Annual
Report
2023
Corporate Directory
Directors
Oliver Kleinhempel
Non-executive Director
Non-executive Chairman
Stephen Layton
Non-executive Director
Richard Morrow
Non-executive Director
Zhui Pei Yeo
Non-executive Director
Company Secretary
Melanie Leydin
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
46 Mineral Resources and Reserves Statement
48 Competent Persons Statement
50 Directors’ Report
63 Consolidated Statement of Profit or Loss and Other Comprehensive Income
64 Consolidated Statement of Financial Position
65 Consolidated Statement of Cash Flows
66 Consolidated Statement of Changes in Equity
67 Notes to the Consolidated Financial Statements
99 Directors’ Declaration
100 Auditor’s Independence Declaration
101
Independent Auditor’s Report
105 Shareholder Information
109 Forward Looking Statements
EQ Resources Limited Annual Report 2023
1
Chairman’s Address
We are proud of the opportunity
presented to take our exploration,
mining and minerals processing
expertise onto the world stage.
Dear Shareholders and Friends of EQR,
It is my great pleasure to present to you the 2023
Annual Report for EQ Resources Limited. The past 12
months have seen enormous changes at our Company.
Not only have we paved the way for the restart of
mining in the Andy White open pit, but we have been
presented with an opportunity to take our exploration,
mining and minerals processing expertise onto the
world stage.
As I write, our team at Mt Carbine, led by CEO Kevin
MacNeill, is into the third month of mining primary
ore from the Andy White open pit. This is the result of
two years of planning and implementing the strategy
outlined in our feasibility studies, which the team has
delivered largely on time and cost effectively.
Mt Carbine was historically one of the major global
sources of tungsten. Today, with the help of so many
employees, contractors and advisers, this grand old
Dame of Far North Queensland’s mining history is once
again making a name for itself, producing a mineral
which is rated as highly critical to the global economy.
GOING GLOBAL
The world is calling out for new, diverse and - most
importantly - sustainably produced sources of
tungsten, a unique metal with a wide variety of uses in
many industries and parts of daily life. Your Company
is committed to be an important supplier of tungsten
concentrate into the global market, from not only our
Australian operations but also from Barruecopardo in
Spain, subject to completion of outstanding conditions
precedent as per the Sale and Purchase Agreement
with global investment manager, Oaktree Capital
Management.
It is a delight to be working with a company such
as Oaktree which has the foresight to recognise the
importance of both the application of advanced
technology in ore sorting but also to recognise the
importance of developing a stable source of this
critical metal for global industrial consumers.
We look forward to welcoming Oaktree as a stakeholder
in the wider group for the benefit of all shareholders.
Last year, I wrote about the importance the EQ
Resources Board places on Our People, Our Partners
and Our Potential, our 3P’s. They certainly came to the
fore in FY23 and will be even more important going
into the future, both in Australia and overseas.
PEOPLE, SAFETY & COMMUNITY
One of the big challenges and opportunities at Mt
Carbine is building and training a workforce. It is also one
of the leadership team’s most rewarding experiences
in rebuilding the importance and reputation of the Mt
Carbine Tungsten Mine. We have had some inspiring
people join us at Mt Carbine, learning to operate heavy
machinery and work complicated mineral processing
equipment. Our growing team has not only risen to the
challenge but also embraced the need for an absolute
focus on safety whilst at work.
We have also been welcomed
local
community as a responsible mining operator and our
work with local conservation groups has also been
acknowledged.
into the
THRIVING FOR MORE
EQ Resources is looking to build on the achievements of
the year under review. In exploration we will be testing
for extensions laterally and at depth of the Mt Carbine
orebody. We will also be studying opportunities at
another former great Queensland tungsten mine,
Wolfram Camp, where we have been awarded the
opportunity to study the potential of refurbishing
this abandoned operation. Our geology team is also
looking forward to working with and learning from our
new colleagues in Spain to examine the potential for
further tungsten opportunities near Barruecopardo.
The year ahead is full of opportunity and we look
forward to sharing these with our stakeholders as the
year unfolds.
Oliver Kleinhempel
Non-Executive Chairman
2
EQ Resources Limited Annual Report 2023
Chief Executive Officer’s Letter
The past year has once again
been a year of strong growth
and definitive value addition for
the business driving the long-
term growth of the Company.
Dear Shareholders
The 2022-23 Financial Year under review was certainly a year of great change and great achievement at Mt Carbine.
It has been my privilege to lead a team of caring and competent mining professionals to rebuild one of the great
tungsten mines in the world, outside China.
The current year is also starting on a strong note as the Company not only consolidates on progress at our Far
North Queensland operations, but takes the skills and lessons learned to a second mine operation in Spain, in
conjunction with the team at Saloro.
The EQR team has earned many accolades over the past two years, not least of which being the AMEC Environmental
Award in 2022. We operate in a unique environment, something our workforce and our contractors pay special
regard to in their day-to-day tasks. The Company also operates in and draws its workforce from some very unique
communities. From the thriving rural service town of Mareeba to our south, the tourism hub of Port Douglas on the
coast to the nearby hamlets of Mt Molloy and Julatten, we are working with local communities to provide jobs and
opportunities for Australians young and old.
It is the ability to work with local communities, local contractors and local people that will prove so useful as we
take the next big step of further developing the Spanish tungsten mine of Barruecopardo, a mine asset which has
a lot of common traits with Mt Carbine.
EQ Resources has a laser-like focus on safety. The Board and management are extremely proud of the safety
record in FY23. Our workforce, which numbers 95 direct employees, and more than 30 contractors in the mining
operations, has come with us on this journey of ensuring we have safety as such a priority. I commend the section
in this report on safety as something stakeholders can be most proud.
The Company has also invested heavily in training with some remarkable achievements in giving young (and not so
young) workers the skills to operate heavy machinery and work inside a complex mineral processing plant.
One of the great achievements in FY23 has been to honour a Geologist who was instrumental in the resuscitation
of Mt Carbine. In naming our open pit after Andy White, the Company pays tribute to the enthusiasm and energy
Andy White showed in moving the project forward. EQ Resources made some remarkable progress this year in
bringing the Andy White open pit up to a mineable proposition. Mining started just as the year was ending and the
first fresh rock went through a processing plant that had previously only treated low-grade stockpiled ore as part
of a well-planned and executed commissioning process.
At the heart of the process were two high-tech TOMRA XRT ore-sorters, to which we added a third in the later
stages of the financial year. TOMRAs 2 & 3 are now at nameplate capacity while our first TOMRA is undergoing
upgrade and modification.
EQ Resources Limited Annual Report 2023
3
Mt Carbine Tungsten Mine’s Andy White Open Pit
As I write, we are working with our mining contractors Golding, a great Queensland company, to fully commission
the mine fleet to move a targeted 4,320,000 tonnes of rock and waste a year. An advanced crushing circuit has
been ordered and will be installed early in 2024. This circuit will not only treat Mt Carbine ore but – as part of
our processing hub strategy - will have the capacity to handle ores from other sources, including from planned
underground mining operations at Mt Carbine.
Finally, I would like to thank all our stakeholders for their support and encouragement in rebuilding Mt Carbine.
We look forward to keeping you informed about progress in Queensland and Spain through our regular Australian
Securities Exchange announcements and our communications via social media.
Thank you and Gracias to our readers.
Regards
Kevin MacNeill
Chief Executive Officer
4
EQ Resources Limited Annual Report 2023
Operating and Financial Review
Health & Safety
Safety
Safety remains a top priority in the Australian mining industry due to its high-risk nature, necessitating rigorous
safety protocols to safeguard workers, communities, and the environment. Upholding safety standards ensures the
well-being of stakeholders and supports the industry’s reputation and sustainability. This commitment to safety is
integral for the sector’s success and global competitiveness.
In the 2023 financial year, the Company showed significant safety efforts: 5,697 “Take 5 Personal Risk Assessments”
were undertaken, alongside 80 Job Safety and Environment Analysis (JSEA) assessments, 24 procedural reviews,
and bi-monthly toolbox meetings. Meanwhile, the Mt Carbine Operations achieved a milestone of 600 days without
a Lost Time Injury (LTI), which has now been reset and currently standing at 44 days LTI-free. The period saw 7
LTIs, 9 minor medical treatments, and 9 cases addressed with first aid, the Company is dedicated to improving
safety practices and ensuring the wellbeing of its employees.
PROACTIVE SAFETY INDICATORS
5,697
Take 5 Safety Assessments
80
JSEA Job Safety
Environment Analysis
24
Toolbox Talks
2
Prestart safety
meetings per day
Figure 1 - Proactive Safety Indicators.
Training
Over the course of the reporting period, we prioritised
employee development and safety through a number
of extensive training programs as follows:
− 17 employees completed Working at Heights
(WAH) training.
− 14 employees received training in Confined Space
Entry and Work.
− 14 employees underwent Gas Testing Atmosphere
training.
− 21 employees trained in First Aid & CPR.
− 2 employees achieved Advanced First Aid
certification.
− 1 employee took on the role of ICAM Lead
Investigator.
− 1 employee completed Diploma of Surface
Operations
− 10 employees secured Heavy Rigid Truck licenses.
− 17 employees completed Supervisor “S123” training.
− 2 individuals trained in drug and alcohol testing
programs.
− Regular site-wide substance testing conducted.
− 391 employees received Verification of Competency
(VOC) certifications.
− 1 employee obtained a Certificate IV in Workplace
Health and Safety.
