and were of utmost importance,
given the specific composition of the Mt Carbine concentrate (containing mixed mineralisation of scheelite and
wolframite).
Average Quarterly XRT Sorter Feed (t)
s
e
n
n
o
T
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Aerial view of XRT Sorting plant
XRT Sorter Development
The Company had a very successful year with the
bulk testing of material through the XRT Sorting plant
at Mt Carbine with results showing on average a 10
times upgrade of feed material to sorter concentrate
produced with a yield of feed to concentrate averaging
+/-10%. The XRT Sorter operates continuously at
+70tph with a +90% tungsten recovery. The results
over the period have proven the robustness of the
technology and specifically the adaptability of the
technology to the Mt Carbine LGS material. This has
given the Company a very cost effective method of
processing the LGS through the reduction of mass to be
processed through the Gravity Plant by concentration
through the XRT Sorter.
Over the year, the Company worked with TOMRA,
the leading equipment manufacturer of sensor based
sorters, to upgrade several pieces of hardware and
software in the machine to ensure it was fitted with the
latest technology to deliver optimal results. After the
upgrades were completed, the Company continued
working with TOMRA on the feed characteristics and
materials to develop an algorithm that was suited to
the LGS material while maximising recovery.
Q1 2021 FY Q2 2021 FY Q3 2021 FY Q4 2021 FY Q1 2022 FY
In July 2020, the project consortium’s application to
METS Ignited Australia Limited for a $220,000 grant
under the Queensland METS Collaborative Projects
Fund was awarded (refer to ASX announcement
Government Support for Mt Carbine Mine Waste
Transformation Initiative released 24 July 2020). The
project consortium was led by CRONIMET Australia
and consists of the Company, CRONIMET Australia,
The University of Queensland - WH Bryan Mining and
Geology Research Centre, TOMRA Sorting Pty Ltd
and DAS Mining Solutions Pty Ltd.
The project was used to establish the physical controls
on separation efficiency of the LGS materials at Mt
Carbine to develop new mine planning and scheduling
models and optimise scale-up application of ore
sorting technologies. This was completed through the
excavation of several pits and two large trenches on
the LGS. Much of the information and data produced
were essential for the compilation of the BFS and
design of the operations going forward. To continue
generating data, the central test pit of the program
has been excavated further in all directions to continue
testing grade continuity and material variability
through the stockpile. More than 40,000t of material
has been excavated from this area alone with results
of the -6mm fines material and XRT sorted material
providing consistently positive results.
10
EQ Resources Limited Annual Report 2021
Operating and Financial Review continued
Quarry Activities
The Company had a very productive year through the
Mt Carbine Quarry operations, which has successfully
completed one of the largest quarry contracts in its
history with no supply side delivery delays over the
contract. This contract completed for the Bama Civil
Group was used in the construction of approximately
10 kilometres of sealed road on the Northern Peninsula
Development Road using completely recycled inert
waste rock materials from the Mt Carbine stockpiles.
Over 70,000t of road making materials was used in
the satisfaction of this contract.
Mt Carbine Quarries is the largest and one of the most
northern hard rock quarries in Queensland. It is a
fully permitted, established business which has been
in operation for over 20 years within the Mt Carbine
Mining Leases. The Company’s cost competitiveness
is primarily due to all of its feed stock being sourced
from readily available stockpiled mined rock, meaning
no drill and blast activities are necessary. The
synergies between the quarry and the Company’s
mining activities through beneficial waste reuse,
reinforces the Company’s commitment to reducing its
environmental footprint and maximising value from all
resources on site.
In addition to satisfying the Bama contract over the
period several other smaller contracts were also
completed and several tenders submitted, with more
tenders becoming available for submission toward
the end of the financial year. This appears to be a
result of Government stimulus packages targeting
infrastructure for the region being rolled out. It is
anticipated that the quarry will see the benefits of
this stimulus during the upcoming financial year.
A recent quote from the Hon. SJ Stewart, the
Queensland Minister for Resources confirms
the Government’s strong understanding and
awareness of the project and the beneficial
impact of how the project is being implemented:
“ In industry, I give the example of EQ
Resources which are recommercialising
the former abandoned tungsten mine at
Mount Carbine in north-east Queensland.
EQ Resources are using advanced ore
sorting technology to optimise recovery
of valuable tungsten ore from waste ore.
Their technology sourced from their
German partner Cronimet is allowing
them to reprocess waste stockpiles
to create value from waste.”
Bama Contract - Road Base Production, Mt Carbine Quarry
The Company has continued taking steps to empower
the current labour force by rewarding outstanding
individuals in their respective fields. This has seen the
promotion of one of the quarry’s most experienced
operators, Mandy McAuley, to become the Supervisor
of the Quarry operations. Her experience in the
practical operations and running of quarries and over
30-years in the industry has been invaluable to the
operation and development of the quarry into a first
class asset for the Company.
The quarry currently produces more the 18 products,
of which, the regular products are stockpiled on site
and ready for despatch. As contracts continue to
be successfully completed, the modernisation of
the quarry gains traction and is allowing the quarry
to tender on larger jobs in more distant regions
when combined with the beneficial reuse of the XRT
Sorter waste materials as a product supply for quarry
aggregates.
income.
look for
The Company continues to
innovative
solutions for the quarry that will allow for sustainable
and continuous
In this connection, the
Company has continued investigating potential value-
add technologies to transform rock waste into higher-
value,
intensive building products,
mainly bricks and innovative road making materials for
the time being.
lower-carbon
EQ Resources Limited Annual Report 2021
11
Mt Carbine Quarries
Quarry Stockpiles
Exploration Activities
information
Mt Carbine
During this year the Company has been active in
refining the mineral resource
from
historical work around the Mt Carbine deposit. The
program was based on a new interpretation of the
geology and mineralization and a recognition of the
structural history of the deposit. This year’s work
was built on the work done in the previous year and
culminated in a successful drill out of resources around
the pit area.
lenses containing
A total of 16 diamond drill holes were completed for
4,074.1m during May-June 2021. The holes were drilled
within the Mt Carbine ML’s 4867 & 4919 and were
expressly located to define the resources remaining
under the existing pit. Previously only 7 holes existed
below the pit over this 500m strike length. The drilling
‘grade
intersected four major
packages’ separated by 15-30m of barren host rocks.
The zones extend East-West along the strike of the
Andy White pit and are marked as the Iolanthe, Bluff,
Wayback and Johnson Zones. Each is sub-vertical in
orientation and extends down to where the zone is
truncated by the South Wall Fault (SWF- A Reverse
Dip Slip Fault). The zones range from 2m to 12m in
width with grades often greater than 1% WO3. Attached
in Appendix 1 are the highlights of this drill program
with all results shown above a diluted cut-off of 2m @
0.25% WO3.
Each of the named zones outlined above contain
narrow high-grade veins designated as ‘King Veins’
and have been linked to what the historic miners
pursued in their underground workings. In historic
times, by mining high-grade veins by hand, the miners
managed to deliver grades consistently of >1% WO3
ore to the co-op mill, that was operational in the early
1900’s. These narrow high-grade veins are typically
10-30cm in size and contain a coarse integration of
Wolframite and Scheelite crystals often reaching 10cm
in size. The King Veins are interpreted to reflect a late
brine event in the mineralizing history that occurs
after a more pervasive gaseous event that deposited
large amounts of early barren or low-grade quartz.
Typically, across the existing historical pit we see some
35-40 veins of which about 5-7 veins are mineralized
King Veins and these high-grade veins have now been
recognized throughout the deposit.
There is a strong level control to much of the
mineralization, with veins recorded as narrow, weak
stringers of 5-15cm width in the +350m RL level and
increasing in size and grade with depth, with the best
zone of mineralization occurring in the 200-350m RL
level. This vertical change in the deposit, is thought
to be a function of declining temperature away
from a degassing granite at depth and the tungsten
depositing in the 250-350°C zone. Although the veins
continue strongly to depth the bonanza grades drop
off gradually.
12
EQ Resources Limited Annual Report 2021
Operating and Financial Review continued
Using orientated core for the drilling and with over 99% core recovery, the Company was for the first time able
to complete a detailed 3D-model of orientated quartz veins that better define the geological model. During the
recent drill program, Hole EQ012 was extended deeper (further Local Grid North) to intersect part of the inferred
Iron Duke formation and allowed a re-interpretation of the zone as being additional parallel zones to the pit
mineralization. Three new ‘vein packages’ were defined in this area named the Dazzler, Talis and Crowne zones and
each zone represents several King Veins clustered together. The zones here, are also separated by wider zones of
barren metasedimentary host rocks.
Plan of 16 diamond holes completed in 2021
EQ Resources Limited Annual Report 2021
13
Typical section through the center of the pit showing the King Vein packages underneath and to the north of the historical pit
All data, including geotechnical information, has been
entered into the Company’s database which was then
used by the Measured Group in Brisbane to calculate
an updated mineral resource for the Mt Carbine
orebody. (See Mineral Resources and Ore Reserves
Statement on Page 17).
input
is being
This mineral resource
into the
Company’s BFS to determine the best approach to
mining of these high-grade lenses and currently it is
thought that this will be a combination of open pit
mining as well as underground mining. The deposit
is still open in multiple directions, including at depth.
Therefore, further drilling with the aim of expanding
the deposit size, will be completed in the future at the
appropriate time. As can be seen in the picture to the
right, Mt Carbine sits within a tungsten cluster and the
Company is working toward better defining the Mt
Carbine deposit to leverage the knowledge against
deposits in the local region.
14
EQ Resources Limited Annual Report 2021
Operating and Financial Review continued
Panama Hat – Broken Hill
This license was renewed with all 19 units without reduction, and is valid up until 29th November, 2024.
Exploration in this area has been hampered by extensive calcrete cover and recent scientific developments have
shown that sampling of calcrete can identify underlying tracing of gold deposits. The initial orientation test sampling
showed anomalies in the calcrete emerging and showed a strong trend across the known ‘line of lodes’. Given the
success of this approach, the Company will complete the survey over the entire gold field and then review for drill
targets once the COVID-19 inter-state travel restrictions are eased.
Plot of god values (ppb) obtained in calcrete samples of Panama
Hat Grid, ≥5ppb is the threshold for gold anomalous value
Plot of gold values (ppb) obtained in calcrete samples of Willyong
Tank ≥ 5ppb is the threshold for gold anomalous value
Crow Mountain – New England
The Crow Mountain tenement is under renewal and this
is expected in Quarter 4, 2021 with a 50% reduction in
land area.
The license covers part of the Great Serpentine Belt
in the western New England province of north eastern
NSW. Shallow marine sediments of late Devonian age
on the western side of the tenement are separated
from much older deep marine sediments and intrusive
rocks on the eastern side of the tenement by a major
north-south trending structure, the Peel Fault. The fault
is well known for the belt of serpentinite, formed by
alteration of pre-existing ultra-mafic intrusive exposed
for several hundred kilometres along the fault.
EQ Resources Limited Annual Report 2021
15
Capital Raisings
Equity Raising – March 2021
On 15 March 2021, the Company announced it had
received $6.5 million of firm commitments in a
well-supported placement of new fully paid shares
(New Shares) to
institutional and sophisticated
investors (Placement). Strong support was shown
for the placement from a broad range of high-quality
institutional investors. The issue price for the placement
was $0.032 (3.2 cents) per share, being an 18% discount
on the most recent closing price and a 16% discount to
the 15-day VWAP. The placement was conducted by
Morgans Corporate Limited (Lead Manager).
187.5 million fully paid ordinary shares (New Shares)
were issued under the Placement on 19 March 2021
with a further 15.625 million fully paid shares issued to
Directors on 20 May 2021 upon receiving shareholder
approval at the General Meeting on 17 May 2021 being
the total gross proceeds from the Placement to $6.5
million before costs (refer ASX announcement “EQR
Raised A$6.5M to Accelerate Mt Carbine Expansion
and Underground Development”).
Convertible Notes – September 2021
Subsequent to the end of the 2021 financial year, the
Company raised a further $6.0 million via the issuance
of 2 year convertible notes with a conversion of 6.5
cents per share, a ~45% premium to the last price of
4.5 cents per share (“Convertible Notes”). The funds
will be used to commence early works for its Mt
Carbine tungsten mine, well ahead of the release of
the Company’s Bankable Feasibility Study.
Details:
Amount: A$6.0 million
Term:
Two years with the ability to be converted
early by the Note Holders.
Coupon:
7% per annum. Coupon payable in
shares or cash at the election of the Note
Holders.
Conversion
Price:
$0.065 per ordinary share, a 44%
premium to the last close on 8 September
2021.
Conversion
Terms:
Converted into new ordinary shares or
repayment of the loan at the Note Holders
election. The Note Holders may elect to
convert the Convertible Notes into new
shares early during the term.
the
last year APT
Tungsten Market Outlook
Throughout
(Ammonium
Paratungstate; as the underlying price reference for
tungsten concentrate) prices between US$205/mtu
(metric ton unit; equals 10 kg) in July-August 2020 and
US$315/mtu, as of the date of this report, have been
seen. This represents an increase of approximately
+50% within the period, and confirms the strong
underlying fundamentals the tungsten market is in at
the moment.
The Company believes that price fundamentals
remain favorable in the months ahead, as global
manufacturing sectors continue to recover from the
disruptions caused by the pandemic and industrial
activities in leading economies start to benefit from
the large stimulus packages rolled out by various
governments.
Corporate Activities
Board of Directors
The Board welcomed Mr Richard Morrow as a Non-
executive Director as from 16 March 2021. Richard is
an experienced professional in mining finance based
in Melbourne, Australia. He is a director of specialist
resources fund Manager Lowell Resources Fund
Management and manager of the ASX-listed Lowell
Resources Fund (ASX:LRT). For many years he was an
equity holder of Melbourne-based stockbroker, E.L. &
C. Baillieu, now part of the Ord Minnett Group. Richard
is the honorary Chairman of the Melbourne Mining Club
and has over 30 years’ experience as a stockbroker
in Melbourne and in London and is a Fellow of the
Australasian Institute of Mining and Metallurgy.
in capital markets and
Mr Morrow’s experience
industry oversight provides an invaluable contribution
to marketing the Company’s continued progress and
potential.
Leadership Team
Ms Kim Cavallaro resigned as Executive Director and
Chief Commercial Officer effective from 15 January
2021 with Mr Kevin MacNeill entering an Executive
Employment Agreement on 1 April 2021 as Chief
Executive Officer.
The Company is pleased Mr Kevin MacNeill will
continue to lead the Company as its CEO, expanding
his focus on the operational front at the Company’s
flagship projects at Mt Carbine, to drive ongoing
strategic initiatives at both Mt Carbine along with
the Company’s gold exploration assets in New South
Wales. Mr MacNeill will work with the team to align key
management roles to best advance these initiatives
and seize the opportunities ahead.
16
EQ Resources Limited Annual Report 2021
Tenement Schedule
Details of mining tenements held by the Company and its controlled entities:
State
Ownership
Area
Status
Notes
Expiry Date
Queensland, Australia
ML 4867
ML 4919
EPM 14871
EPM 14872
EPM 27394
Mt Carbine
Quarries Pty Ltd
(wholly owned
subsidiary of the
Company) 100%
Mt Carbine
Quarries Pty Ltd
(wholly owned
subsidiary of the
Company) 100%
EQ Resources
Limited 100%
EQ Resources
Limited 100%
EQ Resources
Limited 100%
358.5 ha
Granted
7.891 ha
Granted
10 sub- blocks
Granted
21 sub-blocks
Granted
4 sub-blocks
Granted
New South Wales, Australia
EL 6648
EQ Resources
Limited 100%
4 Units
Renewal
Pending
31/07/2022
31/08/2023
12/12/2025
11/12/2025
01/06/2025
19/10/2020
Acquired on 28 June
2019 as part of the
Company’s 100%
acquisition of Mt
Carbine Quarries
Pty Ltd.
Acquired on 28 June
2019 as part of the
Company’s 100%
acquisition of Mt
Carbine Quarries
Pty Ltd.
Notice of Proposed
Decision & Draft
Instrument of Renewal
received from Regional
NSW – Mining,
Exploration and
Geoscience (Division)
on 18 August 2021.
EL 8024
EQ Resources
Limited 100%
ML = Mining Lease
EPM = Exploration Permit for Minerals
EL = Exploration Licence
19 Units
Granted
29/11/2024
EQ Resources Limited Annual Report 2021
17
Mineral Resources and Ore Reserves Statement
Summary of Results of Annual Review of Resources and Reserves
The following is a summary of the Mineral Resource Estimate (“MRE”) issued on 20 September 2021 which also
shows the governance and controls of the resource statement.
The MRE for Mt Carbine consists of two separate components:
1.
In-Situ Mineral Resources adjacent to, and below, the current open pit, proposed to be mined by open pit
mining methods; and
2. the mineralised rock previously mined and stockpiled, located in what is now referred to as the Low Grade
Stockpile (“LGS”).
The MRE was finalised on 8 September 2021 and is based on geological data acquired from 20,426m of diamond
core from 79 drill holes that intersected the in-situ orebody adjacent to, and below, the current open pit; and
samples obtained through a bulk sampling programme conducted over the LGS. Table 1 contains a summary of
the MRE for Mt Carbine.
Table 1 - Mt Carbine Resource Estimate, as at 20 September 2021
Resource
Low Grade Stockpile
In Situ
Total (Low Grade Stockpile + In Situ)
NOTES:
Resource
Classification
Tonnes
(Mt)
Grade
(WO3%)
WO3
(mtu)
Indicated
12.00
0.075
900,000
Indicated
Inferred
Sub-Total
2.40
6.81
9.21
21.21
0.74
0.59
0.63
1,776,000
4,017,900
5,793,900
6,693,900
1
Total estimates are rounded to reflect confidence and resource categorisation
2. Classification of Mineral Resources incorporates the terms and definitions from the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code, 2012) published by the Joint Ore Reserve Committee (JORC)
3. No upper cut was applied to individual assays for this resource, a lower cut of 0.15% WO3 was applied
Geological Interpretations and Mineral Resource Estimation
EQ Resources contracted independent mining consultant firm Measured Group Pty Ltd to estimate a Mineral
Resource for the Mt Carbine Tungsten Mine, utilising the geological data, observations and geochemical analysis
from 79 diamond core drill holes drilled into the in-situ orebody, and samples obtained through a bulk sampling
programme conducted over the LGS.
Lithological, structural and assay data from 79 diamond core drill holes (20,426m) spaced between 10m and 35m
apart, were used to build mineralisation wireframes. Checks of the documentation describing the sampling, sample
preparation, QA/QC protocols and analytical procedures used for all the drilling phases were completed by the
Competent Person responsible for the estimate.
No compositing of core sample intervals was undertaken in the field. Samples were composited within the
mineralisation envelopes for geological modelling. Data spacing was considered sufficient for estimation of WO3
grades by ordinary kriging. Mineralisation was modelled as three-dimensional blocks of parent size 10m x 10m
x 10m with sub-celling allowed to 0.5m x 0.5m x 0.5m. No assumptions were made regarding the modelling of
selective mining units.
The following validation checks were completed on the block model:
− Drill holes used for the estimation plotted in expected positions.
− Flagged domains intersections lay within, and corresponded with, domain wireframes.
− Determine whether statistical analyses indicated that grade cutting was required.
− Volumes of wireframes of domains matched volumes of blocks of domains in block model.
− Visually plot of grades in the block model against drill holes.
18
EQ Resources Limited Annual Report 2021
Mineral Resources and Ore Reserves Statement continued
The MRE was completed on the basis that the in-situ Mineral Resource will be mined by either open cut or
underground mining methods. Given the proximity of the modelled orebody to the current open pit, the MRE has
been deemed by the Competent Person to pass the “reasonable prospects for eventual economic extraction test”
(RPEEE). EQ Resources is currently completing a Feasibility Study, using the current geological model and MRE as
a key input to that work, and when completed, more details on the results of that work will be released.
No upper cut-off grades were applied to the Mt Carbine Resource Estimate. The competent person establish to his
satisfaction that the high grade zones recorded in the drill results were present in the mineralized zones and could
be correlated between sections. A lower cut of 0.15% WO3 was used to determine the resource and definition of
the geological boundaries to the mineralized zones. The Competent Person completed an assessment of tonnes
by grade table to assist in the determination of the cut off grade.
The Mt Carbine Tungsten Mine MRE has been classified by the Competent Person as Indicated and Inferred Mineral
Resource categories, based on the current understanding of continuity of orebody geometry (geology) and
grade. The classification reflects the Competent Person’s confidence in the location, quantity, grade, geological
characteristics and continuity of the Mineral Resource. The MRE was classified as Indicated and Inferred based on
relevant factors, including but not limited to the following:
− Drill hole density (Indicated spacing is approximately 30 m x 30 m; Inferred is approximately 60 m x 60 m).
− Style of mineralisation and geological continuity.
− Data quality and associated QA/QC and grade continuity.
Two methods were used to determine the optimal drill spacing between boreholes for resource classification at the
Mt Carbine Project:
− Variogram methodology which analyses the different proportions of the sill; and
− an estimation variance methodology.
The current data spacing and distribution is sufficient to establish geological and grade continuity appropriate for
the MRE and classification, and the results appropriately reflect the Competent Person’s view of the deposit.
The LGS is comprised of mineralised rock extracted during open pit mining operations between 1974 and 1987.
Grade Control practice during this open pit mining discriminated between ore sent for processing and mineralised
rock deemed at the time to be too low grade to justify processing at the time of mining.
Historical mine records indicate that approximately 12 Mt of mineralised rock is contained in the LGS. This has been
shown to reconcile well, with the estimate of tonnes contained in the LGS, determined by an independent estimate
of total tonnes of material mined from the open pit of 22 Mt, less the 10 Mt of material recorded as having been
processed through the processing plant.
The LGS has been the subject of a bulk sampling programme and 22,000 tonnes of material has been sampled to
date. Bulk samples included the following:
− 8 costeans dug with an excavator;
− Regular costeans/trenches ranging up to 10 m deep and 50 m long; and
− 80 grab samples locations (approximately 20 kg each of -100 mm material) for mineralogical and chemical
characterisation.
The bulk samples have been assayed and subjected to extensive sorting trials with a pilot-scale X-ray sorter (SEI-
CNQ-III ASX announcement 23 March 2011). The 2011 pilot-scale X-ray sorter trials indicated that the low-grade
material could be pre-concentrated by sorting with an optimum 6 times upgrade. The grade of the bulk sample was
estimated to be 0.075% WO3, which compares favourably with a back-calculation from historic mine production
and mill recovery records, and the recent modelling and MRE of the LGS.
EQ Resources Limited Annual Report 2021
19
A significant amount of work has been completed recently to understand the Particle Size Distribution (PSD) as
part of a grade-by-size assessment of the LGS, and a review of the data generated from that work was completed
in 2021, to further support the MRE for the LGS. The following table provides a summary of PSD data:
Table 2: Particle Size Distribution Data (PSD)
Size Fraction (mm)
+170mm
-170 + 100
-100+53
-53 + 30
-30 + 6
-6
TOTAL
Grade (WO3)
0.043%
0.049%
0.069%
0.081%
0.095%
0.110%
0.075%
PSD
30.0%
8.0%
9.0%
11.0%
20.0%
22.0%
100.0%
Competent Persons Statement
Statements contained in this announcement relating to the Mt Carbine Tungsten Mine Mineral Resource Estimate,
are based on, and fairly represents, information and supporting documentation prepared by Mr Chris Grove, who
is a member of the Australian Institute of Mining & Metallurgy (AusIMM No: 310106).
Mr Grove is a full-time employee of independent mining consultant firm Measured Group, who were contracted
by EQ Resources Limited to prepare an estimate of the Mineral Resources for Mt Carbine. Mr Grove has sufficient
relevant experience in relation to the mineralisation styles being reported on to qualify as a Competent Person as
defined in the Australian Code for Reporting of Identified Mineral Resources and Ore Reserves (JORC) Code 2012.
Mr Grove consents to the use of the information contained in this announcement in the form and context in which
it appears.
The Mineral Resource Estimate is reported as at 20 September 2021.
20 EQ Resources Limited Annual Report 2021
Our Purpose
Resourcing the new economy
for a better tomorrow
We are a value-oriented resources company,
sustainably producing and managing
new economy minerals and metals. We
maximise the potential of our assets through
resource-efficiency and investment in our
people to deliver materials that are critical
for a better tomorrow. It’s how we drive
value in our operations, approach new
opportunities and at the same time deliver
positive societal impact while minimising
our environmental footprint.
EQ Resources Limited Annual Report 2021
21
Financial Report
The Directors of EQ Resources present their report on the
consolidated entity (Group), consisting of EQ Resources
and the entities it controlled at the end of, and during,
the financial year ended 30 June 2021.
Contents
18. Directors’ Report
33. Auditor’s Independence Declaration
34. Consolidated Statement of Comprehensive Income
35. Consolidated Statement of Financial Position
36. Consolidated Statement of Changes in Equity
38. Consolidated Statement of Cash Flows
39. Notes to the Financial Statements
99. Directors’ Declaration
100. Independent Auditor’s Report
102. Corporate Governance Statement
110. Additional Stock Exchange Information
Contents
22 Directors’ Report
35 Consolidated Statement of Profit or Loss and Other Comprehensive Income
36 Consolidated Statement of Financial Position
37 Consolidated Statement of Cash Flows
38 Consolidated Statement of Changes in Equity
39 Notes to the Consolidated Financial Statements
65 Directors’ Declaration
66 Auditor’s Independence Declaration
67
Independent Auditor’s Report
71 Shareholder Information
74 Forward Looking Statements
22 EQ Resources Limited Annual Report 2021
ANNUAL Report June 2021
Directors’ Report
Directors’ Report
Directors’ Report
The Directors of EQ Resources present their report on the consolidated entity (Group), consisting of EQ
Resources and the entities it controlled at the end of, and during, the financial year ended 30 June 2021.
Directors
The following persons were Directors of EQ Resources during the whole of the financial year and up to the
date of this report, unless otherwise stated:
• Oliver Kleinhempel, Non-executive Chairman
•
Stephen Layton, Independent Non-executive Director
• Richard Morrow, Independent Non-executive Director (Appointed 16 March 2021)
•
Zhui Pei Yeo, Non-executive Director
Company Secretary (Joint)
Melanie Leydin (Appointed 15 February 2021)
Patricia Vanni de Oliveira (Appointed 15 February 2021)
Suzanne Irwin (Resigned 1 March 2021)
Principal Activities
The principal activities of the Group during the 2021 financial year focused on the:
continued optimisation of the production processes and recoveries from the Mt Carbine Retreatment Plant
as part of the Company’s unincorporated joint venture with CRONIMET Australia Pty Ltd for the
development of the Mt Carbine Tungsten Tailings Retreatment and Stockpile Projects;
ongoing expansion of the Mt Carbine Quarrying operations along with the fulfilment of the ~$4 Million
Purchase Order from Bama Civil for the supply of quarry materials;
drilling program to further define the Mt Carbine Tungsten resource which commenced in March 2021;
appointment of Bankable Feasibility Study lead and preferred independent consultants to assess the
potential for an open pit operation prior to going underground at the Company’s flagship asset, the Mt
Carbine Tungsten Mine, in Far North Queensland; and
maintaining its tungsten exploration assets in Far North Queensland whilst continuing to evaluate the
exploration potential of its gold exploration licences in New South Wales.
The Group also continues to evaluate other corporate and exploration opportunities within the new economy
and critical minerals sector.
Results
The net result of operations for the consolidated entity after applicable income tax expense was a loss of
$4,574,191 (2020: loss of $3,015,680).
Dividends
No dividends were paid or proposed during the period.
8
EQ Resources Limited Annual Report 2021
23
ANNUAL Report June 2021
Directors’ Report
Operating & Financial review
Information on the operations and financial position of the Group and its business strategies and prospects for
future financial years is set out earlier in this Annual Report. The auditors have issued an unqualified opinion.
Corporate Structure
EQ Resources is a limited company that is incorporated and domiciled in Australia.
Significant Changes
Significant changes in the state of affairs of the Group for the financial year were as follows:
(a)
Increase in contributed equity of $6,500,000 resulting from:
Placement of 187,500,000 shares at $0.032 per share to
institutional and sophisticated investors undertaken pursuant to
placement capacities under Listing Rule 7.1 (15% Rule) and Rule
7.1A (10% Rule) (refer ASX announcement dated the 15 March
2021)
Placement of 15,625,000 shares at $0.032 per share to Directors
undertaken pursuant to placement capacities under Listing Rule
7.1 (15% Rule) and Rule 7.1A (10% Rule) (refer ASX
announcement dated the 15 March 2021)
Date
Shares
$
19-03-2021
187,500,000
6,000,000
20-05-2021
15,625,000
500,000
Sub-Total
Lead manager options
Share issue costs
TOTAL
6,500,000
(503,385)
(415,767)
5,580,848
(b) ~$4 Million Purchase Order (including GST) awarded to the Company’s wholly owned subsidiary, Mt
Carbine Quarrying Operations Pty Ltd, for the supply of various quarry materials for a road construction
project located within the Cook Shire in Far North Queensland (refer ASX Announcement “$4 Million
Contract Enhances Order Intake – Mt Carbine” dated 1 July 2020). ~90% of this order was fulfilled during
the period with the contract being satisfied in full during the first quarter of the 2022 financial year.
(c) Appointment of Kim Cavallaro as Chief Commercial Officer on 1 July 2020 and Executive Director on 1
October 2020.
(d) Resignation of Chief Operating Officer, Chris Godfrey, on 31 July 2020.
(e) Change of name to EQ Resources Limited effective from 26 November 2020 (refer ASX announcement
“Change of Name and ASX Code” dated 1 December 2020).
(f) Environmental Approvals granted by the Department of Environment and Science permitting underground
exploration and sampling to take place at Mt Carbine (refer ASX announcement “Environmental Approval
obtained for Underground Exploration and Sampling Campaign” dated 13 January 2021).
(g) Resignation of Kim Cavallaro as Executive Director and Chief Commercial Officer on 15 January 2021.
(h) The Company raised $6,500,000 (before costs) via the placement of 203,125,000 fully paid ordinary
shares at an issue price of $0.032 cents per share with the placement being undertaken pursuant to its
placement capacity under Listing Rule 7.1 (15% Rule) and Rule 7.1A (10% Rule). Refer ASX
announcement “EQR Raises $6.5M to Accelerate Mt Carbine Expansion and Underground Development”
dated 15 March 2021.
(i) Appointment of Richard Morrow, as a Non-executive Director to the Board of EQ Resources on 16 March
2021.
9
24 EQ Resources Limited Annual Report 2021
Directors’ Report continued
ANNUAL Report June 2021
Directors’ Report
(j) Mt Carbine Quarry’s production allowance, under the Queensland Environmental Protection Act,
increased from 100,000 tonnes to 1,000,000 tonnes per year (refer ASX announcement “EQ Resources
Secures Environmental Authority Approval for Quarry to Produce up to 1 Million Tonnes a year at Mt
Carbine” dated 29 April 2021).
(k) Study Lead and preferred independent consultants appointed for Bankable Feasibility Study for the Mt
Carbine Tungsten Mine’s expansion to assess the potential for an open pit operation prior to going
underground (refer ASX announcement “EQR Appoints Bankable Feasibility Study Lead and Selects
Preferred Independent Consultants” dated 25 May 2021).
(l) Mt Carbine’s 16-hole resource drilling program, commenced in March 2021, hits bonanza grades under
the Andy White Open Pit with average grades continuing to significantly exceed the previously reported
resource grade (refer ASX announcement “Mt Carbine Hits Bonanza Grades Under Open Pit” dated 5
August 2021).
Directors' Interests in Shares, Options and Performance Rights
Director
Shares Directly and
Indirectly Held
Options Directly and
Indirectly Held
Performance Rights
Directly and Indirectly
Held
O. Kleinhempel
S. Layton
R.D. Morrow
Z.P. Yeo
17,833,600
54,181,559
4,422,000
70,232,310
10,000,000
4,000,000
4,000,000
4,000,000
-
-
-
-
Directors’ interests in shares, options and performance rights as at 30 June 2021 are set out under Section (e)
of the Remuneration Report .