EQ Resources Limited Annual Report 2023
5
Mt Carbine employees undertaking on-site training.
In the past couple of months, the Company has introduced several key changes to enhance safety and
communication within our workforce:
− Photo identification Personal Danger tags for our workforce. These tags are now used when isolating machinery
and plant on-site, adding an extra layer of safety to our operations.
− Installation of noticeboards across the site to facilitate improved communication. These noticeboards serve
as a central hub for sharing important updates, announcements, details about upcoming training sessions,
information about recent changes, and other relevant safety initiatives that our workers need to stay informed
and engaged.
Safety Initiatives at the Mt Carbine Mine.
These initiatives are only a few examples of the safety initiatives implemented by the Company during the
reporting period to reinforce its ongoing commitment to prioritising the safety and well-being of its employees
while fostering a culture of transparency and effective communication.
6
EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
Mt Carbine Operations
EQR & Golding Execute Mining Contract for
Mt Carbine
The execution of the mining contract between EQ
Resources Limited and Golding Contractors Pty Ltd
(“Golding”) on 29 May 2023 marks one of the Company’s
most significant achievements this year, with promising
prospects for both companies. This partnership is
mutually beneficial and includes a strategic approach
to enhance our ties.
Initially, the contract outlines a 12-18 month period
based on rates and a cost-plus model to establish a
site-specific baseline cost. Following this phase, the
contract will transition to rise-and-run matrix rates,
considering factors such as fleet composition and
material type. This forward-looking strategy ensures
this collaboration evolves to be efficient and cost-
effective as we gain a deeper understanding of our
mutual operations.
The committed contract period of 70 months, with
an estimated value of $179 million, underscores the
long-term commitment and shared vision between
EQR and Golding. Throughout this period, substantial
material movement
including the
excavation of approximately 16.3 million tonnes of
mine waste material, 6.0 million tonnes of mined ore,
and 2.9 million tonnes of low-grade stockpile material.
is anticipated,
By dividing the contract into two phases, both parties
demonstrate a proactive approach to managing risk
in the unique context of mining hard rock tungsten.
This strategy not only helps de-risk the project but
also ensures the successful delivery of the project
scope without the need for significant risk pricing
adjustments. It also solidifies our relationship, laying
the foundation for a strengthened and prosperous
partnership between EQR and Golding (refer ASX
Announcement
‘EQR & Golding Execute Mining
Contract for Mt Carbine’ dated 29 May 2023).
Golding’s Mining Project Manager, Steven Page, and Mining
Superintendent, Craig Williams, with some of their newly
mobilised fleet.
A streamlined delivery schedule for additional equipment
facilitates the acceleration of production ramp-up.
The Mt Carbine and Golding team have optimised the site layout to facilitate increased production and workflow activity.
EQ Resources Limited Annual Report 2023
7
Reopening of the Andy White Open Pit
Commencement of open cut mining operations.
CEO, Kevin MacNeill, inspecting the Andy White open pit.
Another significant achievement for the year involved
the dewatering of the Andry White open pit which was
completed during the last quarter of the 2022 calendar
year. Open cut mining activities kicked off with the
inaugural blast undertaken on 24 June 2023, promptly
followed by the commencement of ore deliveries. The
excitement surrounding this significant and historic
milestone was palpable as EQR embarked on the next
phase of its operations. Golding and EQR are working
collaboratively to ramp-up operations in line with forecast
expectations in an accretive and sustainable manner.
Mt Carbine Tungsten Mine and Quarrying Operations, QLD,
Australia, July 2021.
Mt Carbine Tungsten Mine and Quarrying Operations, QLD,
Australia, July 2023.
Mt Carbine Expansion
This year has truly been a thrilling and transformative
journey for the Mt Carbine Mine. It has witnessed the
successful completion of major capital projects that
has reshaped the operational landscape. The Company
has embarked on a remarkable path of expansion,
optimisation and growth across all sections, marking
a significant milestone in the history of Mt Carbine.
These strategic initiatives have not only enhanced the
site’s operational capabilities but have also fortified
our commitment to excellence and innovation. As we
reflect on this exceptional year, we are excited about
the future opportunities in the continued pursuit
of our mission to deliver exceptional value to our
stakeholders.
− Earthmoving works initiated in Q1 for concrete pad
preparation for Phase 2 Capital Works Program.
− Service road
improvements and groundwork
around water storage facilities completed by MC
Group.
− Improved entrance and new parking area at Gravity
Plant.
− New service areas for heavy machinery in each
operational area.
− Upgrades completed for service access roads and
dump truck roadways in May 2023.
− Significant earth moving work planned for Golding’s
infrastructure needs.
− New inventory warehouse established housing
spare parts, consumables, and equipment.
− New inventory management system rollout planned
from July to December 2023.
− Electrician’s storage, office, and workspace set up.
− New fabrication workshop to be set up post-
financial year end with estimated completion by Q1
2024.
− New Sandvik Crushing Plant detailed design
is underway as per the BFS which is set for
commissioning in early 2024.
8
EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
required
All expansion works
the services of
specialised contractors such as electrical engineers,
civil construction,
fabrication, concreting, crane
operations, and other engineering services. All
contractors are sourced locally wherever possible,
encapsulating the Company’s strong commitment in
supporting the local economy.
Commissioning of the Jaw Crusher for the Crushing
Plant
In July 2023, a mobile jaw crusher was integrated into
the crushing circuit to reduce the oversized -700mm
ore from the open pit blasting to a more manageable
-170mm fraction, significantly reducing the amount of
oversize material. It has also resulted in the volume of
oversize material separated during the initial screening
phase of the circuit being dramatically minimised with
feed input optimised.
With the commencement open pit ore deliveries, the
operations have experienced a higher proportion of
material in the sortable fraction, which is an overall
benefit to the operation due to the low-cost nature of
XRT Ore Sorting. TOMRA 3 will be put in place of the
original Pilot XRT Ore Sorter (“TOMRA 1”) which will
undergo refurbishment works before being placed back
into the circuit. Tomra 3 has the advantage of newer
programming and increased efficiencies, therefore the
operation is expecting to see immediate benefits to
production.
Whilst the preparation, receipt and installation of
TOMRA 3 and replacement of TOMRA 1 led to downtime
during Q4 the subsequent increases in concentrate
outputs has far outweighed this lost time.
Crushing and Screening Plant with the Cone Crusher at the forefront.
Commissioning of TOMRA 3
During the last quarter of 2023 financial year, a third
XRT Ore Sorter (‘Tomra 3) was acquired. Over the
past 12-months of operating and sorting the Low-
Grade Stockpile (“LGS”) material, the Company has
seen an average of 10-12% mass yield from the feed
to concentrate and has optimised the processing
parameters to maximise tungsten recoveries. Since
starting to process the primary ore from the Andy
White open pit an increased mass yield ranging
between 15-18% on the open cut ore has been achieved,
with stable WO3 recoveries above 95%. TOMRA 3 was
commissioned in July 2023 and is in full operation at the
time of this report.
Newly commissioned TOMRA 3 Ore Sorter.
Gravity Plant Upgrades
This year, significant enhancements were made to the
Gravity Plant, boosting operational efficiency:
− First three aging conveyors replaced with a more
efficient model, enhancing feed throughput.
− Introduction of a cone crusher circuit, replacing the
rolls crusher, improving the Plant’s reliability and
performance.
− Reduced reliance on external crushing contractors
by internally processing 40mm sorter product,
enhancing self-sufficiency and offering cost
savings.
− Revamped the Plant’s feeding area with new
conveyors and ramps, optimising material handling.
− New Schenk Dewatering Screen and larger rolls
crushers installed to double the Plant’s capacity.
− A second Mineral Jig, set for commissioning in Q3
2023, will further enhance capacity.
− Post-year end, eight concentrate shaking tables
were added, increasing output, with two stacks of
four shaking tables planned to optimise mineral
separation processes.
These upgrades underscore our dedication
to
innovation and establish us as a forefront tungsten
producer for the Western World.
EQ Resources Limited Annual Report 2023
9
results. This has led to a greater detail in grade and
plant control for variations in material and processes
enabling the operations team to make more informed
and timely decisions during production.
Eight additional shaker tables have been installed and
commissioned to increase processing capacity.
Laboratory Upgrades and Core Shed Relocation.
The laboratory’s operational scope at Mt Carbine has
expanded significantly with the commencement of
open cut operations. The Company has developed
and
implemented a quality assurance system
with regular samples sent to external third-party
laboratory, Australian Laboratory Services (ALS),
for validation. With 20% in-house quality checks and
10% of production and grade samples sent to ALS,
as part of the Company’s quality assurance program,
the technical team ensures that the calibration of the
laboratory equipment is on point.
Previously the on-site laboratory was manned by
a single employee who was responsible for daily
production samples to be sent weekly to ALS in
Brisbane for assay, with a typical turnaround time
of 4-5 weeks and between 80 to 150 samples being
submitted per month. Now, EQR’s newly equipped
laboratory can process and assay on average 80
samples per day with a 24-hour turnaround on
Newly constructed laboratory and core shed.
EQR Corporate Office - Mareeba
The EQR Group now has a presence in Mareeba, with
the opening of it’s Corporate Office in June 2023.
Mareeba is located approximately 1 hour from Mt
Carbine and together with other local communities,
supply a large percentage of the Mt Carbine Mine’s
daily operational requirements.
The Corporate Office overseas the functions of finance,
accounts payable/receivable, payroll and general
administration functions for the Mt Carbine Mine Site
and currenlty employs five full-time employees from
the Mareeba and Atherton Tablelands region.
Mareeba Office Facade.
10
EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
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EQ Resources Limited Annual Report 2023
11
Crushing, XRT Sorting & Gravity Plant Activities
The operation successfully transitioned from primarily utilising material from the LGS to processing primarily
tungsten-rich open cut ore. Since the beginning of the open pit operations, the shift yielded positive outcomes
for the operations team, who focused on enhancing the recovery rates of the ore processed through the XRT Ore
Sorter Plant resulting in higher grade feed into the Gravity Plant. A significant increase in production has been
seen since the introduction of primary ore from open cut mining. The positive results from the processing of the
primary ore has also seen tungsten recovery rates higher than expected which supports strong production trends
going forward.
EQR’s planned ramp up in production is on target with production records continuously being achieved.
Grade control measures are now playing a pivotal role in our mining operations, ensuring the consistent quality of
ore feed grades entering the crushing plant. EQR’s geology team plays an active role in delineating the ore zones
in the open cut and ensuring ore deliveries are received at their designated ore bays prior to processing.
Furthermore, we integrate cutting-edge technology into our grade control efforts through the utilisation of aerial
drone imagery. These aerial surveys provide a comprehensive view of the mining area, aiding in the identification of
key geological features and potential variations in ore grade distribution or zone delineation. This real-time visual
data empowers our team to make rapid adjustments to our daily planning, optimising the extraction process and
ensuring that the feed delivered for processing aligns with planning.
Crushing Plant
The commissioning of the Phase 1 Crushing Plant was concluded during the year, and it now operates on a 24/7
roster. Significant to the crushing operations was the implementation of a slurry line to efficiently transport fines
directly from the Crushing Plant to the Gravity Plant. This strategic move substantially reduces the need for double
handling of -6mm materials, optimising our operations, and curbing machinery operations hours.
12
EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
Efficient transportation of fines from the crushing Plant to the Gravity Plant has been achieved through the successful implementation
of slurry lines.
In parallel, our commitment to achieving the highest standards is reflected in the ongoing training efforts for
crusher-specific operations, aimed at equipping our crews across all plants, with plant-specific specialised skills. As
part of our evolving operational strategy, six employees have transferred to Golding. Originally hired as operators
within EQR, they will now play a pivotal role in the contractor’s load and haul operations, facilitating the mining of
the open cut ore.
EQ Resources Limited Annual Report 2023
13
GGrraavviittyy PPllaanntt WW0033 EEqquu.. CCoonncceennttrraattee PPrroodduuccttiioonn ((tt))
450.00
150.00
250.00
350.00
200.00
300.00
400.00
Gravity Plant
The diligent execution of continuous improvement
programs during the previous financial year has yielded
substantial benefits in the current financial period,
resulting in an impressive average running time of
78%. This demonstrates significant progress from the
72% achieved the previous year. The Gravity Plant has
had a record year with over 362,000 tonnes of -6mm
head feed through the Plant over the target of 336,000
tonnes. This head feed consisted of -6mm fines material
and the XRT Sorter concentrate.
September Forecast
50% WO3 Equiv
Q4 2023
Q2 2023
Q3 2023
Q1 2024
Q1 2023
100.00
50.00
-
TToottaall FFeeeedd MMaatteerriiaall PPrroodduucceedd iinn TToonnss
Total Feed Material Produced (t)
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Fines (Hauled + Pumped)
Sorter Feed (est)
GGrraavviittyy PPllaanntt HHeeaadd FFeeeedd TThhrroouugghhppuutt ((tt))
Gravity Plant Head Feed Throughput (t)
Figure 3 - Total Head feed in the Crushing Plant for 2023.
OOrree SSoorrtteerr CCoonncceennttrraattee PPrroodduuccttiioonn ((TToonnnneess))
12,000
14,000
Ore Sorter Plant
The Ore Sorter Plant has recently received a new XRT
sorter “TOMRA 3” to replace the original “TOMRA 1”.
TOMRA 3 has been successfully commissioned and is
10,000
delivering improved availability rates and feed production
consistency. Furthermore, the installation of a new
conveyor belt for sorter product has expanded our output
stockpile capacity, consequently reducing the need for
excessive machinery traffic to sustain production levels.
4,000
6,000
8,000
-
2,000
Q1 2023
Q3 2023
Q2 2023
Q4 2023
A noteworthy transformation within the Ore Sorter Plant
involves the conversion of the dry screen into a wet screen.
This adaptation allows for the efficient pumping of fines
that were traditionally loaded and hauled after being
collected during the screening process of the 40mm
material. This tungsten-rich material is now seamlessly
TToottaall FFeeeedd MMaatteerriiaall PPrroodduucceedd iinn TToonnss
pumped directly to the Crushing Plant and subsequently
forwarded to the Gravity Plant, thereby minimising the
200,000
handling of feed and enhancing operational efficiency.
180,000
160,000
Parallel to our approach at the Crushing Plant, operators
140,000
assigned to the Ore Sorter Plant undergo continuous
120,000
training to specialise their skill sets for their specific
100,000
roles within the plant. This initiative aims to elevate the
proficiency of our on-site workforce. Over the past
year, the Sorter Plant has achieved an average yield
of 10.52%, processing 405,000 tonnes of feed and
producing 42,808 tonnes of tungsten-bearing sorter
concentrate for further crushing and processing through
the Gravity Plant.
Fines (Hauled + Pumped)
Sorter Feed (est)
Q4 2023
Q2 2023
Q3 2023
80,000
40,000
60,000
Q1 2023
20,000
-
OOrree SSoorrtteerr CCoonncceennttrraattee PPrroodduuccttiioonn ((TToonnnneess))
Ore Sorter Concentrate Production (t)
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Figure 4 - Ore Sorter Concentrate Production for FY 2023.
120,000.00
100,000.00
80,000.00
60,000.00
40,000.00
20,000.00
-
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Head Feed
Target Head Feed
Figure 5 - Gravity Plant Head Feed for 2023.
Gravity Plant WO3 Equ. Concentrate Production (t)
GGrraavviittyy PPllaanntt WW0033 EEqquu.. CCoonncceennttrraattee PPrroodduuccttiioonn ((tt))
450.00
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
-
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
50% WO3 Equiv
September Forecast
Figure 6 - Gravity Plant W03 Concentrate Production for 2023.
GGrraavviittyy PPllaanntt HHeeaadd FFeeeedd TThhrroouugghhppuutt ((tt))
*Based on wet weight off the scale.
logistical complexities persisted
120,000.00
Despite ongoing success, the operational landscape
presented its share of challenges over the year.
100,000.00
Shipping costs escalated beyond expectations, leading
80,000.00
to considerable delays in equipment deliveries. While
the operation remained unhampered by enforced
60,000.00
in
shutdowns,
procuring spare parts and additional equipment,
40,000.00
causing occasional delays in expansion initiatives.
20,000.00
In response, our on-site operational team bolstered
inventory facilities and slightly increased inventory
holdings to mitigate supply disruptions. Where possible
and feasible, the Company sources equipment from
local equipment providers to support the community
and minimise freight expenses.
Target Head Feed
Head Feed
Q4 2023
Q2 2023
Q3 2023
Q1 2023
-
14
EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
These challenges have fostered an expanded network
of suppliers and industry vendors building on historic
relationships. Notably, our workforce has grown to
over 95 employees, a significant increase from 65
the previous year, with a strong focus on employing
local talent from the surrounding communities. The
employee numbers have grown to accommodate
increased production and administration requirements
associated with the operation. We take pride in training
and empowering local individuals, thereby reinvesting
in the community. Operations at Mt Carbine operate
on a 24/7 basis ensuring maximum production output.
In accordance with the Offtake Agreement between
the unincorporated JV, between the Company and
CRONIMET Australia Pty Ltd, and CRONIMET Asia Pte
Ltd, by the end of the financial year CRONIMET Asia
has taken all concentrate produced on-site this year.
Individual production lots are tested against mutually
agreed quality parameters, including WO3 and moisture
content. There continues to be a strong demand in the
global market for the tungsten concentrates produced
at Mt Carbine.
Material Business Risks
The Group continues to assess and manage various
business risk with the potential to have material impact
on the Group’s operating and financial performance
and its ability to successfully achieve its corporate
objectives. Section 14 of the 2021 Bankable Feasibility
Study defines the Group’s risk framework which:
− Describes the process for identifying risks and
opportunities;
− Describes the process for assessing risks using
consistent management guidelines;
− Identifies and assesses the material risks and
defines appropriate measures to control these risks;
− Establishes a process to ensure that risks and
identified and
opportunities continue to be
compliance obligations satisfied; and
− Ensures that the process is communicated to
relevant stakeholders.
The matters listed below are not listed in order of
importance and are not intended to be an exhaustive
list of all the risks and uncertainties affect the business.
Market Risk
The demand for, and the price of, tungsten, is highly
dependent upon on a variety of factors, including
international supply and demand, actions taken by
governments and global economic and political
developments. EQR’s operational and financial
performance, as well as the economic viability of
the Mt Carbine Mine, is heavily reliant on the price of
tungsten.
Any sustained low price for tungsten may adversely
affect EQR’s business and financial results, its ability
to finance, and the financing arrangements for its
future activities or its planned capital expenditure
commitments.