Company Secretary
Joint Company Secretaries:
Melanie Leydin
Patricia Vanni de Oliveira
(Appointed: 15 February 2021)
Messrs Leydin & Vanni de Oliveira were appointed as joint Company Secretaries for the Company on 15
February 2021.
Ms Leydin has over 25 years’ experience in the accounting profession and over 15 years as a Company
Secretary with extensive experience in relation to Public Company responsibilities. Ms Leydin holds a Bachelor
of Business majoring in Accounting and Corporate Law, is a member of the Institute of Chartered Accountants,
Fellow of the Governance Institute of Australia and Registered Company Auditor. Ms Leydin graduated from
Swinburne University in 1997, became a Chartered Accountant in 1999 and since February 2000 has been
the principal of Leydin Freyer Corp Pty Ltd which provides outsourced Company Secretarial and accounting
services to public and private companies across a host of industries.
Ms Vanni de Oliveira has more than 15 years’ professional experience in corporate governance, mergers and
acquisitions, project finance, engineering, procurement and construction contracts and compliance. She has
been working as an in-house counsel of multi-national companies, an associate in Brazilian top tier law firms
(300+ lawyers) and as Company Secretariat and joint Company Secretary providing outsourced Corporate
Governance and Company Secretarial services to various Australian listed companies.
10
EQ Resources Limited Annual Report 2021
25
ANNUAL Report June 2021
Directors’ Report
Suzanne Irwin (Appointed 1 September 2020 | Resigned 1 March 2021)
Ms Irwin was appointed as Company Secretary on 1 September 2020 and resigned on 1 March 2021. Ms Irwin
is a Fellow of the Governance Institute of Australia with over 9 years’Company Secretarial experience with
ASX300 member, ERM Power Limited, which was delisted from the ASX on acquisition by Shell Energy
Australia in November 2019. Prior to this, having completed CPA certification, Suzanne has over 10 years’
financial experience in business and commercial analyst roles at various BHP mining and minerals extraction
operations.
Adrien Wing (Resigned 1 September 2020)
Mr Wing held the position of Company Secretary until 1 September 2020. Mr Wing is a certified practicing
accountant. Mr Wing previously practiced in the audit and corporate advisory divisions of a chartered
accounting firm before working with a number of public companies listed on the ASX as a corporate and
accounting consultant and Company Secretary.
Meetings of Directors
During the financial year, five (5) Board Meetings, (1) Renumeration & Nomination and two (2) Audit Committee
Meetings were held.
Director
Meetings Eligible to Attend
Meetings Attended
O. Kleinhempel
S. Layton
R.D. Morrow
Z.P. Yeo
K.Y. Cavallaro
8
8
1
8
4
8
8
1
8
4
The following table sets out the number of meetings of committees of Directors held during the financial year
and the number of meetings attended by each Director (while they were a committee member):
Director
O. Kleinhempel
S. Layton
R.D. Morrow
Z.P. Yeo
Remuneration &
Nomination Committee
Audit Committee
Risk Committee
Meetings
Eligible to
Attend
Meetings
Attended
Meetings
Eligible to
Attend
Meetings
Attended
Meetings
Eligible to
Attend
Meetings
Attended
1
1
0
1
1
1
0
1
2
2
0
0
2
2
0
0
0
0
0
0
0
0
0
0
Share Options and Performance Rights
The Company granted options during the reporting period to Key Management Personnel of the Group as part
of their remuneration. Refer to Remuneration Report for further details.
There are 42,000,000 unissued ordinary shares of EQ Resources under vested options at the date of this
report, 10,000,000 of which relate to options issued to Key Management Personnel. During or since the end
of the financial year no options were exercised.
11
26 EQ Resources Limited Annual Report 2021
Directors’ Report continued
ANNUAL Report June 2021
Directors’ Report
Remuneration Report - Audited
This report for the year ended 30 June 2021 outlines the remuneration arrangements for the Group in
accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information
has been audited in accordance with section 308(3C) of the Act.
The Remuneration Report details the remuneration arrangements of key management personnel (KMP) who
are defined as those persons having the authority and responsibility for planning, directing and controlling the
major activities of the Group, directly or indirectly, including any Director (whether executive or otherwise) of
the parent company.
For the purposes of this report, the term ‘Executive’ includes the executive directors, senior executives and
general managers of the Group, whilst the term ‘NED’ refers to Non-Executive Directors only.
The Remuneration Report is set out under the following main headings:
(a) Policy Used to Determine the Nature and Amount of Remuneration;
(b) Key Management Personnel;
(c) Details of Remuneration;
(d) Cash Bonuses;
(e) Equity Instruments;
(f) Options and Performance Rights Granted as Remuneration;
(g) Equity Instruments Issued on Exercise of Remuneration Options or Rights;
(h) Service Agreements; and
(i) EQ Resources’ Financial Performance.
(a) Policy Used to Determine the Nature and Amount of Remuneration
The objective of the Company’s remuneration framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with
achievement of strategic objectives and the creation of value for shareholders. The Board believes that
executive remuneration satisfies the following key criteria:
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation;
transparency; and
capital management.
These criteria result in a framework which can be used to provide a mix of fixed and variable remuneration
and a blend of short and long-term incentives in line with the Company’s limited financial resources.
Fees and payments to the Company’s Non-executive Directors and senior executives reflect the demands
which are made on, and the responsibilities of, the Directors and the senior management. Such fees and
payments are reviewed annually by the Board. The Company’s Executive and Non-executive Directors,
senior executives and officers are entitled to receive performance rights, options and/or shares under the
Company’s Equity Incentive Plan which was approved by shareholders at the General Meeting held on
26 November 2020.
Fees for Non-executive Directors are not linked to the performance of the Group.
Use of Remuneration Consultants
The Group has not used any remuneration consultants during the year.
12
EQ Resources Limited Annual Report 2021
27
ANNUAL Report June 2021
Directors’ Report
Voting and Comments made at the Group’s 2020 Annual General Meeting
The Group received votes against its Remuneration Report for the 2020 financial year however did not
receive any specific feedback on its remuneration practices at the 2020 Annual General Meeting or during
the year.
(b) Key Management Personnel
The following persons were Key Management Personnel of the Group during the 2021 financial year:
Position
Appointment
Resignation
-
-
-
-
-
-
Directors
O. Kleinhempel
Non-executive Director
Non-executive Chairman
12 August 2019
24 April 2020
S. Layton
Independent Non-executive Director
14 November 2017
R.D. Morrow
Independent Non-executive Director
16 March 2021
Z.P. Yeo
Non-executive Director
12 August 2019
Executives
K.B. MacNeill
K.Y. Cavallaro
Interim Chief Executive Officer &
Senior Technical Advisor
Chief Executive Officer
Chief Commercial Officer
Executive Director
4 May 2020
1 April 2021
1 July 2020
1 October 2020
15 January 2021
15 January 2021
C.P. Godfrey
Chief Operating Officer
4 November 2019
31 July 2020
(c) Details of Remuneration
Directors are entitled to remuneration out of the funds of the Company, but the remuneration of the Non-
executive Directors may not exceed in any year the amount fixed by the Company in general meeting for
that purpose. The aggregate remuneration of the Non-executive Directors has been fixed at a maximum
of $200,000 per annum to be apportioned among the Non-executive Directors in such a manner as they
determine. Directors are also entitled to be paid reasonable travelling, accommodation and other
expenses incurred in consequence of their attendance at Board Meetings and otherwise in the execution
of their duties as Directors.
Details of the nature and amount of each element of the remuneration of each of the Key Management
Personnel of the Company and the consolidated entity during the year ended 30 June 2021 are set out in
the following tables:
13
28 EQ Resources Limited Annual Report 2021
Directors’ Report continued
ANNUAL Report June 2021
Directors’ Report
Short-term
employee
benefits –
cash salary
and fees
$
Post-
employment
benefits -
superannuation
$
Termination
benefit
$
Share-based payments
Performance
rights and
options6
$
Shares
$
%
Performance
based
Total
$
48,000
48,000
14,000
48,000
226,457
212,991
18,333
8,000
623,781
-
-
-
-
-
19,155
2,613
-
-
-
-
-
-
-
74,616
-
21,768
74,616
-
-
-
-
-
-
-
-
-
10,565
4,226
4,226
4,226
68,923
86,808
-
-
58,565
52,226
18,226
52,226
295,380
318,954
95,562
8,000
178,974
899,139
18.0%
8.1%
23.2%
8.1%
23.3%
27.2%
0.0%
0.0%
2021
Directors
O. Kleinhempel
S. Layton
R. Morrow1
Z.P. Yeo
Executives
K.B. MacNeill2
K.Y. Cavallaro3
C.P. Godfrey4
A.M Wing5
Total KMP
compensation
1 R. Morrow appointed Non-executive Director on 16 March 2021.
2 K.B. MacNeill appointed Chief Executive Officer on 1 April 2021.
3 K.Y. Cavallaro appointed Chief Commercial Officer on 1 July 2020; Executive Director on 1 October 2020 and resigned on 15
January 2021 from both positions.
4 C.P. Godfrey's position as Chief Operating Officer made redundant as of 31 July 2020.
5 A.M. Wing resigned as Company Secretary on 1 September 2020.
6 Performance rights and options do not represent cash payment to Directors or senior executives and performance rights / options
granted may or may not be exercised by the Directors or executives.
Short-term
employee
benefits –
cash salary
and fees
$
Post-
Share-based payments
employment
benefits -
superannuation
$
Termination
benefit
$
Performance
rights and
options
$
Shares
$
Total
$
%
Performance
based
42,581
48,000
42,581
228,121
24,000
218,056
54,000
657,339
-
-
-
-
-
13,875
-
-
-
-
137,500
-
-
-
13,875
137,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
42,581
48,000
42,581
365,621
24,000
231,931
54,000
808,714
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2020
Directors
O. Kleinhempel1
S. Layton
Z.P. Yeo1
R.H. Krause2
Executives
K.B. MacNeill3
C.P. Godfrey4
A.M. Wing
Total KMP
compensation
1 O. Kleinhempel and Z.P. Yeo appointed as Non-executive Directors on 12 August 2019.
2 R.H. Krause resigned as Executive Chairman and Chief Executive Officer on 24 April 2020.
3 K. MacNeill appointed as Interim Chief Executive Officer & Senior Technical Advisor on 7 May 2020.
4 C.P. Godfrey employed as Chief Operating Officer on 4 November 2019. Mr Godfrey was engaged as a consultant prior to this
date.
(d) Cash Bonuses
No cash bonuses were paid during the period.
14
EQ Resources Limited Annual Report 2021
29
ANNUAL Report June 2021
Directors’ Report
(e) Equity Instruments
The Company rewards Directors and executives for their performance and aligns their remuneration with
the creation of shareholder wealth by issuing shares, options or performance rights. Share-based
compensation is at the discretion of the Board and no individual has an unconditional contractual right to
participate in any share-based plan or receive any guaranteed benefits.
(i) Shareholdings
The trading of shares issued pursuant to the Company’s Equity Incentive Plan are subject to the
Company’s Securities Trading Policy; further, Key Management Personnel and employees are
encouraged not to trade shares granted in order to align Director, Key Management Personnel and
employee interests with those of all shareholders. Details of equity instruments (other than options
and rights) held directly, indirectly or beneficially by Key Management Personnel and their related
parties are as follows:
30 June 2021
Directors
O. Kleinhempel
S. Layton
R. Morrow
Z.P. Yeo
Executives
C.P. Godfrey1
A.M. Wing1
Balance at
1 July 2020
Granted as
compensation
Received on
exercise of
Performance
Rights
Other
Changes
Balance at
30 June 2021
Balance held
nominally
15,333,600
43,000,000
-
64,919,810
6,443,231
8,000,000
137,696,641
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500,000
17,833,600
11,181,559
54,181,559
4,422,000
4,422,000
5,312,500
70,232,310
(6,443,231)
(8,000,000)
-
-
8,972,828
146,669,469
-
-
-
-
-
-
-
There were no shares granted to Key Management Personnel as remuneration in the 2021 Financial Year.
1 Deemed disposal upon resignation from the Board or Company.
(ii) Options and Performance Rights Holdings
Details of options and performance rights held directly, indirectly or beneficially by Key Management
Personnel and their related parties, during the financial year, are as follows:
Balance at
1 July 2020
Granted
Exercised
Balance
Total vested
and
exercisable
Total unvested
and unexercisable
30 June 2021
Directors
O. Kleinhempel
S. Layton
R. Morrow
Z.P. Yeo
Executives
-
-
-
-
10,000,000
4,000,000
4,000,000
4,000,000
K.B. MacNeill
5,000,000
10,000,000
K. Cavallaro
-
5,000,000
5,000,000
37,000,000
-
-
-
-
-
-
-
10,000,000
4,000,000
4,000,000
4,000,000
-
-
-
-
10,000,000
4,000,000
4,000,000
4,000,000
15,000,000
5,000,000
10,000,000
5,000,000
5,000,000
-
42,000,000
10,000,000
32,000,000
15
30 EQ Resources Limited Annual Report 2021
Directors’ Report continued
ANNUAL Report June 2021
Directors’ Report
The key terms of the options issued during the year are as follows:
Grant date
Number issued
Share price at grant date
Exercise Price
Life of options (years)
Expected share price volatility
Weighted average risk-free
interest rate
Fair value per option
Vesting conditions
Grant date
Number issued
Share price at grant date
Exercise Price
Life of options (years)
Expected share price volatility
Weighted average risk-free
interest rate
Fair value per option
Vesting conditions
Directors
Directors
Executives
Executives
25/05/2021
11,000,000
$0.026
$0.060
3 Years
115.288%
0.100%
25/05/2021
11,000,000
$0.026
$0.060
3 Years
115.288%
0.100%
01/07/2020
2,000,000
$0.031
$0.004
3 Years
107,942%
0.270%
01/07/2020
3,000,000
$0.031
$0.060
3 Years
107.942%
0.270%
$0.01402
12 Month
Anniversary1
$0.01402
24 Month
Anniversary1
$0.01878
6 Month
Anniversary2
$0.01642
12 Month
Anniversary3
Executives
Executives
23/06/2021
5,000,000
$0.026
$0.060
3 Years
92.397%
0.200%
23/06/2021
5,000,000
$0.026
$0.060
3 Years
92.397%
0.200%
$0.01031
12 Month
Anniversary2
$0.01031
24 Month
Anniversary2
1 Anniversary – Date of Shareholder approval. Subject to the option holder remaining as a Director of the Company until
vesting date.
2 Anniversary – Issue date. Subject to continuous employment by the Company to vesting date.
3 Vested upon resignation as resolved by the Board of Directors.
(iii) Loans to Key Management Personnel
No loans have been made to Key Management Personnel of the consolidated Group, including their
personally-related entities.
(iv) Other Transactions and Balances
Consulting Services
Payments made for Key Management Personnel noted in (c) Details of Remuneration above are to
Specialised Metallurgical Projects (Pty) Limited and Northern Star Nominees Pty Ltd as payments
for consulting services.
16
EQ Resources Limited Annual Report 2021
31
ANNUAL Report June 2021
Directors’ Report
(f) Options and Performance Rights Granted as Remuneration
The following options were granted by the Company to the Directors and Executives of the Group during
the financial year as part of their remuneration.
Number
of granted
30 June 2021
options Grant date
Directors
Fair Value
per Option
at grant
date
Total fair
value of
options
Expiry
date
Share-Based Payments
Forfeited
2021 year
Expensed
2021 year
AASB 2
Not yet
expensed
O. Kleinhempel
10,000,000
25/05/21
25/05/24
$0.01402
140,207
S. Layton
R. Morrow
Z.P. Yeo
Executives
4,000,000
25/05/21
25/05/24
$0.01402
4,000,000
25/05/21
25/05/24
$0.01402
4,000,000
25/05/21
25/05/24
$0.01402
56,083
56,083
56,083
K.B. MacNeill
10,000,000
23/06/21
23/06/24
$0.01031
170,503
K.Y. Cavallaro
5,000,000
01/07/20
01/07/23
Various
86,808
37,000,000
565,767
-
-
-
-
-
-
-
10,565
129,642
4,226
4,226
4,226
51,857
51,857
51,857
68,923
101,580
86,808
-
178,974
386,793
(g) Equity Instruments Issued on Exercise of Remuneration Options or Rights
No equity instruments were issued during the 2021 financial year to Directors or other Key Management
Personnel as a result of options or rights exercised that had previously been granted as remuneration.