Key factors which affect the price of tungsten (many
of which are outside the control of EQR) include,
among many other factors, the quantity of global
supply as a result of the commissioning of new mines
and manufacturing facilities, and the decommissioning
of others; political developments in countries which
produce and consume material quantities; and the
weather in such countries to name only a few.
Given the range of factors which contribute to the
price of tungsten, and the fact that pricing is subject
to negotiation, it is difficult for EQR to predict with
any certainty the prices at which tungsten will be sold.
The effect of changes in assumptions about future
prices may include, amongst other things, changes to
Mineral Resources and Ore Reserves estimates and
the assessment of the recoverable amount of EQR’s
assets.
Mineral Resources and Ore Reserves
Mineral Resources and Ore Reserves are estimates
of mineralisation that have reasonable prospects
for eventual economic extraction in the future, as
defined by the 2012 Edition of the Australasian
Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (“JORC Code”). JORC
Code compliant statements relating to EQR’s Ore
Reserves and Mineral Resources are estimates only.
An estimate is an expression of judgement based
on knowledge, experience and industry practice.
Estimates which were valid when originally calculated
may alter significantly when new information or
techniques become available. In addition, by their very
nature, Resource estimates are imprecise and depend
to some extent on interpretations, which may prove
to be inaccurate. As further information becomes
available through additional fieldwork and analysis,
the estimates are likely to change and may be updated
from time to time. This may result in alterations to
mining plans or changes to the quality or quantity of
EQR’s Ore Reserves and Mineral Resources, which
may, in turn, adversely affect EQR’s operations.
Mineral production
involves risks, which even a
combination of experience, knowledge and careful
evaluation may not be able to adequately mitigate.
No assurance can be given that the anticipated
tonnages or grade of minerals will be achieved
during production or that the indicated level of
recovery rates will be realised. Additionally, material
price fluctuations, as well as increased production
and operating costs or reduced recovery rates, may
render any potential mineral Resources or Reserves
EQ Resources Limited Annual Report 2023
15
containing relatively lower grades uneconomic or less
economic than anticipated, and may ultimately result
in a restatement of such Resource or Reserve. This in
turn could impact the life of mine plan and therefore
the value attributable to mineral inventory and/or the
assessment of recoverable amount of EQR’s assets
and/or depreciation expense. Moreover, short term
operating factors relating to such potential mineral
Resources or Reserves, such as the need for sequential
development of mineral bodies and the processing of
new or different mineral types or grades, may cause a
mining operation to be unprofitable in any particular
period. In any of these events, a loss of revenue or
profit may be caused due to the lower than expected
production or ongoing unplanned capital expenditure
in order to meet production targets, or the higher than
expected operating costs. EQR seeks to manage and
minimise this risk through its existing risk management
framework including an external audit process for its
Mineral Resources and Ore Reserves.
Operational Risk
At the Mt Carbine Mine operational risks can cause
disruptions to operations, failures
in plant and
equipment, difficulties
in obtaining replacement
equipment and difficulties with product separation
and screening.
The Mt Carbine site is a mature operating site that
has been in operation since February 2020. EQR’s
CEO, Kevin MacNeill, has successfully navigated the
Company’s from a junior explorer to a fully-fledged
ming operation with the commencement of open cut
mining operations in late June 2023. Kevin has over 30
years’ of experience in managing mining operations
through North America, Europe, and Africa. This
experience has aided the development of a cohesive,
hands-on management approach and operations team
development while restricting the reporting chain to
ensure employees are empowered in their roles for
efficient decision making and optimal outcomes.
Other risks include, and are not limited to, weather,
availability of materials, availability and productivity
of skilled and experienced workers and contractors,
industrial
industrial and environmental accidents,
disputes and unexpected shortages or increases in the
costs of labour, consumables, spare parts, plant and
equipment IT failures or disruptions, unanticipated
changes in government regulation and risks associated
with increased global uncertainty and/or global events
such as the COVID-19 pandemic (including the national
or regional governmental response to such events).
Any inability to resolve any unexpected problems
relating to these operational risks or adjust costs
profiles on commercial
terms could adversely
impact continuing operations, Mineral Resources
and Ore Reserves estimates and the assessment
of the recoverable amount of EQR’s assets. EQR
seeks to manage and minimise this risk through its
existing risk management framework including the
implementation of an Integrated Health and Safety
Management System
that protects employees
physical safety and mitigates operational risks which
are guided by the Integrated Management System
(IMS) which addresses the intended outcomes of
ISO 9001:2015 Quality Management Systems, ISO
14001:2015 Environmental Management Systems
and ISO 45001:2018 Occupational Health and Safety
Management Systems.
Environmental Risks (including climate change)
EQR must comply with a range of environmental
performance and reporting requirements, many of
which are conditions of its mineral exploration and
mining activities. There is a risk that the Company
may not be able to achieve the financial performance
or outcomes disclosed herein if it fails to comply with
those environmental performance and reporting
requirements or if the requirements change in the
future and the Company is no longer able to comply
with the requirements or must incur material unplanned
expenditure in order to remain compliant. EQR seeks
to manage and minimise this risk through its existing
risk management framework and through detailed
environmental management plans and systems.
Social Risks
EQR is exposed to social risks as a result of the many
stakeholders who are involved in its operations
including but not limited to employees, contractors,
local community members residing in areas where the
Company operates, governments and government
agencies (local, state and federal) as well as customers
and suppliers. EQR is subject to reputational damage
as well as potential claims for damages as a result
of any harm or loss sustained by any stakeholder as
a result of the actions by the Company and/or and
its representatives. There is a risk that the Company
may not be able to achieve the financial performance
or outcomes disclosed herein if it incurs reputational
damage or significant claims for damages. EQR seeks
to manage and minimise this risk through its existing risk
management framework, including Board approved
policies on stakeholder management and through
established stakeholder consultation processes.
16
EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
Governance Risks
EQR must comply with a range of governance requirements which are conditions of its listing on the ASX and
of its mineral exploration and mining activities. There is a risk that the Company may not be able to achieve the
financial performance or outcomes disclosed herein if it fails to comply with those governance requirements or if
the requirements change in the future and the Company is no longer able to comply with the requirements or must
incur material unplanned expenditure in order to remain compliant. EQR seeks to manage and minimise this risk
through its existing risk management framework including Board approved governance policies which are subject
to regular review.
Quarry Activities
In the challenging and competitive landscape that characterises the Quarrying industry, the Mt Carbine Quarry
embraced strategic advancement, precision operations, and equipment upgrades to increase its competitive
advantage. Aligned with the Queensland Government strategy of repurposing waste rock from mining projects,
the Mt Carbine operations beneficially re-uses mine waste to make a diverse array of products, including road
bases, drainage aggregates, bituminous sealing aggregates, and robust armour rock to name only a few.
A notable aspect of the Compamy’s progress this year was characterised by a strategic focus on optimising its
equipment resources. Acknowledging the dynamic needs of the site’s operational activities, the Company initiated
the leasing of assorted crushing equipment, at different stages, to fulfil its contractual obligations. This deliberate
strategy enabled the Company to seamlessly align project demands. A crucial element to the Quarry’s continued
success is the cultivation of strong alliances with prominent clients such as Boral Asphalt, Mareeba Shire Council,
and Hall Contracting. Through these partnerships, the Quarry will continue to provide high-quality quarry material
to regional infrastructure and development projects.
Some of the key projects completed during the year under review are set out below:
− Boral Asphalt: Northern Roads Reseal - Pormpuraaw.
− Mareeba Shire Council: Local Euluma Creek Road, Julatten Road Rebuild following damage sustained during
last year’s wet season.
− Hall Contracting: Newell Beach Boat Ramp Amour Rock
− Yorkey’s Knob Boat Ramp
Julatten Road Rebuild.
Euluma Creek Roadworks.
EQ Resources Limited Annual Report 2023
17
Newell Beach Boat Ramp.
Yorkey’s Knob Boat Ramp.
The Quarry team is looking forward to building on the momentum and success of the previous year, leveraging
upon the strong relationships built. The quarry will also continue to provide quarry materials to the construction of
the Phase 2 Crushing Plant and other on-site infrastructure projects. For more information, please head to the Mt
Carbine Quary’s website at https://mtcarbinequarries.au/.
The Mt Carbine Tungsten Mine’s tailings dam’s clean water remains host to a vast array of indigenous fauna and flora.
Sustainability at EQ Resources
Sustainability Overview
EQ Resources’ ESG Early Adoption Profile
EQR recognises the significant potential of an Environmental, Social, and Governance (ESG) focus. As early
adopters, it aims to set industry benchmarks among junior miners through its comprehensive ESG program.
Commitment to Sustainable Resource Development
EQR’s core commitment is sustainable resource development, ensuring economic growth without harming the
environment. EQR values Australia’s biodiversity and prioritises conservation efforts. Through its ESG program, it
actively engages in community partnerships to support our environmental and social commitments.
18
EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
Leadership in ESG
EQR has taken significant strides in leading the Australian junior mining sector by developing and sharing its
Sustainability (ESG) Program. It is committed to the ongoing maturation of this program, recognising that
sustainability is an evolving journey that requires constant dedication.
Environmental Responsibility
Throughout the year, EQR partnered with Cairns based firm, Natural Resource Assessments (NRA) Pty Ltd, to
conduct various component studies and oversee the design and upgrade of existing infrastructure to meet global
sustainability standards as it moved to recommence open-pit mining at the Andy White open pit.
Putting Sustainability and ESG commitments into action has been achieved through the Company’s continued
partnership with Turner & Townsend JukesTodd (‘TTJT’), the EQR Management Team and its ESG Committee.