(h) Service Agreements
Remuneration and other terms of employment for the Directors and Executives are formalised in
Service/Appointment Agreements. All contracts with Directors and executives may be terminated by either
party with regards to the stipulated notice period, subject to any termination payments as detailed below.
Directors
O. Kleinhempel
There is a written agreement with Mr Kleinhempel dated 12 August 2019 in his role as a Non-executive
Director of the Company and subsequently as Non-Executive Chairman on 24 April 2020. Cash payments
and benefits totalling $48,000 were paid to Mr Kleinhempel during the 2021 financial year.
S. Layton
There is a written agreement with Mr Layton dated 9 November 2017 in his role as a Non-executive
Director of the Company. Cash payments and benefits totalling $48,000 were paid to Mr Layton during
the 2021 financial year. The payments were made through Bodie Investments Pty Ltd, a company in
which Mr Layton has a substantial interest.
R.D. Morrow
There is a written agreement with Mr Morrow dated 22 February 2021 in his role as a Non-executive
Director of the Company. Payments and benefits totalling $14,000 were accrued for Mr Morrow during
the 2021 financial year.
Z.P. Yeo
There is a written agreement with Mr Yeo dated 12 August 2019 in his role as a Non-executive Director
of the Company. Cash payments and benefits totalling $48,000 were paid to Mr Yeo during the 2021
financial year.
17
32 EQ Resources Limited Annual Report 2021
Directors’ Report continued
ANNUAL Report June 2021
Directors’ Report
Executives
K.B. MacNeill
There was a written agreement with Mr MacNeill dated 5 May 2020 in his role as an Interim Chief
Executive Officer and Senior Technical Advisor of the Company. This contract would continue until the
earlier of one (1) year from its commencement or until a subsequent engagement agreement is entered
into, with the ability to extend the term on a yearly basis. Cash payments and benefits totalling $36,000
were paid to Mr MacNeill during the 2021 financial year. These payments were made through Specialised
Metallurgical Projects (Pty) Limited, a company in which Mr MacNeill has a substantial interest.
The above agreement was superseded by a written Executive Employment Agreement with Mr MacNeill
dated 1 April 2021 in his role as Chief Executive Officer. The Company or Mr MacNeill may terminate the
contract by giving three month’s written notice. Cash payments and benefits totalling $190,457 were paid
to Mr MacNeill under this Agreement during the 2021 financial year.
K. Cavallaro
There was a written Executive Employment Agreement with Ms Cavallaro dated 8 May 2020 as Chief
Commercial Officer and Chief Executive Officer Designate under which the Company or Ms Cavallaro
may terminate the contract by giving three (3) months’ written notice. This Agreement also covered Ms
Cavallaro’s appointment as Executive Director on 1 October 2020. Cash payments, superannuation and
benefits totalling $232,147 were paid to Ms Cavallaro during the 2021 financial year. Ms Cavallaro
resigned as Chief Commercial Officer and Executive Director on of 15 January 2021.
A.M. Wing
There was an agreement dated 22 January 2019 whereby Mr Wing agreed to provide Company
Secretarial services to the Company. The Company or Mr Wing may terminate the contract by giving one
month’s written notice. Cash payments and benefits totalling $8,000 were paid to Mr Wing during the 2021
financial year. The payments were made through Northern Star Nominees Pty Ltd, a company in which
Mr Wing has a substantial interest. Mr Wing resigned as Company Secretary as of 1 September 2020.
C.P. Godfrey
There was a written employment agreement with Mr Godfrey dated 9 November 2019 in his role as Chief
Operating Officer of the Company. Cash payments, superannuation and benefits totalling $95,562 were
paid to Mr Godfrey during the 2021 financial year. Mr Godfrey ceased employment with the Company on
31 July 2020.
(i) EQ Resources’ Financial Performance
EQ Resources’ financial performance for the five years to 30 June 2021 is summarised below and the
relationship between results and performance is discussed.
Year ended
Measure
2021
2020
2019
2018
2017
Net profit / (loss) after tax
Net assets
Cash and cash equivalents
Cash flows from operating activities
EBITDAX
Share price at 30 June
$
$
$
$
$
$
Basic earnings / (loss) per share
Cents
(4,574,191)
(3,015,680)
3,808,863
(1,478,746)
(9,888,710)
16,725,734
14,936,296
10,905,040
2,672,436
2,371,501
3,504,721
2,989,859
217,962
602,675
1,048,000
(3,816,722)
(2,948,321)
(1,627,127)
(1,368,767)
(916,448)
(3,947,550)
(2,789,350)
3,847,034
(1,022,747)
(865,010)
$0.028
(0.39)
$0.028
(0.30)
$0.031
0.67
$0.019
(0.29)
$0.010
(2.27)
18
EQ Resources Limited Annual Report 2021
33
ANNUAL Report June 2021
Directors’ Report
Financial Performance
The loss for the consolidated Group for the financial year after tax amounted to $4,574,191 (2020: loss of
$3,015,680). This result was primarily brought about by an increase in operating costs associated with
the ramp-up of production at the Mt Carbine Retreatment Plant following the finalisation of its
commissioning during the prior financial year coupled with the scaling up of activities for the fulfilment of
the Quarry’s ~$4 Million Purchase Order with Bama Civil.
The Group has created value for shareholders through:
its continued focus on optimising production and recoveries from the Mt Carbine Retreatment Plant
with XRT Sorting testwork continuing across the Low-Grade Stockpile (LGS);
the fulfilment of ~90% of the Quarry’s ~$4 Million Purchase Order with Bama Civil. The balance of the
order was satisfied in-full during the first quarter of the 2022 financial year.
Completion of 16-hole resource drilling program which hits bonanza grades under the Andy White
Open Pit with average grades continuing to significantly exceed the previously reported resource
grade; and
Initiation of a Bankable Feasibility Study to assess the potential for an open pit operation prior to
commencement of underground mining at the Company’s flagship asset, the Mt Carbine Tungsten
Mine.
The Company also continues to evaluate its NSW Exploration Licences in conjunction with the
development and commercialisation of its tungsten assets in Far North Queensland.
Financial Position
In accordance with the Company’s accounting policy, the recoverability of the carrying amounts of
Deferred Exploration and Evaluation Expenditure were reassessed during the 2021 financial year with no
impairments recognised, resulting in exploration and evaluation expenses of $1,559,397 being capitalised
for the 2021 financial year. The carrying value of the exploration assets as at 30 June 2021 is $8,280,353
(2020: $6,896,994).
At 30 June 2021, the Group had a net working capital deficit of $234,358 (2020: $2,571,385 surplus). This
change was predominately brought about by the reclassification of the Offtake Contract Liability from non-
current to current.
As the Group is an exploration and development entity, ongoing exploration and development activities
are reliant on future capital raisings. During the year, the Company raised $5,580,848 (after share issue
costs) from placements.
Indemnification and Insurance of Officers and Auditors
Indemnification
The Company has not, during or since the end of the financial period, in respect of any person who is or has
been an Officer of the Company or a related body corporate indemnified or made any relevant agreement for
indemnifying against a liability incurred as an Officer, including costs and expenses in successfully defending
legal proceedings.
Insurance Premiums
During the financial period the Company has paid premiums to insure each of the Directors and Officers against
liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their
conduct whilst acting in the capacity of a Director or Officer of the Company, other than conduct involving a
wilful breach of duty in relation to the Company.
The premiums paid are not disclosed as such disclosure is prohibited under the terms of the insurance
contract.
19
34 EQ Resources Limited Annual Report 2021
Directors’ Report continued
ANNUAL Report June 2021
Directors’ Report
Audit and Non–Audit Services
During the financial year, the following fees for audit and non-audit services were paid or payable to Nexia
Melbourne Audit Pty Ltd and Nexia Melbourne Pty Ltd:
Audit-related services
Amounts paid or payable to Nexia Melbourne Audit Pty Ltd
- Audit services
Taxation services
Amounts paid or payable to Nexia Melbourne Pty Ltd
- Tax compliance services (tax returns)
- Other tax advice
2021
$
2020
$
62,000
74,000
21,500
10,273
93,773
46,600
11,180
131,780
The Directors are satisfied that the provision of non-audit services during the year by the auditor is compatible
with the general standard of independence for auditors imposed by the Corporations Act 2001.
On the advice of the Audit Committee, the Directors are satisfied that the provision of non-audit services by
the auditor, as set out above, did not compromise the auditor independence requirements of the Corporations
Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed by the Audit Committee to ensure that they do not impact the
integrity and objectivity of the auditor; and
none of the non-audit services undermine the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act
2001 is set out and located after the Director’s Declaration and forms part of this report.
Corporate Governance
A statement disclosing the extent to which the Company has followed the best practice recommendations set
by the ASX Corporate Governance Council during the period is displayed on the Company’s website at
https://www.eqresources.com.au/site/who-we-are/corporate-governance.
Signed this 27th day of September 2021 in accordance with a resolution of Directors.
[Insert Signature]
Oliver Kleinhempel
Non-executive Chairman
20
ANNUAL Report June 2021
Consolidated Statement of Profit or Loss and Other Comprehensive Income
EQ Resources Limited Annual Report 2021
35
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2021
For the Year ended 30 June 2021
Revenue
Other income
Total revenue & other income
Administration expenses
Consultant expenses
Depreciation
Amortisation – deferred exploration & evaluation
Development and testwork costs
Exploration expenses written-off
Finance costs
Foreign exchange gains (losses)
Note
2
2
9
10
2021
$
4,547,080
871,620
2020
$
748,578
338,867
5,418,700
1,087,445
(661,194)
(140,288)
(412,507)
(176,038)
(432,068)
(886)
(39,643)
302,345
(514,412)
(172,600)
(219,655)
-
(351,955)
(29,361)
(7,448)
(91,226)
Impairment expense (deferred exploration and evaluation assets)
10, 18
-
(140,855)
Occupancy expenses
Gain / (Loss) on Disposal of Fixed Assets
Production expenses
Salaries and employee benefits expense
Share based payments
Superannuation
Travel and accommodation
Total Expenses
Profit (Loss) Before Income Tax Expense
Income Tax Expense
Profit (Loss) After Income Tax Expense
Other comprehensive income/(loss)
Gain/(loss) on revaluation of financial assets
Total Comprehensive Profit / (Loss)
Attributable to Owners of EQ Resources Limited
Basic profit (loss) per share
Diluted profit (loss) per share
(109,524)
(22,537)
(53,193)
(8,564)
(4,455,540)
(664,773)
(3,295,284)
(1,626,893)
(279,446)
(213,937)
(57,891)
(45,000)
(92,772)
(85,191)
(9,994,438)
(4,103,898)
(4,575,738)
(3,016,453)
-
-
(4,575,738)
(3,016,453)
1,547
773
(4,574,191)
(3,015,680)
Cents
(0.39)
(0.39)
Cents
(0.30)
(0.30)
25
3
13
13
21
36 EQ Resources Limited Annual Report 2021
ANNUAL Report June 2021
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
As at 30 June 2021
Consolidated Statement of Financial Position
For the Year ended 30 June 2021
Current Assets
Cash assets
Trade and other receivables
Prepayments
Inventory
Total current assets
Non-Current Assets
Receivables
Plant and equipment
Inventory
Deferred exploration and evaluation
Financial assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Employee benefits
Lease liability
Contract liability – offtake
Contract liability - sublease
Total Current Liabilities
Non-Current Liabilities
Employee benefits
Lease liability
Contract liability – offtake
Contract liability - sublease
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated profit / (loss)
Total Equity
Note
20(b)
7
7
4
8
9
4
10
5
11, 24
26
22, 24
21
21
26
22, 24
21
21
2021
$
2020
$
3,504,721
1,927,630
324,619
673,024
2,989,859
332,212
309,547
108,000
6,429,994
3,739,618
1,082,071
2,807,615
7,142,176
8,280,353
3,610
1,086,681
2,254,941
7,437,413
6,896,994
2,113
19,315,825
17,678,142
25,745,819
21,417,760
3,647,525
182,840
268,167
2,323,423
242,397
6,664,352
24,112
681,140
-
1,650,481
2,355,733
9,020,085
736,610
105,090
200,715
-
125,818
1,168,233
12,884
968,094
2,547,615
1,784,638
5,313,231
6,481,464
16,725,734
14,936,296
12
20,603,915
15,023,117
782,831
-
(4,661,012)
(86,821)
16,725,734
14,936,296
22
EQ Resources Limited Annual Report 2021
37
ANNUAL Report June 2021
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
Consolidated Statement of Cash Flows
For the Year ended 30 June 2021
Cash Flows from Operating Activities
Proceeds from sales to customers
Proceeds from R & D tax offset
Proceeds from diesel fuel rebate
Proceeds from government COVID-19 relief packages
Proceeds from other sources
Payment to suppliers and employees
Interest paid
Interest paid for lease liabilities
Interest received
Note
2021
$
2020
$
4,690,563
610,106
151,257
77,436
8,100
651,494
203,427
15,676
60,000
-
(9,353,465)
(3,865,957)
(9,684)
(879)
9,844
(23,002)
(855)
10,896
Net Cash Flows Used in Operating Activities
20(a)
(3,816,722)
(2,948,321)
Cash Flows from Investing Activities
Payments for the purchase of plant and equipment
Payments for the capitalised exploration and evaluation expenditure
Proceeds from the sale or disposal of plant and equipment
Payments for the purchase of tenements
Payments for tenement security deposits
Net Cash Flows Used in Investing Activities
Cash Flows from Financing Activities
Proceeds from the issue of shares
Payments for share issue costs
Proceeds from long-term loan facilities
Payments for lease liabilities
Proceeds from short-term loan facilities
Payment of short-term loan
Proceeds from working capital loan (unincorporated joint venture)
Proceeds from prepayments for sales of concentrate and quarry materials
Net Cash Flows from Financing Activities
Net (decrease)/increase in cash held
Add opening cash brought forward
Effect of movement in exchange rates on cash held
(1,221,800)
(2,223,308)
(835,667)
16,500
-
-
-
(1,502)
7,262
(309,047)
(2,033,705)
(2,533,857)
6,500,000
(418,343)
-
(9,644)
-
-
1,860
312,973
7,503,491
(554,456)
1,175,036
(7,037)
-
(200,000)
330,718
-
6,386,846
8,247,752
536,419
2,765,574
2,989,859
(21,557)
217,962
6,323
Closing Cash Carried Forward
20(b)
3,504,721
2,989,859
23
38 EQ Resources Limited Annual Report 2021
ANNUAL Report June 2021
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
For the year ended 30 June 2021
For the Year ended 30 June 2021
Consolidated
At 1 July 2019
Profit / (loss) for the period
Adjustment to prior year
Other comprehensive income for the period
Total comprehensive loss for the period
Issue of share capital
Share issue costs
Share based payments
Performance Rights Vested but not Exercised
At 1 July 2020
Profit / (loss) for the period
Adjustment to prior year
Other comprehensive income for the period
Total comprehensive loss for the period
Issue of share capital
Share issue costs
Share based payments
Attributable to the Shareholders of EQ Resources Limited
Issued Capital
$
Accumulated
Losses
$
Reserves
$
Total Equity
$
7,651,079
2,923,961
330,000
-
-
-
-
(3,016,453)
4,898
773
(3,010,782)
7,703,192
(376,154)
45,000
-
15,023,117
(86,821)
-
(4,575,738)
(50)
-
-
1,547
(50)
(4,574,191)
6,500,000
(919,152)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(330,000)
(330,000)
-
-
-
-
-
-
-
-
782,831
782,831
782,831
Total transactions with owners in their capacity as owners
5,580,848
Balance at 30 June 2021
20,603,915
(4,661,012)
Total transactions with owners in their capacity as owners
7,372,038
BALANCE AT 30 JUNE 2020
15,023,117
(86,821)
10,905,040
(3,016,453)
4,898
773
(3,010,782)
7,703,192
(376,154)
45,000
(330,000)
7,042,038
14,936,296
14,936,296
(4,575,738)
(50)
1,547
(4,574,241)
6,500,000
(919,152)
782,831
6,363,679
16,725,734
24
EQ Resources Limited Annual Report 2021
39
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Going Concern Basis for Preparation of Financial Statements
These financial statements have been prepared on the going concern basis which contemplates the
continuity of normal business activities and the realisation of assets and the discharge of liabilities in the
normal course of business.