Comprehensive Studies and Ongoing Commitments
Several critical studies were successfully conducted to support the Company’s open-cut mining plans and project
risk mitigation. Some of the key activities that remain ongoing include:
− Noise, Air & Vibration Studies: Minimising local community disruption.
− Water Management Plan Update: Responsible water usage and conservation.
− Hydrogeological Study: New data from monitoring wells for better groundwater understanding.
− Blast Management Plan: Safe and efficient blasting.
− Waste Rock & Tailings Management Plan: Responsible disposal and management.
− Flora and Fauna Studies: Preserving local biodiversity.
− Water Engineering Works: Upgrade Mt Carbine water storage facilities.
− Stakeholder Engagement Program: Based on a comprehensive heritage site review around Mt Carbine.
− Progressive Rehabilitation and Closure Plan (PRCP) Plan: Outlining EQR’s proposed rehabilitation strategy to
authorities, governments, and communities.
A Focus on Community and Social Responsibility
The Company’s sustainability commitment extends beyond compliance, emphasising responsible resource
development benefiting the environment and society. As EQR’s ESG program matures, it acknowledges its
community impact and has initiated partnerships in 2023 to offer meaningful support.
EQR Sustainability and ESG Journey
Embedding Sustainability and ESG into Our Foundations
At EQR, management have proactively integrated sustainability and ESG principles into the core of its operations.
The deliberate approach of maturation through the 2023 year has ensured alignment with existing sustainability
frameworks and scope to evolve with future reporting requirements. EQR’s journey began with a name change
reflecting its core values and has since achieved strategic milestones, partnerships, and initiatives showcasing its
commitment to sustainability.
Explore the timeline below to witness this transformation.
Key Milestones: Sustainability and ESG Journey Timeline
2019:
2021:
2021:
2021 Q2:
2021 Q4:
2022 Q1:
2022 Q1:
2022 Q2:
2022 Q3:
2022 Q4:
EQR adopts a new name that reflects its core values.
A dedicated ESG focus becomes integral to its operations.
Engagement with TTJT to establish the ESG Strategy baseline.
Engagement with ARTEH on Scope 1 & 2 Emissions Tracking tool development.
Stakeholder sentiment survey conducted.
Adoption of United Nations (‘UN’) Sustainable Development Goals (‘SDGs’).
Aligning ESG priorities with stakeholder sentiments and the Company values.
Adoption of TTJT ESG Categorisation Framework.
Frist quarterly ESG Committee Meeting held.
Developed/reviewed policies.
EQ Resources Limited Annual Report 2023
19
2022 Q4:
2023 Q1:
2023 Q1/2:
2023 Q2:
2023 Q2:
2023 Q2:
Initiatives workbook developed for tracking and planning.
Development of an ESG reporting framework, including a symbol communicating EQR's
values.
Establishment of a Mt Carbine based ESG Sub-Committee to drive community-based
initiatives.
Development of EQR's ESG Roadmap outlining quarterly objectives for the year.
Net Zero Readiness Assessment conducted.
Investigation of potential disclosure framework alignment commenced:
International Council on Mining and Metals (‘ICMM’), Global Reporting Initiative (‘GRI’),
Task Force on Climate-Related Financial Disclosures (‘TCFD’).
2023 Q2/3:
2023 Q3:
2023 Q3/Q4:
Development of Sustainability landing page for EQR website.
Revision of United Nations SDGs.
Sustainability landing page for EQR website launched.
2023 Planned - Q4:
Gap analysis on metric disclosure/reporting framework alignment (ICMM,GRI, TCFD,)
2023/4 Planned -
Q4/Q1:
2023/4 Planned -
Q4/Q1:
2024 Planned:
Commencement of a decarbonisation strategy/roadmap for Mt Carbine.
Second Stakeholder Sentiment Survey to be undertaken.
Inclusion of additional metric disclosures in the 2024 Annual Report, progressing
towards GRI/TCFD and possibly ICMM compliance.
Our ESG Program
EQR employs the TTJT ESG Categorisation Framework (refer Figure 7) to guide the maturation of its ESG program.
This program is rooted in the Company’s core values and purpose, aligning its foundational commitments with
tangible metrics for future reporting whenever possible.
The Company is dedicated to the ongoing enhancement of its ESG policies and programs, recognising the imperative
of adaptability as it grows and evolves. These policies undergo regular review to ensure practical application and
adherence to its values, as well as meeting the
expectations of its valued shareholders.
Strategic Positioning
Building on Our ESG Foundation
EQR continues
its ESG
leadership
foundation with
workshops and stakeholder surveys. ESG
principles are woven into every aspect of its
operations, ensuring ongoing improvement.
to strengthen
insights from
Figure 7 - TTJT ESG Categorisation Framework.
20 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
A Focused Approach
EQR’s strategic approach remains consistent:
Environmental Excellence: Embracing eco-friendly practices, technology, and efficient resource extraction.
Social Responsibility: Leading in sustainable communities, diversity, and local employment.
Governance and Transparency: Going beyond compliance with an emphasis on transparent reporting.
Unlocking Potential
EQR’s Leadership Team is committed to advancing its ESG program, including circular economy projects and
community development.
Stakeholder-Centric Evolution
Stakeholder surveys shape EQR’s ESG program direction. A 2024 survey and gap analysis will ensure alignment
with industry best practices.
Community Engagement
EQR engages closely with its local and regional communities as it develops the Mt Carbine Tungsten Mine, reflecting
its commitment to align actions with values.
UN SDG Alignment
EQR continually refines its alignment with the United Nations Sustainable Development Goals (UN SDG). Updated
alignments reflect its commitment to specific UN SDG targets, with plans for a 2024 survey and gap analysis to
further enhance alignment.
EQR currently aligns with the following UN SDGs, addressing one to four specific targets in each category, guided
by the TTJT alignment framework.
UN SDG’s that EQR aligns to.
Materiality Assessment
In 2021, EQR conducted an ESG Materiality Assessment during the Mt Carbine Mine expansion Pre-feasibility
Study. Surveying key stakeholders, it identified critical areas guiding EQR’s ESG strategy. Regular assessments
adapt to evolving stakeholder priorities, with an upcoming Stakeholder Sentiment Survey planned for the 2024
financial year.
EQ Resources Limited Annual Report 2023
21
Figure 8 - 2021 Stakeholder Sentiment Survey.
Governance
EQR maintains a strong governance
comprehensive
framework with
corporate
ensuring
policies,
transparency and ethics. Targeted
investments align with the Company’s
purpose and stakeholder values,
to a
supporting
low carbon
risk
management considers ESG factors
from project inception to operation.
transition
future. Robust
the
EQR’s dedicated ESG Committee
meets quarterly to review initiatives
and industry best practices, aiming
for positive sustainability outcomes
for the Company, the environment,
and local communities.
22 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
resourcing the new economy for a better tomorrow
ESG PROGRAM FRAMEWORK ALINGNED TO
2021 Stakeholder ESG Sentiments and EQR Core Values
EQR CORE VALUES
ESG FOUNDATIONAL COMMITMENTS
ESG REPORTING METRICS
Act Safe. Feel
Safe.
Act safe at work. Care
and respect each
other. Feel safe to be
yourself.
Embrace
Difference
Diversity of thinking,
skills and background
creates value and
drives innovation.
Tread Lightly
Embed resource
efficiency to minimise
environmental
footprint & deliver
positive societal impact
Dig Deep
Go one better. Strive to
continuously learn and
improve. Challenge the
status quo.
Buddy Up
Collaboration is key to
realising shared value.
•
•
•
•
•
•
•
•
•
Our approach to Health and Safety includes
wellbeing and highlights the importance of
mental health.
H&S programmes focussing on maturing
our safety management system,
undertaking physical and psychological
safety training and continuing to look for
opportunities to improve site safety.
Health & Safety Statistics
•
•
•
H&S incidents and injury
H&S improvements
H&S innovations
We pride ourselves on our existing diversity:
Women and Indigenous workforce
participation, as well as diversity of
backgrounds and skills mix
Looking for opportunities to increase
diversity through targeted programs. (E.g.,
Youth training)
Diversity & participation statistics
•
•
•
% Women
% Indigenous
Training participation
Acknowledgement of climate change and
commitment to low carbon future,
adoption of technology and GHG Tracking.
Investigating opportunities for future
renewables uptake
Endeavouring to reduce our environmental
footprint through adoption of emerging
technologies and being more resourceful.
Environmental Statistics
Energy use / mix
•
Scope 1, 2 and 3 GHG
•
reporting
Water use / recycle stats
Waste reduction / reuse /
recycle
•
•
Implementing cost effective measures for
recovery, reuse or recycle of energy, natural
resources and materials throughout project
design, operation and de-commissioning.
•
•
•
•
Tomra sorting technology
Plotlogic mapping
technology
Other innovation initiatives
Decarbonisation
collaborations, initiatives
Prioritising social and cultural
collaborations, partnerships and provision
of materials with councils, community,
industry, university and research
institutions and environmental NFP
organisations
Local procurement partnering and
engagement statistics
•
$$ spent and on local
procurement
% overall procurement
purchased locally
# of community feedback
sessions held / attendance or
feedback received
Lead with
Integrity
Have courage to do the
right thing. Be
accountable.
•
•
•
Endeavouring to operate openly, ethically
and transparently.
Senior leadership involvement in ESG
Council meetings and internal
engagement through employee Sub-
committee participation.