For the full-year ended 30 June 2021, the consolidated entity incurred a total comprehensive loss of
$4,574,191 (2020: loss of $3,015,680), incurred cash outflows from operating activities of $3,816,722
(2020: $2,948,321) and had a net working capital deficit of $234,358 (2020: $2,571,385 surplus). The
deficit in net working capital was due largely to the reclassification of the Offtake Contract Liability from
non-current to current.
The ability of the Company to continue to adopt the going concern assumption is based upon the
Company raising $6 million via the issue of 2-year Convertible Notes in September 2021 along with it
having a source of income from the Mt Carbine Quarry and the Company’s joint venture with CRONIMET
Australia Pty Ltd for the development of the Mt Carbine Tailings and Low Grade Stockpile Retreatment
Projects.
Should additional funds be necessary the Directors are confident of securing these funds if and when
necessary to meet the Company’s obligations as and when they fall due and consider the adoption of the
going concern basis to be appropriate in the preparation of these financial statements.
(b) Basis of Preparation
These general-purpose financial statements have been prepared in accordance with the requirements of
the Australian Accounting Standards, Australian Accounting Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. These
financial statements have been prepared on a historical cost basis. The financial report is presented in
Australian currency. The consolidated entity operates on a for-profit basis.
(c) Statement of Compliance
The financial statements have been prepared and comply with Australian Accounting Standards. The
financial statements also comply with International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board.
(d) Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) as at 30 June each year. Control is defined as entities which
the Group has power over and the rights to, or is exposed to, variable returns from its involvement with
the entity and has the ability to use its power to affect those returns.
The financial statements of subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.
All inter-company balances and transactions, including unrealised profits arising from intra-group
transactions, have been eliminated in full.
Subsidiaries are fully consolidated from the date upon which control is transferred to the Group and cease
to be consolidated from the date upon which control is transferred out of the Group.
25
40 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Interests in Joint Operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement
have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the parties sharing control.
When a Group entity undertakes its activities under joint operations, the Group as a joint operator
recognises in relation to its interest in a joint operation:
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liabilities incurred jointly;
its revenue from the sale of its share of the output arising from the joint operation;
its share of the revenue from the sale of the output by the joint operation; and
its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenue and expenses relating to its interest in a joint
operation in accordance with the IFRS Standards applicable to the particular assets, liabilities, revenue
and expenses.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a
sale or contribution of assets), the Group is considered to be conducting the transaction with the other
parties to the joint operation, and gains and losses resulting from the transactions are recognised in the
Group’s consolidated financial statements only to the extent of other parties’ interests in the joint
operation.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a
purchase of assets), the Group does not recognise its share of the gains and losses until it resells those
assets to a third party. The requirements of IAS 36 are applied to determine whether it is necessary to
recognise any impairment loss with respect to the Group’s investment in an associate or a joint venture.
When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment
in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use
and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not
allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any
reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable
amount of the investment subsequently increases.
(e) Property, Plant and Equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Depreciation is calculated either on a diminishing value or straight-line basis over the estimated useful life
of the asset. Plant and equipment useful life ranges from 1 – 25 years.
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable.
An item of plant and equipment is derecognised upon disposal.
Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the item) is included in the income statement in the period
the item is derecognised.
26
EQ Resources Limited Annual Report 2021
41
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
(f)
Inventory
Inventories are valued at the lower of cost and net realisable value as per AASB 102 with the exception
of the 7 million tonnes of stockpiled inventory which was recognised at fair value as part of the business
combination upon the acquisition of Mt Carbine Quarries Pty Ltd on 28 June 2019. This inventory will be
consumed on a units of operation basis.
The cost of partly-processed and saleable products is generally the cost of production, including:
labour costs, materials and contractor expenses which are directly attributable to the processing of
quarry material or the production of tungsten concentrate;
the depreciation of property, plant and equipment used in the processing of quarry material or the
production of tungsten concentrate; and
Production overheads.
(g) Borrowings
Borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using
the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the
settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with
the accounting policy for borrowing costs.
Borrowings are classified as current unless the Group has an unconditional right to defer the settlement
of the liability for at least 12 months after the reporting date.
(h) Recoverable Amount of Assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired.
Where an indicator of impairment exists, the Group makes a formal estimate of the recoverable amount.
Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired
and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use.
(i) Exploration, Evaluation, Development and Restoration Costs
Exploration and Evaluation
Exploration and evaluation expenditure incurred by or on behalf of the Company is accumulated
separately for each area of interest. Such expenditure comprises net direct costs and an appropriate
portion of related overhead expenditure but does not include general overheads or administrative
expenditure not having a specific connection with a particular area of interest.
Exploration and evaluation costs in relation to separate areas of interest for which rights of tenure are
current are brought to account in the year in which they are incurred and carried forward provided that:
such costs are expected to be recouped through successful development and exploitation of the
area, or alternatively through its sale; or
exploration and/or evaluation activities in the area have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves.
Once a development decision has been taken, all past and future exploration and evaluation expenditure
in respect of the area of interest is aggregated within costs of development.
Exploration and Evaluation – Impairment
The Directors assess at each reporting date whether there is an indication that an asset has been impaired
and for exploration and evaluation costs whether the above carry forward criteria are met.
27
42 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Accumulated costs in respect of areas of interest are written off or a provision made in profit or loss when
the above criteria do not apply or when the Directors assess that the carrying value may exceed the
recoverable amount. The costs of productive areas are amortised over the life of the area of interest to
which such costs relate on the production output basis, provisions would be reviewed and if appropriate,
written back.
Development
Development expenditure incurred by or on behalf of the Company is accumulated separately for each
area of interest in which economically recoverable reserves have been identified to the satisfaction of the
Directors. Such expenditure comprises net direct costs and, in the same manner as for exploration and
evaluation expenditure, an appropriate portion of related overhead expenditure having a specific
connection with the development property.
All expenditure incurred prior to the commencement of commercial levels of production from each
development property is carried forward to the extent to which recoupment out of revenue to be derived
from the sale of production from the relevant development property, or from the sale of that property, is
reasonably assured.
No amortisation is provided in respect of development properties until a decision has been made to
commence mining. After this decision, the costs are amortised over the life of the area of interest to which
such costs relate on a production output basis.
Remaining Mine Life
In estimating the remaining life of the mine at each mine property for the purpose of amortisation and
depreciation calculations, due regard is given not only to the volume of remaining economically
recoverable reserves but also to limitations which could arise from the potential for changes in technology,
demand, product substitution and other issues that are inherently difficult to estimate over a lengthy time
frame.
(j) Cash and Cash Equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand
and short-term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of any outstanding bank overdrafts, if any.
(k) Revenue
Revenue from contracts with customers is measured based on the consideration specified in a contract
with a customer and excludes amounts collected on behalf of third parties. The revenue is recognised
when it transfers control over a product to a customer.
Where payment is received upfront a contract liability is recognised on receipt of payment and revenue is
recognised over a period in time as product/services are delivered.
In addition to the above, the following specific recognition criteria must also be met before revenue is
recognised:
Sublease Rent
Revenue is recognised in accordance with the Retreatment Operations Sublease Agreement when the
gross value of the consideration of the minerals extracted from the subleased area has been received.
Interest
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial instrument) to
the net carrying amount of the financial asset.
28
EQ Resources Limited Annual Report 2021
43
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Research and Development Refundable Tax Offset
The Research and Development Refundable Tax Offset is recognised as revenue when it is received as
it relates to expenditure incurred in the past.
(l) Leases
The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements
in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months
or less) and leases of low value assets (such a tablets and personal computers, small items of office
furniture and telephones). For these leases, the Group recognises the lease payments as an operating
expense on a straight-line basis over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Group uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that depend on an index or rate, initially measured using the index or rate at
the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the
lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease
payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-
use asset) whenever:
The lease term has changed or there is a significant event or change in circumstances resulting in a
change in the assessment of exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised leave payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment
under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the lease payments change is due
to a change in a floating interest rate, in which case a revised discount rate is used).
A lease contract is modified and the lease modification is not accounted for as a separate lease, in
which case the lease liability is remeasured based on the lease term of the modified lease by
discounting the revised lease payments using a revised discount rate at the effective date of the
modification.
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease
payments made at or before the commencement day, less any lease incentives received and any initial
direct costs. They are subsequently measured at cost less accumulated depreciation and impairment
losses.
29
44 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the
site on which it is located or restore the underlying asset to the condition required by the terms and
conditions of the lease, a provision is recognized and measured under AASB 137. To the extent that the
costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those
costs are incurred to produce inventories.
The right-of-use assets are presented as a separate line in the consolidated statement of financial
position.
The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for any
identified impairment loss as described in the “Property, Plant and Equipment” policy (as outlined in the
financial report for the annual reporting period).
Variable rents that do not depend on an index or rate are not included in the measurement of the lease
liability and the right-of-use asset. The related payments are recognised as an expense in the period in
which the event or condition that triggers those payments occurs and are included in the line “Other
Expenses” in profit or loss.
As a practical expedient, AASB 16 permits a lessee not to separate non-lease components, and instead
account for any lease and associated non-lease components as a single arrangement.
(m) Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted at reporting date.
Deferred income tax is provided on all temporary differences at reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
except where the deferred income tax liability arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, except where the timing of the reversal of the temporary differences
can be controlled and it is probable that the temporary differences will not reverse in the foreseeable
future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, the carry-forward of unused tax assets and
unused tax losses can be utilised:
except where the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the
year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
30
EQ Resources Limited Annual Report 2021
45
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
(n) Other Taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part
of the expense item as applicable; and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the Balance Sheet.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities, which is recoverable from, or payable to, the
taxation authority is classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the taxation authority.
(o) Currency
Both the functional and presentation currency is Australian dollars (A$).
In preparing the financial statements of the Group entities, transactions in currencies other than the
entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the
dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair
value that are denominated in foreign currencies are translated at the rates prevailing at the date when
the fair value was determined. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
exchange differences on foreign currency borrowings relating to assets under construction for future
productive use, which are included in the cost of those assets when they are regarded as an
adjustment to interest costs on those foreign currency borrowings;
exchange differences on transactions entered into to hedge certain foreign currency risks (see below
under financial instruments/hedge accounting); and
exchange differences on monetary items receivable from or payable to a foreign operation for which
settlement is neither planned nor likely to occur in the foreseeable future (therefore forming part of
the net investment in the foreign operation), which are recognised initially in other comprehensive
income and reclassified from equity to profit or loss on disposal or partial disposal of the net
investment.
(p)
Investment in Subsidiaries
The parent entity’s investment in its subsidiaries is accounted for under the cost method of accounting
in the Company’s financial statements included in Note 17.
31
46 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
(q) Share Based Payments
Equity-settled share-based payments to employees and others providing similar services are measured
at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-
market-based vesting conditions. Details regarding the determination of the fair value of equity-settled
share-based transactions are set out in Note 25.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of the number of equity
instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number
of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions.
The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.
Equity-settled share-based payment transactions with parties other than employees are measured at the
fair value of the good or services received, except where fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments granted, measured at the date the
entity obtains the goods or the counterparty renders the service.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired,
measured initially at the fair value of the liability. At each reporting date until the liability is settled, and at
the date of settlement, the fair value of the liability is remeasured, with any changes in fair value
recognised in profit or loss for the year.
(r) Critical Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and
expenses. Management bases its judgements, estimates and assumptions on historical experience and
on other various factors, including expectations of future events, which management believes to be
reasonable under the circumstances. The resulting accounting judgements and estimates will seldom
equal the related actual results. The judgements estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
Accounting for Acquisition of Businesses
Accounting for acquisition of businesses requires judgement and estimates in determining the fair value
of acquired assets and liabilities. The relevant accounting standard allows the fair value of assets acquired
to be refined for a window of a year after the acquisition date and judgement is required to ensure that
any adjustments made reflect new information obtained about facts and circumstances that existed as of
the acquisition date.
Impairment of Non-Financial Assets
The consolidated entity assesses impairment of non-financial assets at each reporting date by evaluating
conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an
impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less
costs to sell or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Refer to notes 9, 10, and 19 for further detail regarding judgements made when assessing impairment of
plant and equipment and deferred exploration and evaluation costs and determining their recoverable
amount.
(s) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources
and assessing performance of the operating segments, has been identified as Mr K. MacNeill, Chief
Executive Officer (CEO) and prior to his appointment the Board of Directors of the Company.
32
EQ Resources Limited Annual Report 2021
47
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
2. REVENUE AND OTHER INCOME
Revenue
Sales and hire income
Sub-lease rent (unincorporated joint venture)
Interest received – other persons/corporation
Other income:
Government subsidies (various)
R&D tax offset
Diesel fuel rebates
Other income
Total revenue and other income
3.
INCOME TAX
(a) Reconciliation of income tax expense to prima facie tax payable
Profit / (loss) before income tax
Tax at the Australian rate of 26.0% (30 June 2020: 27.5%)
Tax effect of amounts which are not taxable in calculating taxable income:
Non-deductible expenses
Non-assessable income
Deferred tax assets not recognised
(b) Unrecognised deferred tax assets
Balance at beginning of year
Current year not recognized
Adjustments in respect of prior year tax balances
Tax rate change 26% to 25% (Prior Year: Tax rate change from 27.5% to 26%)
Balance at end of year
Deferred tax assets have not been recognized in respect of the following items:
Tax losses
Less: other timing differences
Net deferred tax assets
2021
$
4,522,982
17,578
6,520
4,547,080
69,872
610,106
191,642
-
2020
$
735,480
1,455
11,643
748,578
107,228
199,186
32,453
-
871,620
338,867
5,418,700
1,087,445
2021
$
2020
$
(4,574,191)
(3,015,680)
(1,189,290)
(829,312)
72,656
(170,003)
1,286,637
-
5,219,268
669,121
(593,284)
(171,333)
5,123,772
11,725
(54,776)
872,363
-
5,583,942
872,363
(876,769)
(360,268)
5,219,268
7,112,830
6,278,688
(1,989,058)
(1,059,420)
5,123,772
5,219,268
No provision for income tax is considered necessary in respect of the Company for the period ended 30
June 2021.
Deferred tax assets have not been recognised in respect of these items because it is not probable in the
short to medium term that these assets will be realised. The Group has total tax losses at 30 June 2021
of $28,451,322 (2020: $24,148,795). A future income tax benefit which may arise from tax losses of 26%
of approximately $7,112,830 will only be obtained if:
the parent and the subsidiaries derive future assessable income of a nature and of an amount
sufficient to enable the benefit from the deductions for the losses to be realised;
the parent and the subsidiaries continue to comply with the conditions for deductibility imposed by the
law; and
no changes in tax legislation adversely affect the Parent and the Subsidiaries in realising the benefit
from the deductions for the losses, i.e. current tax legislation permits carried forward tax losses to be
carried forward indefinitely.
33
48 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
No franking credits are available for subsequent years.
Tax consolidation
The tax consolidation scheme is applicable to the Company. As at the date of this report the Directors
have assessed the financial effect the scheme may have on the Company and its consolidated entities
and have made a decision to be taxed as a consolidated entity. The financial effect of the tax consolidation
scheme on the Group has not been recognised in the financial statements.
4.