Participating in authentic stakeholder
engagement, taking on feedback
Alignment with UN SDGs
(Potential future)
Sustainability reporting
Figure 9 – EQR’s Sustainability Framework aligned to its values can be found on the EQR website : Sustainability Framework and
Materiality Assessment.
Sustainability Framework & Materiality Assessment V1.1
Page 3
•
•
•
•
EQ Resources Limited Annual Report 2023
23
2022/23 Sustainability Initiatives & Performance
Initiatives Management
EQR utilises the TTJT Categorisation Framework in its Initiatives Workbook. This tracks ESG initiatives, assigns
ownership, forecasts adoption and completion and maintains accountability through the ESG Committee. Initiatives
align with sustainability frameworks like ICMM, GRI, and ISSB/TCFD, ensuring best practices and future reportable
metrics where possible. Alignment supports EQR’s future sustainability reporting for emerging Australian
disclosure and reporting requirements.
INSIGHTS
Growth
96
Staff as of end
of June 2023
Retention
5.6
New starters
per month
Buddy Up
Embrace Difference
100%
employees live in
the local region
20%
6%
Women
employees
Indigenous
employees
Growth
+37%
Growth of
Employees
Buddy Up
53.0%
Local suppliers (Queensland)
(58.3% in $ value of total
spending)
Buddy Up
86.3%
Australian suppliers (89% in
$ value of total spending)
Lead with Integrity
Lead with Integrity
7
ESG related Governance
policy reviews
Dig Deep
~1x
site tour per week
Lead with Integrity
2x
ESG platforms EQR
is represented on
ESG Initiatives in Progress
Total ESG Spend
63
completed ESG initiatives
$45,540
24 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
2022/23 Sustainability and ESG Special Achievements
2022 - Dual XRT Ore Sorter installation.
2022 - Partnered with Mitchell River Watershed Management Group: Frogbit Sentinel Network (ongoing)
2022 - Mt Carbine Rodeo Sponsorship.
2022 - Winner AMEC Environment Award
2022 - 19 Year partnership with Australian Wildlife Conservancy (‘AWC’) signed.
2023 - 600 days with no Lost Time Injury (‘LTI’).
2023 - Mt Carbine Rodeo Sponsorship
2023 - Mt Carbine Quarry website launched.
2023 – Featured as an “Explorer Acing ESG” on Queensland Exploration Council Website : ESG Toolbox
2023 - AMEC ESG Guide – EQR best practice case study featured.
2023 - EQR awarded Wolfram Camp preferred tenderer.
2023 - Sustainability landing page on EQR website to improve transparency and communication.
ESG Activities and Initiatives
EQR reports on its activities and initiatives in detail each quarter.
Ongoing monitoring and activities include:
− Noise, Air & Vibration Studies;
− Water Management Plan Update;
− Waste Rock & Tailings Management;
− Enhanced Conceptual Groundwater Model which involved the drilling of 18 additional investigation bores;
− Flora and Fauna Studies; and
− Water Engineering Works
A summary of the past year’s initiatives are outlined below, segmented by the EQR value they align to. Where
possible, further information is provided by the links below.
Act Safe, Feel Safe
Act safe at work. Care and respect each other. Feel safe to be yourself
Mt Carbine Staff undertaking Working at Heights training.
“R U OK?” Day 2023.
− Training: Regular staff training and upskilling resulted in 600 days without an LTI: Link
− Safety Initiatives: Ongoing dust management and safety drives enhance workplace safety.
− Mental Health Support: EQR actively participates in R U OK Day, promoting a safe and supportive environment
for mental and emotional well-being: Link
EQ Resources Limited Annual Report 2023
25
Embrace Difference
Diversity of thinking, skills and background creates value and drives innovation.
EQR CEO, Kevin MacNeill, hosting an indigenous training provider and potential trainees at the Mt Carbine Mine.
− ITEC Group visit Link
− Internship and traineeship programs – ongoing Link
− 2023 AMEC Membership Renewal Link
− AusIMM ‘Resourceful Far North Queensland’ Forum. Technology Innovation in Tungsten Mining Presentation
by Chief Geologist Link
− Mt Carbine Brooklyn Village Estate Recreation Hall: power upgrade to facilitate community gatherings and
functions.
26 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
Tread Lightly
Embed resource efficiency to minimise environmental footprint and deliver positive societal impact.
Figure 10 - Mt Carbine’s circular economy flow decouples economic growth from environmental degradation and won the 2022 AMEC
Environment Award in recognition of its sustainable mining efforts.
Follow the links below for further information:
− Circular Economy approach to operations: Resourcing the industrial, building, construction and landscaping
industries with sustainable quarry product while actively managing mining waste Link
− Updated Water Management Plan and alignment to ICMM Water Stewardship Statement.
− Institute of Quarrying Australia (IQA) stakeholder engagement site tour Link
− Internal Environmental Audit 2023 – Continued environmental management planning to embed future required
reporting metrics in current frameworks and initiatives.
− Commissioning of third XRT Ore Sorter embeds resource efficiency and further reduces environmental
impact Link
− Siam Weed invasive species management.
EQ Resources Limited Annual Report 2023
27
Dig Deep
Initiatives undertaken:
Go one better. Strive to continuously learn and
improve. Challenge the status quo.
− Containers for Change local schools donations
− Controlled burning with the local fire brigade
− Environmental conservation collaboration through
AWC Partnership Link
− Local partnership: Toddy’s Machinery Maintenance
Link
− Partnership MOU: Masan High-Tech Materials Link
− Noosa 2023 Stakeholder Engagement Link
− Collaboration with the European Raw Materials
Alliance Link
Lead with Integrity
Have courage to do the right thing. Be
accountable.
Operations Manager, Ryan MacNeill, being presented
with the 2022 AMEC Environmental Award.
2023 Highlights:
− EQR wins AMEC Environment Award Link
− Plotlogic mining technology programme Link
− Further development of ARTEH dashboard lays
foundation for future reporting and net-zero
readiness. ARTEH emissions tracking partnership
Link
− QCWA Mt Molloy BBQ Donation for monthly
market fundraising.
− Mt Carbine annual rodeo sponsorship Link
Buddy Up
Collaboration is key to realising shared value.
EQR employees present their Containers for Change
Donation to one of the schools supported by this
initiative.
− Mt Carbine Residents stakeholder engagement
sausage sizzle Link
− Local stakeholder information evening, Port Douglas.
− Queensland Exploration (QE) Connect website.
Best practice case study feature – Northern Quoll
habitat and Circular Economy Link.
− Community Support - Julatten State School
Centenary Celebration donation.
− Recognition of work and contribution to the
ongoing Research and Development activities
through R&D tax refund Link.
− EQR progression to open pit mining discussion
and company growth information breakfast with
employees: Link
− Community consultation BBQ prior to commencing
open cut mining facilitating conversation and
communication Link
− Australia’s Biggest Morning Tea for Queensland
Cancer Council Link
− AMEC ESG Guide – EQR best practice case study
featured Link
28 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
EQRs Plans for the Future
EQR takes a programmatic approach to identifying and
implementing ESG opportunities, ensuring positive
sustainability outcomes for project sites, stakeholders,
and the surrounding community. As it moves forward,
its vision for the future is built upon these principles,
with a focus on the following key elements:
Maturation of ESG Program
Its ESG program will continue to mature, guided by
best practices and ongoing refinement.
Sustainability Reporting
It is dedicated to enhancing its sustainability reporting
to ensure transparency and clarity.
Innovation
Embracing innovation will remain a core element of
its strategy, driving environmental responsibility and
economic growth.
Community-Centric Initiatives
Strengthening community engagement
is a top
priority as it works to benefit the regions in which it
operates.
Net Zero Roadmap
EQR is actively developing a roadmap to reduce
carbon emissions, aligning with a low-carbon future.
Stakeholder Collaboration
Collaboration with stakeholders and industry peers
will amplify EQR’s impact and foster positive change.
Ongoing Materiality Assessments and Sentiment
Surveys
Regular assessments will ensure its initiatives align
with evolving stakeholder priorities.
Integrating Wolfram Camp
Wolfram Camp presents an opportunity to EQR
to apply its proven approach to the sustainable
redevelopment of abandoned and pre-existing
tungsten mines to produce another local success
story. An ESG Desktop Analysis of the mine identified
the following areas which could be targeted as a part
of the broader ESG program:
− ESG Stakeholder Materiality Assessment to shape
localised ESG Program;
− Creation of localised job opportunities;
− Localised support of shared benefit community
initiatives;
− Refurbishing, commissioning and expansion of the
existing tungsten processing plant in line with the
Mt Carbine operations; and
− Application of mine processes and key technology
that are transferable and appropriate, such as:
− TOMRA XRT waste sorting technology to
existing waste rock stockpiles;
− Employee attraction and retention programs;
− Tailings operation development; and
− Robust environmental processes (e.g. pollution
prevention)
EQ Resources Limited Annual Report 2023
29
Sustainability Tab EQR Website
Please visit our website to view our Sustainability landing page for further information.
https://www.eqresources.com.au/site/sustainability/what-we-care-about-1
Exploration Activities
Throughout the 2023 financial year, following successful drilling campaigns, the Company released successive
updated Resource Statements, The latest updated Resource Statement was released on 4 April 2023 (refer ASX
ASX Announcement ‘64% Increase of Mt Carbine Indicated Resources (In-Situ)’) followed by an updated Reserve
Statement (refer ASX Announcement ‘43% Increase in Mt Carbine Ore Reserves From Western Pit’ dated 18 May
2023). This culminated in an updated Bankable Feasibility study (refer ASX Announcement ‘Strong BFS Update
Delivers 47% Increase In NPV’ dated 22 May 2023). The full document can be found on the EQR Website under
Technical Reports.