INVENTORY
Current
Finished Goods
Work-in-progress
Raw materials
Workshop inventory
Non-current
Raw materials
2021
$
2020
$
493,400
7,953
64,661
107,010
673,024
108,000
-
-
-
108,000
7,142,176
7,142,176
7,437,413
7,437,413
7,815,200
7,545,413
The above amount for raw materials incorporates the fair value of the estimated 7 million tonnes of
stockpiled inventory acquired as part of the acquisition of Mt Carbine Quarries Pty Ltd on 28 June 2019
along with the work-in-progress and finished goods inventory which have been created from this
stockpiled material. The inventory will be consumed on a units of operation basis in accordance with
AASB102. All inventory, regardless of type and stage in the production process has been valued at the
lower of cost and net realisable value (NRV). Inventories expected to be processed or sold within twelve
months after the balance sheet date are classified as current assets. All other inventories are classified
as non-current assets.
The cost of inventories recognised as an expense includes write-downs of inventory to NRV in the amount
of $81,406.
5. FINANCIAL ASSETS
Shares in listed companies:
2021
$
2020
$
Critical Resources Limited (ASX: CRR) | Formerly Force Commodities Limited (ASX: 4CE)
3,610
2,113
Equity instruments are measured at fair value as at reporting date with all changes recognised as other
comprehensive income / (loss) in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income.
34
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
6. AUDITOR’S REMUNERATION
Audit-related services
Amounts paid or payable to Nexia Melbourne Audit Pty Ltd
- Audit services
Taxation Services
Amounts paid or payable to Nexia Melbourne Pty Ltd
- Tax compliance services (tax returns)
- Other tax advice
7. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Allowance
Other taxation
Other receivables
Total trade & other receivables
Prepayments
Trade Receivables
EQ Resources Limited Annual Report 2021 49
2021
$
2020
$
62,000
74,000
21,500
10,273
93,773
46,600
11,180
131,780
2021
$
2020
$
1,213,453
178,697
-
1,213,453
384,889
329,288
1,927,630
-
178,697
29,230
124,285
332,212
324,619
309,547
The average credit period on sales of product is 30 days. No interest is charged on outstanding trade
receivables.
The collectability of trade receivables is assessed continuously, and individual receivables are written off
when management deems them unrecoverable. No provision has been made for doubtful debts as all
trade receivables were deemed to be recoverable as at reporting date.
8. RECEIVABLES
Tenement security deposits
Other security deposits
2021
$
2020
$
1,075,385
1,083,797
6,686
2,884
1,082,071
1,086,681
The tenement deposits are restricted so that they are available for any rehabilitation that may be required
on the mining leases and/or exploration tenements (refer to Notes 15 and 16).
9. PLANT AND EQUIPMENT AT COST
Plant and equipment
Accumulated depreciation
Plant and equipment – right of use assets
Accumulated depreciation
2021
$
2020
$
3,298,373
2,436,535
(1,609,688)
(1,380,777)
1,291,148
(172,218)
1,201,234
(2,051)
2,807,615
2,254,941
35
50 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Reconciliation of the carrying amount of plant and equipment at the beginning and end of
the current and previous financial year
Carrying amount at beginning
Additions
Disposals
Plant and equipment written down
Depreciation expense
10. DEFERRED EXPLORATION AND EVALUATION
Costs brought forward
Costs incurred during the period
Costs recognised upon acquisition of MCQ on 28 June 2019
Exploration and evaluation expenditure written down
Capitalised portion of R&D tax offset
Total deferred exploration and evaluation
Amortisation deferred exploration and evaluation
Costs carried forward
Exploration expenditure costs carried forward are made up of:
Expenditure on joint venture areas
Expenditure on non-joint venture areas
Costs carried forward
2021
$
2020
$
2,254,941
1,070,671
(105,490)
-
331,674
2,151,486
(8,564)
-
(412,507)
(219,655)
2,807,615
2,254,941
2021
$
6,896,994
1,572,597
-
-
(13,200)
8,456,391
(176,038)
8,280,353
-
8,280,353
8,280,353
2020
$
6,834,416
212,753
(5,079)
(140,855)
(4,241)
6,896,994
-
6,896,994
-
6,896,994
6,896,994
The above amounts represent costs of areas of interest carried forward as an asset in accordance with
the accounting policy set out in Note 1. The ultimate recoupment of deferred exploration and evaluation
expenditure in respect of an area of interest carried forward is dependent upon the discovery of
commercially viable reserves and the successful development and exploitation of the respective areas or
alternatively sale of the underlying areas of interest for at least their carrying value. Amortisation, in
respect of the relevant area of interest, is not charged until a mining operation has commenced.
The Directors reassess the carrying value of the Group’s tenements at each half year, or at a period other
than that, should there be any indication of impairment.
11. TRADE AND OTHER PAYABLES
PAYABLES
Trade payables
Other taxation
Unearned revenue
Accrued expenses
Other
2021
$
2020
$
2,485,388
171,343
393,519
597,275
-
494,259
92,846
-
149,505
-
3,647,525
736,610
36
EQ Resources Limited Annual Report 2021
51
2021
$
2020
$
20,603,915
15,023,117
20,603,915
15,023,117
Number of
Shares
1,110,229,631
-
Issue Price
$
15,023,117
(50)
19/03/21
187,500,000
$0.0320
6,000,000
20/05/21
15,625,000
$0.0320
500,000
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
12. ISSUED CAPITAL
Share Capital
1,313,354,631 (2020: 1,110,229,631) ordinary shares fully paid
(a) Movements in Ordinary Share Capital
1 July 2020 to 30 June 2021
Date
Balance b/fwd
Prior year adjustment
Placement of 187,500,000 shares @ $0.032 per share to
institutional and sophisticated investors undertaken pursuant to
placement capacities under Listing Rule 7.1 (15% Rule) and
Rule 7.1A (10% Rule) (refer ASX announcement dated 15
March 2021)
Placement of 15,625,000 shares @ $0.032 per share to
Directors undertaken pursuant to placement capacities under
Listing Rule 7.1 (15% Rule) and Rule 7.1A (10% Rule) (refer
ASX announcement dated 15 March 2021)
Lead manager options
Share issue costs
(503,385)
(415,767)
20,603,915
Balance as at 30 June 2021
1,313,354,631
1 July 2019 to 30 June 2020
Date
Balance b/fwd
Placement of 112,733514 shares at $0.018 per share under the
Company’s Non-Renounceable Pro-Rata Entitlement Offer of
one (1) new share for every five (5) shares held (refer ASX
announcement dated 26 July 2019)
Placement of 46,888,236 shortfall shares at $0.018 per share
under the Company’s Non-Renounceable Pro-Rata Entitlement
Offer of one (1) new share for every five shares held (refer ASX
announcement dated 26 July 2019)
Issue of 25,000,000 shares at $0.0132 per share to Directors
upon the satisfaction of the vesting conditions for the
Performance Rights issued to Directors on 22 June 2018 (refer
ASX announcement dated 2 August 2019)
Issue of 2,500,000 shares at $0.018 per share to consultants
for consulting services pursuant to the Mt Carbine Quarries
Transaction.
Placement of 125,000,000 shares at $0.036 per share to
institutional and sophisticated investors undertaken pursuant to
placement capacity under Listing Rule 7.1 (15% Rule) (refer
ASX announcement dated 6 March 2020)
Share issue costs
Balance as at 30 June 2020
Number of
Shares
798,107,881
Issue Price
$
7,651,079
31/07/19
112,733,514
$0.0180
2,029,204
02/08/19
46,888,236
$0.0180
843,988
02/08/19
25,000,000
$0.0132
330,000
27/12/19
2,500,000
$0.0180
45,000
06/03/20
125,000,000
$0.0360
4,500,000
1,110,229,631
(376,154)
15,023,117
37
52 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Terms and Conditions of Contributed Equity
Ordinary Shares
Ordinary shares have the right to receive dividends as declared and in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of
and amounts paid up, on the shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Option holders have no voting rights until the options are exercised.
(b) Movements in Share Options Reserve
The following table illustrates the share-based payments expense, number and weighted average
exercise prices (WAEP) of, and movements in, share options during the year:
Balance at 1 July 2020
Options recognised as share based payments expense
Options recognised as share issue costs
Forfeited / cancelled
Exercised
Expired
Balance at 30 June 2021
Number
WAEP
5,000,000
56,000,000
25,000,000
(2,000,000)
-
-
-
0.057
0.043
0.060
-
-
$
-
279,446
503,385
-
-
-
84,000,000`
0.055
782,831
The following table illustrates outstanding options that have vested and are exercisable at year end:
Employee Options
Issue EQRAB
Issue EQRAC
Issue EQRAD
Issue EQRAE
Issue EQRAF
Issue EQRAG
Number
outstanding
Number vested
and
exercisable
Exercise price
Expiry Date
Remaining
Contractual
Life (Years)
2,000,000
3,000,000
2,000,000
3,000,000
2,000,000
2,000,000
3,000,000
2,000,000
3,000,000
2,000,000
30,000,000
30,000,000
0.040
0.060
0.040
0.060
0.040
0.432
05/05/23
05/05/23
01/07/23
01/07/23
01/02/24
19/03/24
1.85
1.85
2.00
2.00
2.59
2.72
Outstanding at 30 June 2021
42,000,000
42,000,000
(c) Movements in Performance Rights Reserve
No performance rights were issued nor outstanding at the end of the reporting period.
13. EARNINGS PER SHARE
Profit (Loss) after income tax attributable to the owners of the Company used in calculating
basic and diluted earnings per share
Weighted average number of ordinary shares on issue used in the calculation of basic loss
per share
Weighted average number of ordinary shares used in calculating diluted earnings per share.
Note options outstanding at reporting date have not been brought to account as they are
anti-dilutive.
Basic profit (loss) per share (cents)
Diluted profit (loss) per share (cents)
2021
$
2020
$
(4,574,191)
(3,015,680)
Number
Number
1,165,452,234
1,008,440,208
1,177,616,617
1,008,440,208
(0.39)
(0.39)
(0.30)
(0.30)
38
EQ Resources Limited Annual Report 2021
53
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
14. KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment superannuation
Other long-term benefits
Termination benefits
Share based payments
Balance at the end of period
15. CONTINGENT LIABILITIES
2021
$
623,781
21,768
-
74,616
178,974
899,139
2020
$
657,339
13,875
-
137,500
-
808,714
The Group has provided guarantees totalling $1,075,385 in respect of mining exploration tenements and
environmental bonds. These guarantees in respect of mining and exploration tenements are secured
against deposits with the relative State Department of Mines. The Company does not expect to incur any
material liability in respect of the guarantees.
16. COMMITMENTS
Exploration Licence Expenditure Requirements
Queensland
The Queensland Government has approved a number of changes to Exploration Permits under the
Natural Resources and Other Legislation Amendment Act 2019 (known as NROLA Act). This Act
commenced in May 2020 which results in a change from an expenditure-based approach upon which a
company’s compliance with its licence conditions will be assessed on an outcomes-based approach.
New South Wales
In order to maintain the Company’s tenements in good standing in New South Wales, the Company will
be required to incur exploration expenditure under the terms of each licence. These expenditures will
diminish if the Group joint ventures projects to third parties. It is likely also, that the granting of new
licences and changes in licence areas at renewal or expiry will change the expenditure commitment of
the Group from time to time. Whilst the renewal terms for EL 6648 have been accepted, expenditure
commitments for this tenement have been excluded from the figures below as Company is still waiting for
the final instrument of renewal
Payable not later than 1 year (NSW only)
Payable later than one year but not later than two years
2021
$
38,000
76,000
2020
$
38,000
76,000
114,000
114,000
39
54 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
17. INVESTMENT IN SUBSIDIARIES
Parent Entity
EQ Resources Limited
Controlled Entities
South Eastern Resources Pty Ltd
Mt Carbine Retreatment Pty Ltd
Troutstone Resources Pty Ltd
Mt Carbine Quarrying Operations Pty Ltd
Mt Carbine Quarries Pty Limited
Equity Interest
2021
%
2020
%
100
100
100
100
100
100
100
100
100
100
Cost of Parent Entity’s
Investment
2021
$
2
200
1
100
2020
$
2
200
1
100
8,130,000
8,130,000
Icon Resources Africa Pty Ltd
Mt Carbine Retreatment Management Pty Ltd1
1 Mt Carbine Retreatment Management Pty Ltd acts as the agent for the unincorporated joint venture between Mt Carbine
100
100
10
50
50
10
50
50
Retreatment Pty Ltd and CRONIMET Australia Pty Ltd.
EQ Resources Limited and all of its subsidiaries are located and incorporated in Australia.
18. IMPAIRMENT OF DEFERRED EXPLORATION EXPENDITURE AND PLANT AND
EQUIPMENT
The Directors reassess the carrying value of the Group’s assets including deferred exploration
expenditure, tenements and plant and equipment at each half year, or at a period other than that, should
there be any indication of impairment to fair value. When making their assessment for the 2021 financial
year the Directors took the following into consideration:
During the financial year the Company through its Joint Venture with CRONIMET Australia Pty Ltd
continued to ship tungsten concentrate from the Mt Carbine Retreatment Plant.
APT (Ammonium Paratungstate; as the underlying price reference for tungsten concentrate) price
appreciation from a low of approximately US$205/mtu (metric tonne unit equals 10kg) in July- August
2020 to approximately US$300/mtu as at the end of July 2021.
The Company’s wholly owned subsidiary, Mt Carbine Quarrying Operations Pty Ltd, fulfilled ~90% of
its $4 million (including GST) contract with Bama Civil for the supply of various quarry materials with
the balance of the contract being fulfilled during the first quarter of the 2021 – 2022 financial year.
Efforts to support the continued growth and development of the quarry are continuing with a number
of tenders being submitted for substantial civil projects in the Quarry’s operational area during the first
quarter of 2021-2022 financial year.
The Company has maintained its two (2) gold prospects in NSW. A further tungsten focused
Exploration Permit was granted in June 2020 (EPM 27394) to complement its existing two (2) tungsten
focused Exploration Permits (EPM 14871 & EPM 14872) located at Mt Carbine, North Queensland.
EPM 14872 contains both the Iron Duke and Petersen’s Lode prospects whilst EPM 14871 features
the Mt Holmes tin-tungsten prospect.
The Company believes that EPM 14872 holds significant exploration upside given that the tungsten
grades indicated in the sampling of the Iron Duke and Petersen’s Lode are extensively higher than
the estimated global average grade in the present open-pit resource within the Mt Carbine Mining
Leases. These unencumbered, greenfield sites also offer the added advantage of having minimal
environmental legacy issues.
Based on the above, Directors’ have assessed there to be no indication of impairment in the current
financial year. In the prior financial year however, Deferred Exploration and Evaluation expenditure of
$140,855 was impaired in full due to the adverse geo-political climate in Chile during the 2020 financial
year resulting in the Company deciding not to pursue any further exploration activities within this sector.
40
EQ Resources Limited Annual Report 2021
55
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Combined Deferred Expenditure, Plant and Equipment and Financial Assets
Non-current assets
Receivables
Plant and equipment
Plant and equipment – at cost
Accumulated depreciation
Inventory
Inventory – Quarry Material
Inventory – Workshop
Deferred exploration and evaluation expenditure
Exploration and evaluation expenditure
Amortisation
TOTAL
2021
$
2020
$
1,082,071
1,082,071
1,086,681
1,086,681
4,589,521
3,637,769
(1,781,906)
(1,382,828)
2,807,615
2,254,941
7,708,190
7,437,413
107,010
108,000
7,815,200
7,545,413
8,456,391
(176,038)
8,280,353
6,896,994
-
6,896,994
19,985,239
17,784,029
Reconciliation of the carrying amount of Mt Carbine assets at the beginning and end
of the current and previous financial year:
2021
$
2020
$
Combined assets carrying amount at the beginning of the year
17,784,029
15,481,524
Receivables – prior year adjustment
Plant and equipment – additions
Plant and equipment – WDV of disposals
Plant and equipment – depreciation expense
Inventory – increase / (depletion)
Tenement & other security deposits – decrease
Capitalised exploration and evaluation expenses
Capitalised exploration and evaluation expenses - R&D Tax Offset
Capitalised exploration and evaluation expenses recognised upon MCQ acquisition
Capitalised exploration and evaluation expenses written down
Capitalised exploration and evaluation – amortisation
(50)
1,070,670
(105,490)
(412,507)
269,787
(4,560)
1,572,598
(13,200)
-
-
(176,038)
-
2,151,486
(8,564)
(219,655)
-
316,660
212,753
(4,241)
(5,079)
(140,855)
-
TOTAL
19,985,239
17,784,029
19. SUBSEQUENT EVENTS
There have been no material events subsequent to 30 June 2021 that have not previously been reported
other than:
The following ASX announcements detailing the drill results from its feasibility study resource drilling
program at Mt Carbine:
•
•
•
“Mt Carbine – More High Grade Intercepts” dated 6 July 2021;
“EQR Drilling at Mt Carbine Hits Iron Duke Extensions” dated 13 July 2021; and
“Mt Carbine Hits Bonanza Grades Under Open Pit” dated 5 August 2021.