Resource Update
With the addition of a further 7 holes for 1,646.3m, the Company undertook a re-assessment of the Mt Carbine
Resource Model. As there was a sufficient increase in the Indicated Resource an update to the Mineral Resource
Estimation (MRE) was undertaken to show the results of extension work immediately west of the BFS pit design
(December 2022). Total drilling to date at Mt Carbine used for this updated MRE now comprises of 96 holes for
24,337m of diamond drilling. Highlights of the updated resource are as follows:
− 64% increase in the latest resource ‘Mt Carbine Mineral Resource Estimate* (“MRE”) dated 4 April 2023 (*0.05%
WO3 cut-off grade).
− 2.11 million metric tonne units (mtu, equal to 10kg WO3) increase of the metal contained in Indicated Resources
(In-situ).
− Global MRE (Inferred & Indicated category) increases by 28.6% to ~9.61 million mtu.
− Indicated Resources (In-situ) expanded from 12Mt @ 0.27% WO3 to 18.1Mt @ 0.30% WO3, adding significant
metal value to the Company’s inventories.
− Additional high-grade mineralisation located in the Dyke West Zone and the Northern Iron Duke Zone.
− Model shows the mineralisation remaining open at depth and along strike.
resourcing the new economy for a better tomorrow
The Company is now in a position to model a larger pit to expand from the current 4 year BFS pit as per the
revised BFS Economic Update of November 2022. The high-grade mineralisation recently intersected still
remains open further to the west, north and to depth and the Company flags it will continue to drill this year to
further expand this world-class tungsten resource.
30 EQ Resources Limited Annual Report 2023
“The target has always been a long life open pit operation followed by, or in sequence to, a long life
Operating and Financial Review continued
underground operation. The Company’s immediate priority is to put this additional resource into our financial
model to plan a larger pit and extend open pit mine life’’, Mr MacNeill adds.
The updated MRE is reported in accordance with the 2012 JORC Code and summarised as follows:
Orebody
Resource
Classification
Low-Grade Stockpile
In-Situ
All
Indicated
Indicated
Inferred
Subtotal
Indicated
Inferred
Subtotal
Total
Tonnes
(Mt)
10.126
Grade
(%WO3)
0.075
2.75
0.83
13.71
18.06
10.68
28.74
42.45
0.07
0.06
0.07
0.30
0.30
0.30
WO3
(mtu)
759,450
178,517
53,789
991,756
5,405,901
3,217,311
8,623,212
9,614,968
Notes:
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 uppercut was applied to individual assays for this resource; lower cuts of 0.05% & 0.08% W O3 were applied to the resource
and reported as Low Grade Insitu and In Situ respectively. These cuts are where mineralisation forms distinct vein zones.
4. Drilling used in this methodology was all diamond drilling with 1/2 core sent acoording to geological intervals to ALS for XRF-15b
analysis
5. Resource estiamtation was completed using the Kriging Variable Orientation Estimation Methodology
6. Indicated spacing is approximatley 30 x30m inferred is approximatley 60 x 60m.
7. The deposit is sheeted vein system with subparrallel zones of quartz tungsten mineralisation that extends for >1.2km in length and
remains open to the west and north. At depth the South W all Fault cuts the Iolanthe to Johnson's veins but the Iron Duke zones
remain open to depth.
Figure 11 - Mt Carbine Mineral Resources Estimate as of April 2023.
Figure 1 - Mt Carbine Mineral Resource Estimate as of April 2023
The Company’s remodelled MRE used a similar set of parameters as defined by its contractor, Measured Group,
when calculating the June 2021 and August 2022 Resource Statements with only minor modifications (for details
see the Technical Reports section of the EQR website). The calculation used a ‘Kriged Variable Orientated
Estimation’ methodology for the model. It was found the single variogram applied in previous estimations was not
suitable for the western extensions where changes in veins orientations were observed. The strike changes of the
veins in this area moved from grid east-west to grid south-west and was recorded from surface mapping of the
veins as well as reflected in the recent orientated drill core.
The Company remodelled this MRE with a similar set of parameters as defined by the Measured Group when
calculating the June 2021 and August 2022 Resource Statements with only minor modifications (for details
see ‘Annex 1 - Mineral Resource Statement’). The calculation used a ‘Kriged Variable Orientated Estimation’
methodology for the model. It was found the single variogram applied in previous estimations was not suitable
for the western extensions where changes in vein orientations were observed. The strike changes of the veins
in this area moved from grid east-west to grid south-west and was recorded from surface mapping of the veins
as well as reflected in the recent orientated drill core.
The updated MRE uses the same 0.05% WO3 cut-off as defined in EQR’s previous Resources and Reserves
Statements (refer Mt Carbine Expansion Project – Bankable Feasibility Study 2022 Economic Update). The lower
grade portion of these Resources is designated for storage into the Company’s Low-grade Stockpiles which are
currently being mined at a grade of 0.075% WO3, whilst the >0.08% WO3 portion is marked into the Company’s
In-situ Resources.
The updated MRE uses the same 0.05% WO3 cut-off as defined in our previous Resources and Reserves
Statements (see November 2022 Updated Bankable Feasibility Study). The lower grade portion of these
Resources is designated for storage into the Company’s low-grade stockpiles which are currently being mined
at a grade of 0.075% WO3, whilst the >0.08% WO3 portion is marked into the Company’s In-situ Resources
Category.
The updated resources allowed the Company to model a larger pit to expand from the current 4-year BFS pit as
per the revised BFS Economic Update of November 2022. The high-grade mineralisation recently intersected still
remains open further to the west, north and to depth. The Company flags it will continue to drill this year to further
expand its world class tungsten resource.
Page 2
EQ Resources Limited Annual Report 2023
31
Figure 12 - Cross Section through current Resource Model. (Indicated Resources are Red, Inferred Resources are Green).
Figure 13 - Plan view showing Indicated and Inferred Resources. (Indicated Resources are Red, Inferred Resources are Green).
resourcing the new economy for a better tomorrow
18th May 2023
43% INCREASE IN MT CARBINE ORE RESERVES
FROM WESTERN PIT EXTENSION
32 EQ Resources Limited Annual Report 2023
EQ Resources Limited is the 100% owner of the Mt Carbine Tungsten Mine near Cairns.
Operating and Financial Review continued
Highlights:
- Open cut Ore Reserves tonnage increases from 3.54mt to 5.93mt.
-
43% increase in contained WO3 in open cut Ore Reserves to 1.66m mtu after the 64% increase
in the Mt Carbine Indicated Resource as announced to the ASX on 4 April.
of 7 years, with the west and north remaining open for potential further extensions.
- Additional Ore Reserves extend the open cut life-of-mine (excl. low-grade stockpile) to a total
Reserves Update
Based on the significant increases in Indicated Resources, the Company undertook to update the Reserves and
released a new statement (refer ASX Announcement ‘43% Increase in Mt Carbine Ore Reserves From Western
Pit, dated 18 May 2023). The re-modelling was undertaken by Optimal Mining Group who completed the previous
Reserve Statements of 31 December 2021 and 16 September 2022. The consultants use the Spry Optimiser and
have each time updated parameters to reflect changing labour, fuel and operating costs, etc. The highlights of the
Reserve Statement are summarised here:
with drilling to continue to bring Inferred to Indicated Resources for further expansion.
- Only 19% of the In-Situ Mt Carbine Mineral Resources are currently in open cut Ore Reserves
EQ Resources Limited ("EQR" or "the Company") is pleased to announce updated Ore Reserves for its Mt
Carbine Tungsten Project (100% ownership) in Far North Queensland.
− Open cut Ore Reserves tonnage increases from 3.54 million tons to 5.93 million tonnes.
− 43% increase in contained WO3 in open cut Ore Reserves to 1.66 million mtu.
− Additional Ore Reserves extend the open cut life-of-mine (excl. Low-grade Stockpile) to a total of 7 years, with
− Only 19% of the In-Situ Mt Carbine Mineral Resources are currently in open cut Ore Reserves with drilling to
the west and north remaining open for potential further extensions.
The Company’s successful 2022 drilling campaigns and corresponding update of the Mt Carbine Mineral
Resource Estimate formed the basis for the significant increase in the estimated open cut Ore Reserves
tonnage and contained WO3 metal. The low-grade stockpile (“LGS”) has been partially depleted since the
previous Ore Reserves update from September 2022.
continue to bring Inferred to Indicated Resources for further expansion.
The Ore Reserves are current as of 15 May 2023 and account for all mining activities undertaken to this date.
The Low-Grade Stockpile (“LGS”) has been partially depleted since the previous Ore Reserves update from
September 2022. The Ore Reserves are current as of 15 May 2023 and account for all mining activities undertaken
to this date.
Reserve Category
ROM Tonnes (mt)
WO3 (%)
Contained WO3 (mtu)
Table 1 - Mt Carbine Ore Reserves at 15 May 2023
Open Cut - Proven
Open Cut - Probable
Open Cut – Total
LGS - Proven
LGS - Probable
LGS - Total
-
5.93
5.93
-
9.77
9.77
Figure 14 - Mt Carbine Ore Reserves at 15 May 2023.