The raising of $6 million in September 2021 through the issuance of 2-year convertible notes with a
conversion of 6.5 cents per share to be utilised to commence early works for its Mt Carbine tungsten
mine expansion, well ahead of the release of the Company’s Bankable Feasibility Study (refer ASX
announcement “Mt Carbine Early Works Funding Secured for Mt Carbine Expansion, Well Ahead of
BFS Release” dated 13 September 2021).
41
56 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
The release of an updated resource statement for the Company’s Mt Carbine Tungsten Project (refer
ASX Announcement “Mineral Resource Update Drives Mt Carbine BFS Optimisation” dated 23
September 2021).
20. STATEMENT OF CASH FLOWS
Reconciliation of net cash outflow from operating activities to operating loss after
income tax
2021
$
2020
$
(a) Operating profit / (loss) after income tax
(4,574,191)
(3,015,680)
Depreciation and amortisation
Share based payments expense
Gain on disposal of assets
Loss on disposal of assets
Impairment of capitalised exploration and evaluation assets
(Revaluation) Devaluation of investment to market value
Unrealised foreign exchange (gains) losses
Realised foreign exchange (gains) losses capitalised
R&D Tax Offset capitalised portion
Change in assets and liabilities:
Decrease (Increase) in receivables
Decrease (Increase) in other assets
Increase/(decrease) in trade and other creditors
Net cash outflow from operating activities
(b) For the purpose of the Statement of Cash Flows, cash includes cash on hand, at bank,
deposits and bank bills used as part of the Company’s cash management function. The
Company does not have any unused credit facilities.
The balance at 30 June 2021 comprised:
Cash assets
Cash on hand
21. CONTRACT LIABILITIES
Contract Liability - Sublease1
Current
Non-current
Contract Liability - Offtake2
Balance at beginning of the year
Plus: Offtake Final Contribution
Less: Unrealised Foreign Exchange (Gain) / Loss
588,545
279,446
-
22,537
-
(1,547)
(323,179)
-
-
219,655
45,000
-
8,564
140,855
(773)
82,142
5,793
4,241
(1,607,890)
(331,770)
2,131,327
(109,884)
(380,607)
52,373
(3,816,722)
(2,948,321)
3,504,721
2,989,859
3,504,721
2,989,859
2021
$
2020
$
242,397
1,650,481
1,892,878
125,818
1,784,638
1,910,456
2,547,615
2,134,140
-
(224,192)
355,685
57,790
2,323,423
2,547,615
1 Mt Carbine Sublease Rent prepaid to Mt Carbine Quarries Pty Ltd as per the Retreatment Operations Sublease Agreement
between Mt Carbine Quarries Pty Ltd, CRONIMET Australia Pty Ltd and Mt Carbine Retreatment Pty Ltd.
2 The Company’s wholly owned subsidiary and 50% unincorporated joint venture partner, Mt Carbine Retreatment Pty Ltd’s,
Offtake Advance recognition. The Loan is denominated in USD and the terms and repayment of this advance are governed by
the Offtake Advance Agreement between CRONIMET Asia Pte Ltd, CRONIMET Australia Pty Ltd and Mt Carbine Retreatment
Pty Ltd.
42
EQ Resources Limited Annual Report 2021
57
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
The contract liability arrangements for the Offtake Advance are secured as follows:
general security deed from Mt Carbine Retreatment Pty Ltd over its present and subsequent acquired
assets;
general security deed from CRONIMET Australia Pty Ltd over all its present and subsequent acquired
assets; and
mortgage from Mt Carbine Quarries Pty Ltd over mining leases ML4867 and ML4919. This mortgage
also includes an interest over “Featherweight Property” which is all other property of Mt Carbine
Quarries Pty Ltd other than the mining leases. The mortgage is limited recourse, in that it is limited to
the value of the mining leases.
The contract liability arrangement for the unincorporated joint venture between Mt Carbine Retreatment
Pty Ltd and CRONIMET Australia Pty Ltd (Joint Venture) are as follows:
Deed of Cross Security between the Joint Venture parties and Mt Carbine Retreatment Management
Pty Ltd (as the manager) which secures the performance of their obligations to each other under the
Joint Venture; and
General Security Deed from Mt Carbine Quarries Pty Ltd in favour of the Joint Venture parties over
all present and after acquired property of Mt Carbine Quarries Pty Ltd including its rights under the
Mining Leases.
22. LEASES
Right-of-use assets
Balance at 1 July 2020
Additions:
- Plant & equipment
- Motor vehicle
Depreciation charge for the year
Balance at 30 June 2021
Lease Liability - Maturity Analysis
Less than 1 year
1 to 5 years
5+ years
Amounts Recognised in profit or loss
Interest on lease liabilities
Expenses relating to short-term leases
Amounts recognised in statement of cash flows
Total cash outflow for leases
23. CORPORATE INFORMATION
2021
$
1,225,390
2020
$
-
57,066
1,201,234
-
(163,526)
1,118,930
32,848
(8,692)
1,225,390
268,167
681,140
-
200,715
968,094
-
949,307
1,168,809
29,425
-
29,425
855
-
855
10,523
7,892
The Financial Report of the Group for the year ended 30 June 2021 was authorised for issue in
accordance with a resolution of the Directors on 27 September 2021.
EQ Resources Limited is a company limited by shares and incorporated in Australia. Its shares are
publicly traded on the Australian Securities Exchange under the ticker code “EQR”.
43
58 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company’s principal financial instruments comprise cash, short term deposits and available for sale
investments.
The main purpose of these financial instruments is to finance the Company’s operations. The Company
has various other financial assets and liabilities such as trade receivable and trade payables, which arise
directly from its operations. It is, and has been throughout the entire period under review, the Company’s
policy that no trading in financial instruments shall be undertaken.
The main risks arising from the Company’s financial instruments are cash flow interest rate risk and equity
price risk. Other minor risks are summarised below. The Board reviews and agrees policies for managing
each of these risks.
(a) Price Risk
The Group is not exposed to equity securities price risk.
(b) Liquidity Risk
The Company manages liquidity risk by maintaining sufficient cash reserves and marketable securities
and through the continuous monitoring of budgeted and actual cash flows.
Contracted maturities for payables year ended 30 June 2021
Payable:
- less than 6 months
- 6 to 12 months
- 1 to 5 year
- later than 5 year
Total
2021
$
2020
$
3,365,742
549,950
681,140
-
797,892
139,433
968,094
-
4,596,832
1,905,419
(c) Fair Value of Financial Instruments
The following tables detail the consolidated entity’s fair values of financial instruments categorised by the
following levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices).
Level 3:
Inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
Consolidated – 2021
Assets
Ordinary shares
Total assets
Liabilities
Total liabilities
Consolidated – 2020
Assets
Ordinary shares
Total assets
Liabilities
Total liabilities
Level 1
3,610
3,610
-
Level 1
2,113
2,113
-
Level 2
Level 3
-
-
-
-
-
-
Level 2
Level 3
-
-
-
-
-
-
Total
3,610
3,610
-
Total
2,113
2,113
-
44
EQ Resources Limited Annual Report 2021
59
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
There were no transfers between levels during the financial year.
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying
amounts of trade receivables and trade payables are assumed to approximate their fair values due to
their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the
current market interest rate that is available for similar financial instruments.
(d) Commodity Price Risk
The Company is exposed to commodity price risk. This risk arises from its activities directed at exploration
and mining development of mineral commodities. If commodity prices fall, the market for companies
exploring and/or mining for these commodities is affected. The Company does not currently hedge its
exposures.
(e) Fair Values
For financial assets and liabilities, the fair value approximates their carrying value. No financial assets
and financial liabilities are readily traded on organised markets in standardised form, other than listed
investments. The Company has no financial assets including derivative financial assets and liabilities
where the carrying amount exceeds the net fair values at reporting date. The Company’s receivables at
reporting date comprise of GST input tax credits refundable by the Australian Taxation Office and other
receivables. The balance (if any) of receivables comprises prepayments (if any). The credit risk on
financial assets of the Company which have been recognised on the Statement of Financial Position is
generally the carrying amount.
(f) Capital Risk Management
The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a
going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to
maintain an optimum capital structure to reduce the cost of capital. Consistently with others in the industry,
the consolidated entity monitors capital on the basis of the gearing ratio. This ratio is calculated as net
debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents.
Total capital is calculated as “equity” as shown in the Statement of Financial Position plus net debt. The
gearing ratio as at 30 June 2021 and 30 June 2020 was 0% as net debt was negative in both years.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce
debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company
was seen as value adding relative to the current parent entity’s share price at the time of the investment.
The consolidated entity continues to evaluate corporate and exploration opportunities within the new
economy and critical minerals sector.
The consolidated entity is subject to certain financing arrangements and covenants and meeting these is
given priority in all capital risk management decisions. There have been no events of default on the
financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 30 June 2020 Annual Report. The
consolidated entity is not subject to externally imposed capital requirements.
25. SHARE BASED PAYMENTS
(a) Expenses arising from share-based payment transactions
Total expenses rising from share-based payment transactions recognised during the period were as
follows:
45
60 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Options issued to directors
Options issued to employees /
consultants
FV at
Grant Date
308,454
983,361
Total share-based payments
1,291,815
Expensed
in prior
years
Lapsed /
Forfeited
Expensed
2021 Year
Capitalised
2021 Year
AASB 2
Not yet
Expensed
-
-
-
-
-
-
23,243
-
285,211
256,204
503,385
223,772
279,447
503,385
508,983
The fair value of options issued during the year were calculated by using a black-scholes pricing model
applying the following inputs:
Employees /
Consultants
Employees /
Consultants
Employees /
Consultants
Employees /
Consultants
Grant date
Number issued
Share price at grant date
Exercise Price
Life of options (years)
01/07/2020
01/07/2020
01/02/2021
2,000,000
3,000,000
2,000,000
$0.031
$0.040
3 Years
$0.031
$0.060
3 Years
$0.040
$0.040
3 Years
94.384%
0.110%
23/06/2021
7,000,000
$0.026
$0.060
3 Years
92.397%
0.200%
$0.01031
Expected share price volatility
107.942%
107.942%
Weighted average risk-free interest rate
Fair value per option
Vesting conditions
0.270%
$0.01878
6 Months
Service1
0.270%
$0.01642
$0.02348
12 Months
Service4
None
12 Month
Anniversary1
Grant date
Number issued
Share price at grant date
Exercise Price
Life of options (years)
Expected share price volatility
Weighted average risk-free interest rate
Fair value per option
Vesting conditions
Grant date
Number issued
Share price at grant date
Exercise Price
Life of options (years)
Expected share price volatility
Weighted average risk-free interest rate
Fair value per option
Vesting conditions
Employees /
Consultants
Employees /
Consultants
Employees /
Consultants
Employees /
Consultants
23/06/2021
4,000,000
$0.0260
$0.0600
3 Years
92.397%
0.200%
$0.01031
12 Month
Anniversary2
23/06/2021
19/03/2021
23/06/2021
7,000,000
25,000,000
5,000,000
$0.026
$0.060
3 Years
92.397%
0.200%
$0.01031
24 Month
Anniversary1
Employees /
Consultants
$0.0370
$0.0432
3 Years
92,405%
0.110%
$0.02014
None
$0.0260
$0.0432
3 Years
85.528%
0.200%
$0.01040
None
Directors
Directors
23/06/2021
25/05/2021
25/05/2021
4,000,000
11,000,000
11,000,000
$0.0260
$0.0600
3 Years
92.397%
0.200%
$0.01031
$0.026
$0.060
3 Years
$0.026
$0.060
3 Years
115.288%
115.288%
0.100%
0.100%
$0.01402
$0.01402
24 Month
Anniversary2
12 Month
Anniversary3
24 Month
Anniversary3
1 Anniversary of issue date, subject to continuous employment by the Company to the vesting date.
2 Anniversary of issue date, subject to continuous rendering of services to the Company to the vesting date.
3 Anniversary of shareholder approval, subject to the option holder remaining as a Director of the Company until vesting date.
4 Vested upon resignation as resolved by the Board of Directors.
46
EQ Resources Limited Annual Report 2021
61
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
Each option provides the right for the option holder to be issued one fully paid share in the Company, upon
payment of the exercise price of each option once vesting conditions have been met.
Historical volatility has been used as the basis for determining expected share price volatility as it is assumed
that this is indicative of future trends, which may not eventuate.
For service provider options the value of the service rendered was unable to be measured reliably and
therefore the value was measured by reference to the fair value of the options issued.
(b) Options Issued
The following table details the number and movements in options issued as employment incentives to
Key Management Personnel during the year.
Outstanding at the beginning of the year
Granted
Forfeited / cancelled
Exercised
Expired
Outstanding at year end
Exercisable at year end
2021
Number
5,000,000
37,000,000
-
-
-
2021
WAEP
0.052
0.059
-
2020
Number
-
5,000,000
-
-
-
42,000,000
10,000,000
0.058
0.043
5,000,000
-
2020
WAEP
-
0.052
-
-
-
0.052
-
(c) Performance Rights / Options lapsed during the reporting period
There were no Performance rights issued during the reporting period.
26. EMPLOYEE BENEFITS
Current
Annual leave benefits
Non-current
Long service leave benefits
Total employee benefits
2021
$
2020
$
182,840
105,090
24,112
206,952
12,884
117,974
27. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Adoption of New Standards and Interpretations
Changes in accounting policies on initial application of Accounting Standards
From 1 July 2020, the Group has adopted all the standards and interpretations mandatory for annual periods
beginning on or after 1 July 2020 Adoption of these standards and interpretations did not have any effect on the
statements of financial position or performance of the Group. The Group has not elected to early adopt any new
standards or amendments.
47
62 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
28. PARENT ENTITY INFORMATION
The following information relates to the parent entity, EQ Resources Limited. The information presented
has been prepared using accounting policies that are consistent with those presented in Note 1.
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
FINANCIAL PERFORMANCE
Profit (loss) for the year
Other comprehensive income/(loss) for the year
Total comprehensive profit/(loss)
Contingent Liabilities
2021
$
2020
$
8,878,042
5,029,560
17,054,241
15,604,705
25,932,283
20,634,265
1,226,826
3,823,821
5,050,647
293,801
3,823,821
4,117,622
20,881,636
16,516,643
20,603,965
15,023,117
782,831
(505,160)
-
1,493,526
20,881,636
16,516,643
(2,000,234)
(1,653,438)
1,547
773
(1,998,687)
(1,652,665)
As at 30 June 2021 and 30 June 2020 the Company had no contingent liabilities.
Contractual Commitments
As at 30 June 2021 and 30 June 2020 the Company had no contractual commitments other than those
disclosed in Note 16.
Guarantees Entered into by Parent Entity
As at 30 June 2021, the Company has not provided any financial guarantees.
48
EQ Resources Limited Annual Report 2021
63
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
29. OPERATING SEGMENTS
Segment Information
Identification of Reportable Segments
During the 2020 financial year, the Company operated principally in one business segment being mineral
exploration and in two geographical segments being Queensland and New South Wales, Australia.
The Company’s revenues and assets and liabilities according to geographical segments are shown below.
June 2021
Total
$
Queensland
$
NSW
$
Total
$
June 2020
Australia
$
Chile
$
REVENUE
Revenue & Other Income
5,418,700
5,418,700
Total segment revenue
5,418,700
5,418,700
RESULTS
Profit / (loss) before income tax
(4,575,738)
(4,575,738)
Income tax
-
-
Profit/ (loss) after income tax
(4,575,738)
(4,575,738)
-
-
-
-
-
1,087,445
1,087,445
1,087,445
1,087,445
(3,016,453)
(3,016,453)
-
-
(3,016,453)
(3,016,453)
-
-
-
-
-
ASSETS AND LIABILITIES
Assets
Liabilities
25,745,819
25,568,239
177,580
21,417,760
21,271,634
146,126
9,020,085
9,020,085
-
6,481,414
6,481,414
-
30. RELATED PARTY DISCLOSURES
(a) The Company’s main related parties are as follows:
Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities
of the Company, directly or indirectly, including any director (whether executive or otherwise), are
considered key management personnel.
The Directors and Officers in office during the year were as follows:
• Oliver Kleinhempel
(Sonnenalee Investments Limited)
Appointed Non-executive Director, 12 August 2019
Appointed Non-executive Chairman, 24 April 2020
• Stephen Layton
(Bodie Investments Pty Ltd)
• Richard Damon Morrow
(Yavern Creek Holdings Pty Ltd)
Appointed Non-executive Director, 14 November 2017
Appointed Non-executive Director, 16 March 2021
• Zhui Pei Yeo
Appointed Non-executive Director, 12 August 2019
(Whitfords Holdings Investments PtyLtd)
• Kevin Bruce MacNeill
• Kim Yang Cavallaro
• Adrien Michele Wing
(Northern Star Nominees Pty Ltd & Vision
Tech Nominees Pty Ltd)
Appointed Chief Executive Officer, 1 April 2021
Appointed Chief Commercial Officer, 1 July 2020
Appointed Executive Director, 1 October 2020
Resigned, 15 January 2021
Appointed Company Secretary, 1 February 2019
Resigned 1 September 2020
49
64 EQ Resources Limited Annual Report 2021
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2021
Notes to the Consolidated Financial Statements
For details of disclosures relating to key management personnel, refer to Key Management Personnel
disclosures Directors and Remuneration Report.
(b) Transactions with other related parties:
Transactions between other related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
There were no transactions with other related parties during the reporting period.
(c) Receivable from and payable to related parties
There were no trade receivables from nor trade payables to related parties at the current and
previous reporting date.
(d) Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
(e) Parent entity
EQ Resources Limited is the parent entity.
(f) Subsidiaries
Interests in subsidiaries are set out in Note 17.
50
ANNUAL Report June 2021
Directors’ Declaration
ANNUAL Report June 2021
Directors’ Declaration
Directors’ Declaration
EQ Resources Limited Annual Report 2021
65
Directors’ Declaration
Directors’ Declaration
The Directors of the Company declare that:
The Directors of the Company declare that:
1.
1.
the Financial Statements, comprising the Statement of Profit or Loss and Other Comprehensive Income,
Statement of Financial Position, Statement of Cash Flows, Statement of Changes in Equity and
the Financial Statements, comprising the Statement of Profit or Loss and Other Comprehensive Income,
accompanying Notes, are in accordance with the Corporations Act 2001 and:
Statement of Financial Position, Statement of Cash Flows, Statement of Changes in Equity and
accompanying Notes, are in accordance with the Corporations Act 2001 and:
a) comply with Accounting Standards, which, as stated in the accounting policy Note 1, to the financial
statements, constitutes explicit and unreserved compliance with international Financial Reporting
a) comply with Accounting Standards, which, as stated in the accounting policy Note 1, to the financial
Standards (IFRS); and
statements, constitutes explicit and unreserved compliance with international Financial Reporting
Standards (IFRS); and
b) give a true and fair view of the financial position as at 30 June 2021 and of the performance for the
b) give a true and fair view of the financial position as at 30 June 2021 and of the performance for the
year ended on that date of the company and consolidated group;
year ended on that date of the company and consolidated group;
the directors have been given the declaration required by s.295A of the Corporations Act 2001 by the
Interim Chief Executive Officer declaring that:
the directors have been given the declaration required by s.295A of the Corporations Act 2001 by the
Interim Chief Executive Officer declaring that:
a)
a)
the financial records of the company for the financial year have been properly maintained in
accordance with s 286 of the Corporations Act 2001;
the financial records of the company for the financial year have been properly maintained in
accordance with s 286 of the Corporations Act 2001;
the Financial Statements and notes for the financial year comply with Accounting Standards; and
the Financial Statements and notes for the financial year comply with Accounting Standards; and
the Financial Statements and notes for the financial year give a true and fair view; and
the Financial Statements and notes for the financial year give a true and fair view; and
b)
b)
c)
c)
in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
2.
2.
3.
3.
This declaration is made in accordance with the resolution of the Board of Directors.
This declaration is made in accordance with the resolution of the Board of Directors.
On behalf of the Board
On behalf of the Board
[Insert signature]
[Insert signature]
Oliver Kleinhempel
Non-executive Chairman
Oliver Kleinhempel
27 September 2021
Non-executive Chairman
27 September 2021
51
51
ANNUAL Report June 2021
Auditor’s Independence Declaration
66 EQ Resources Limited Annual Report 2021
Auditor’s Independence Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report to the Members of
Independent Auditor’s Report to the Members of
EQ Resources Limited
EQ Resources Limited
Independent Auditor’s Report to the Members of
EQ Resources Limited
Key audit matter
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
How our audit addressed the key audit matter
Opinion
Opinion
Carrying value Deferred exploration and
evaluation expenditure
Refer to Note 10 non-current assets
Our procedures included, amongst others:
performance for the year then ended; and
performance for the year then ended; and
i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
We have audited the financial report of EQ Resources Limited (the Company and its subsidiaries (the
We have audited the financial report of EQ Resources Limited (the Company and its subsidiaries (the
Group)), which comprises the statement of financial position as at 30 June 2021, the statement of profit
Group)), which comprises the statement of financial position as at 30 June 2021, the statement of profit
or loss and other comprehensive income, statement of changes in equity and statement of cash flows
or loss and other comprehensive income, statement of changes in equity and statement of cash flows
for the year then ended, and notes to the financial statements, including a summary of significant
for the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
accounting policies, and the directors’ declaration.
The Group carries significant exploration and
evaluation assets at 30 June 2021 which is
material to the financial report.
In our opinion, the accompanying financial report of EQ Resources Limited is in accordance with the
In our opinion, the accompanying financial report of EQ Resources Limited is in accordance with the
Corporations Act 2001, including:
Corporations Act 2001, including:
As a result the capitalised exploration and
evaluation expenditure were required to be
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
considered for impairment indicators in
accordance with AASB 6 Exploration and
Evaluation of Mineral Resources and therefore
considered a key audit matter.
• Obtain schedules of the areas of interest held by
the Group and assessing whether the rights to
tenure remain current at balance date;
Considering whether any such areas of interest
had reached a stage where a reasonable
assessment of economically recoverable reserves
existed;
Review the Group’s capitalisation of exploration
expenditure in the current year, ensuring that it is
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
consistent with the criteria as stated under AASB
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
6. This included discussion with management,
Report section of our report. We are independent of the Group in accordance with the auditor
Report section of our report. We are independent of the Group in accordance with the auditor
reviewing Group exploration budgets, ASX
independence requirements of the Corporations Act 2001 and the ethical requirements of the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
announcements and directors’ minutes;
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Review and considered whether any facts or
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
circumstances existed that suggest impairment
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
was required;
the Code.
the Code.
Assessing the adequacy of the related disclosures
in Note 10 to the financial report.
Basis for opinion
Basis for opinion
•
•
•
•
We confirm that the independence declaration required by the Corporations Act 2001, which has been
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
given to the directors of the Company, would be in the same terms if given to the directors as at the
Other information
time of this auditor’s report.
time of this auditor’s report.
The directors are responsible for the other information. The other information comprises the information
in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report
and the auditor’s report thereon.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
for our opinion.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
Key audit matters
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
Key audit matters are those matters that, in our professional judgement, were of most significance in
In connection with our audit of the financial report, our responsibility is to read the other information
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report of the current period. These matters were addressed in the context of
and, in doing so, consider whether the other information is materially inconsistent with the financial
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
a separate opinion on these matters.
a separate opinion on these matters.
If, based on the work we have performed, we conclude that there is a material misstatement of the
other information we are required to report that fact. We have nothing to report in this regard.
Nexia Melbourne Audit Pty Ltd
Nexia Melbourne Audit Pty Ltd
Registered Audit Company 291969
Registered Audit Company 291969
Level 12, 31 Queen Street
Level 12, 31 Queen Street
Melbourne VIC 3000
Melbourne VIC 3000
p +61 3 8613 8888
p +61 3 8613 8888
f +61 3 8613 8800
f +61 3 8613 8800
e info@nexiamelbourne.com.au
e info@nexiamelbourne.com.au
w nexia.com.au
w nexia.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
Nexia Melbourne Audit Pty Ltd (ABN 86 005 105 975) is an independent firm of Chartered Accountants. It is a affiliated with, but independent
Nexia Melbourne Audit Pty Ltd (ABN 86 005 105 975) is an independent firm of Chartered Accountants. It is a affiliated with, but independent
from Nexia Australia Pty Ltd, which is a member of Nexia International, a worldwide network of independent accounting and consulting firms.
from Nexia Australia Pty Ltd, which is a member of Nexia International, a worldwide network of independent accounting and consulting firms.
Neither Nexia International nor Nexia Australia Pty Ltd, deliver services in its own name or otherwise. Nexia International Limited and the
Neither Nexia International nor Nexia Australia Pty Ltd, deliver services in its own name or otherwise. Nexia International Limited and the
member firms of the Nexia International network (including those members which trade under a name which includes NEXIA) are not part of
member firms of the Nexia International network (including those members which trade under a name which includes NEXIA) are not part of
a worldwide partnership.
a worldwide partnership.
The trademarks NEXIA INTERNATIONAL, NEXIA and the NEXIA logo are owned by Nexia International Limited and used under licence.
The trademarks NEXIA INTERNATIONAL, NEXIA and the NEXIA logo are owned by Nexia International Limited and used under licence.
52
EQ Resources Limited Annual Report 2021
67
Independent Auditor’s Report
Independent Auditor’s Report to the Members of
EQ Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of EQ Resources Limited (the Company and its subsidiaries (the
Group)), which comprises the statement of financial position as at 30 June 2021, the statement of profit
or loss and other comprehensive income, statement of changes in equity and statement of cash flows
for the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of EQ Resources Limited is in accordance with the
Corporations Act 2001, including:
i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
performance for the year then ended; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Nexia Melbourne Audit Pty Ltd
Registered Audit Company 291969
Level 12, 31 Queen Street
Melbourne VIC 3000
p +61 3 8613 8888
f +61 3 8613 8800
e info@nexiamelbourne.com.au
w nexia.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Nexia Melbourne Audit Pty Ltd (ABN 86 005 105 975) is an independent firm of Chartered Accountants. It is a affiliated with, but independent
from Nexia Australia Pty Ltd, which is a member of Nexia International, a worldwide network of independent accounting and consulting firms.
Neither Nexia International nor Nexia Australia Pty Ltd, deliver services in its own name or otherwise. Nexia International Limited and the
member firms of the Nexia International network (including those members which trade under a name which includes NEXIA) are not part of
a worldwide partnership.
The trademarks NEXIA INTERNATIONAL, NEXIA and the NEXIA logo are owned by Nexia International Limited and used under licence.
68 EQ Resources Limited Annual Report 2021
Independent Auditor’s Report continued
Independent Auditor’s Report to the Members of
EQ Resources Limited
Key audit matter
How our audit addressed the key audit matter
Carrying value Deferred exploration and
evaluation expenditure
Refer to Note 10 non-current assets
The Group carries significant exploration and
evaluation assets at 30 June 2021 which is
material to the financial report.
As a result the capitalised exploration and
evaluation expenditure were required to be
considered for impairment indicators in
accordance with AASB 6 Exploration and
Evaluation of Mineral Resources and therefore
considered a key audit matter.
Our procedures included, amongst others:
•
•
• Obtain schedules of the areas of interest held by
the Group and assessing whether the rights to
tenure remain current at balance date;
Considering whether any such areas of interest
had reached a stage where a reasonable
assessment of economically recoverable reserves
existed;
Review the Group’s capitalisation of exploration
expenditure in the current year, ensuring that it is
consistent with the criteria as stated under AASB
6. This included discussion with management,
reviewing Group exploration budgets, ASX
announcements and directors’ minutes;
Review and considered whether any facts or
circumstances existed that suggest impairment
was required;
Assessing the adequacy of the related disclosures
in Note 10 to the financial report.
•
•
Other information
The directors are responsible for the other information. The other information comprises the information
in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report
and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the
other information we are required to report that fact. We have nothing to report in this regard.
EQ Resources Limited Annual Report 2021
69
Independent Auditor’s Report to the Members of
EQ Resources Limited
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
70 EQ Resources Limited Annual Report 2021
Independent Auditor’s Report continued
Independent Auditor’s Report to the Members of
EQ Resources Limited
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the Group financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 33 of the Directors Report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of EQ Resources Limited for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Nexia Melbourne Audit Pty Ltd
Melbourne
Dated this 27th day of September 2021.
Geoff S. Parker
Director
EQ Resources Limited Annual Report 2021
71
ANNUAL Report June 2021
Shareholder Information
Shareholder Information
Shareholder Information
Shareholder Enquiries
Shareholder’s information in relation to shareholding or share transfer can be obtained by contacting the
Company’s share registry:
Automic Registry Services
Level 5/126 Phillip Street, Sydney NSW 2000
Telephone: 1300 288 664 (local), +61 2 9698 5414 (international) Website: www.automicgroup.com.au
For all correspondence to the share registry, please provide your Security-holder reference Number (SRN) or
Holder Identification Number (HIN).
Change of Address
Changes to your address can be updated online at https://www.automicgroup.com.au or by obtaining a
Change of Address Form from the Company’s share registry. CHESS sponsored investors must change their
address details via their broker.
Annual General Meeting
The Annual General Meeting will be held in Melbourne on 25 November 2021. The time and other details
relating to the meeting will be advised in the Notice of Meeting to be sent to all shareholders and released to
the ASX immediately upon dispatch.
The Closing date for receipt of nomination for the position of Director is 7 October 2021. Any nominations must
be received in writing no later than 5.00pm (Melbourne time) on 30 September 2021, at the Company’s
Registered Office.
The Company notes that the deadline for the nominations for the position of Director is separate to voting on
Director elections Details of the Director’s to be elected will be provided in the Company’s Notice of Annual
General Meeting in due course.
Corporate Governance Statement
The Company’s 2021 Corporate Governance Statement once released to the ASX will be available on the
Company’s website at https://www.eqresources.com.au
Annual Report Mailing List
All shareholders are entitled to receive the Annual Report. In addition, shareholders may nominate not to
receive an annual report by advising the share registry in writing, by fax, or by email, quoting their SRN/HIN.
Securities Exchange Listing
EQ Resources shares are listed on the Australian Securities Exchange and trade under the ASX code EQR.
The securities of the Company are traded on the ASX under CHESS (Clearing House Electronic Sub-Register
System)
57
72 EQ Resources Limited Annual Report 2021
Shareholder Information continued
ANNUAL Report June 2021
Shareholder Information
ASX Shareholder Disclosures
The following additional information is required by the Australian Securities Exchange in respect of listed public
companies. The information is current as at 13 September 2021.
Distribution of Equity Securities
Analysis of numbers of ordinary shareholders by size of holding.
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Ordinary Shares
Options over Ordinary
Shares
Number
of Holders
Ordinary
Shares
Number of
Holders
Options
Issued
76
47
105
736
12,079
161,236
935,415
31,906,214
706
1,280,339,687
1,670
1,313,354,631
100%
-
-
-
-
14
14
-
-
-
-
84,000,000
84,000,000
100%
Holdings less than a marketable parcel
167
509,692
Equity Security Holders
Twenty largest quoted equity security holders.
Position & Holder Name
1. BNP Paribas Noms Pty Ltd
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