-
0.28%
0.28%
-
0.075%
0.075%
-
1,660,400
1,660,400
-
732,750
732,750
The Ore Reserves have been limited to a practical pit shell based on the current economic limits of the deposit. The
updated mine plan considers the utilisation of larger mining equipment and a reduction in the amount of costly
selective ore mining, which supports a further improvement of the project economics. An isometric view of the Ore
Reserves pit shell is shown in the figure below.
REGISTERED OFFICE: Level 4, 100 Albert Road, South Melbourne, VIC 3205
PRINCIPAL PLACE OF BUSINESS: 6888 Mulligan Highway, Mt Carbine Qld 4871
POSTAL ADDRESS: PO Box 1496, Mareeba Qld 4880
ABN: 77 115 009 106 (ASX: EQR)
T: (07) 4094 3072 | F: (07) 4094 3036 | W: eqresources.com.au
Figure 15 - Isometric view of Ore Reserves Pit Shell (Blue) compared with previous BFS Pit Shell designed in November 2022 (Green)
Refer to updated Mineral Resource & Reserves Statement on page 46.
EQ Resources Limited Annual Report 2023
33
Strong Bankable Feasibility Study Update Delivers 47% Increase In Net Present Value (NPV)
During the last quarter of the 2023 financial year, the Company upgraded the Mt Carbine Ore Reserves. A detailed
review of the Project Economics was performed, with consideration given to changing underlying cost and revenue
assumptions.
The BFS Economic Update supported by a 43% increase in open cut Ore Reserves upgrade, and doubling of plant
capacity from 2025, resulted in a 25% higher tungsten concentrate (50% WO3 content) output, and over a shorter
period (due to doubling capacity), thus bringing revenue forward.
The Project delivers strong Pre-Tax Economics* including:
− NPV8** of $307.1 million*** (47% increase compared to the November 2022 BFS update of $209);
− IRR of 477%;
− Life of Mine EBITDA of $450 million.
− Low capital cost of $21.4 million has been further optimised to $18.5m (a decrease of $2.9m) as an effect of
scope changes and defined costing. $7.8m has been added to reflect doubling of plant capacity, resulting in
total Capex over Project life of $26.3m.
− Tungsten concentrate production C1 Cash Cost**** remains amongst lowest in industry with an equivalent of
US$104/mtu once full capacity has been reached.
resourcing the new economy for a better tomorrow
*
Concentrate sales price basis US$340/mtu (mtu = metric tonne unit, 10kg) in 2023, with a long-term forecast average of US$369/mtu
(2024-2040) calculated using the average of the Roskill Base Case and High Case price level scenarios (see Chapter 16 of 2021 BFS)
** 8% discount rate applied
updates have resulted in a positive net effect of approximately $2.9 million in total Capex savings. An additional
$7.8m has been added to capital expenses to account for doubling of plant capacity in 2025.
*** $307M NPV is Project NPV; NPV attributable to EQR as 50% portion of LGS Joint Venture and 100% of Open Pit results to $270M
**** C1 Cash Cost: Direct costs (mining and processing cost), plus local G&A and by-product credits from sale of aggregate through quarry,
but excluding royalty; Exchange rate AUD/USD 0.688
Figure 16 - Comparison of Consolidated Project Economics.
EQR Chief Executive Officer, Kevin MacNeill, commented: “The successful drill campaigns and strong trends
The BFS Update now contemplates a 10-year production schedule with the Project delivering impressive economics
of conversion of resource from inferred to indicated along with a fully functioning processing operation has
including a NPV8 of $307 million and an IRR of 477%.
supported the positive outcomes in this BFS Update.”
“As reiterated in previous announcements, the Phase 1 processing plants have provided the data we need as
a company to design a plant that is optimised for the Mt Carbine mineralogy to maximise tungsten recovery
and deliver the best results for the Company.”
“The pit has now been completely de-watered and grade control drilling is ongoing with mining set to start in
June 2023. This is extremely exciting for the Company with the site an absolute hive of activity as final
preparations are made for the open-cut mining to resume. The Phase 2 plant upgrades are underway along
with the new Sandvik crushing plant which is set for commissioning in early 2024. Until then, we have the
processing capacity to use our current plant and equipment to process the primary open cut ore.”
“We continue to focus on excellence in execution and delivering on our development plan as we progress the
Mt Carbine operations and grow EQR supporting the global requirement for Critical Minerals.”
The BFS Update had been prepared by independent lead study manager Turner & Townsend JukesTodd Pty
Ltd. The full BFS report is available on the Company’s webpage.
Released on authority of the Board by:
Kevin MacNeill
Chief Executive Officer
Further Enquiries:
Peter Taylor
Investor Relations
0412 036 231
peter@nwrcommunications.com.au
Page 2
34 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
The BFS Update covers total concentrate production of approximately 38,570 tonnes (50% WO3 content), an
increase of 25% over the last BFS output. The Project implementation was split into two phases, with the Company
having successfully completed Phase 1 Scope as per the initial BFS (December 2021). The BFS Update highlights
that scope changes and cost updates have resulted in a positive net effect of approximately $2.9 million in total
CAPEX savings. An additional $7.8m has been added to capital expenses to account for the doubling of plant
capacity in 2025. The BFS Update had been prepared by independent lead study manager Turner & Townsend
JukesTodd Pty Ltd. The full BFS report is available on the EQR webpage.
Drilling & Discoveries
During the quarter, drilling of 7 diamond holes for 1,646.30m was completed with the goal to extend the drill out
of indicated resource for the western pit extension and to explore the extensions of the Iron Duke System to the
North and the Western Extension High-Grade Zone. During April 2023, EQR brought a reverse circulation drill rig
to site. In the coming weeks the rig will be used to define the daily mine blocks for each panel and is intended for
use in continuous exploration drilling to extend on the target areas mentioned above.
Both phases of the 2022 Drill Program were very successful with high-grade mineralisation adding resource and
showing the deposit remained open in strike and depth. The figure below shows the location of the drilling this
period relative to the proposed BFS designed open cut. Some of the highlights of the drilling include the following
intercepts:
− 2.36m @ 0.88% WO3 from 195.68m (EQ027)
− 3.63m @ 0.40% WO3 from 233.18m, incl. 0.20m @ 6.01% WO3 from 233.18m (EQ028)
− 9.76m @ 0.46% WO3 from 140.84m, incl. 2.25m @ 1.90% WO3 from 140.84m (EQ029)
− 2.64m @ 0.76% WO3 from 218.50m (EQ029)
− 2.48m @ 0.69% WO3 from 75.11m (EQ030)
− 1.00m @ 1.90% WO3 from 213.42m (EQ030)
− 18.24m @ 1.00% WO3 from 387.25m, incl. 5.51m @ 3.20% WO3 from 387.25m (EQ030)
− 2.82m @ 1.81% WO3 from 140.10m, incl. 1.19m @ 3.89% WO3 from 140.84m (EQ031)
resourcing the new economy for a better tomorrow
Iron Duke Extension
Good mineralisation was located on the down dip extension of the high-grade surface exposures. Hole EQ029
Two holes west of the pit, EQ027 and EQ028, confirmed the geological model identifying the most prospective
holds good promise that high-grade mineralisation can be found across the entire Iron Duke Vein Package
target zone for tungsten enriched veining, which appears to be a roughly vertical zone below ‘200m Reduced
(Dazzler, Talis & Crown veins, shown in purple). The main Mine Pit Vein Package veins are the Iolanthe, Bluff
Level (RL)’. A third hole, EQ029, confirmed a northern extension of the high-grade Iron Duke veining.
& Johnson, shown in red.
South (A)
North (A’)
3m zone at
surface >1% WO3
(Visual Result)
EQ029
1.61m @
0.6% WO3
9.76m @ 0.46% WO3
incl. 2.25m @ 1.9% WO3
BFS Pit
South Wall Fault
2.64m @
0.76% WO3
2.0m @
0.77% WO3
Figure 17 - Cross Section of EQ029 confirming continuation of high-grade mineralisation in the Iron Duke Vein Package (Purple).
Figure 3 - Cross section of EQ029 confirming continuation of high-grade mineralisation in the Iron Duke Vein Package (shown in purple)
Released on authority of the Board by:
Further Enquiries:
Kevin MacNeill
Chief Executive Officer
Peter Taylor
Investor Relations
0412 036 231
peter@nwrcommunications.com.au
Page 4
EQ Resources Limited Annual Report 2023
35
This now highlights that high-grade extends for over 200m in the Iron Duke region and is open in all directions.
Further drilling of this zone is warranted and will significantly add to the resource base of the deposit for future
years.
Western Extensions
Since the review of the Mt Carbine deposit two years ago it has long been postulated that a second high-grade
lobe of the deposit would plunge off westwards. In November 2022, EQR outlined to target this concept and look
for extensions of Hole EQ026 that reported 5.95m @ 0.94% WO3 (see ASX announcement ‘Drilling Targeting New
Discoveries and Potential Western Pit Expansion’ dated 17 November 2022).
The two holes of EQ030 & EQ031 were drilled for the postulated down dip extension of these high-grade zones.
The success of hitting high-grade intercepts in these holes indicates an additional high-grade system exists and
confirms the fluid flow direction from the west that provides the vectors for ore repeats along westerly structures.
The high-grade nature of the intercepts is perfectly situated for underground mining off the existing decline. The
results will add significantly to the Mt Carbine Underground Scoping Study where the Company modelled taking
2.36Mt @ 1.05% WO3 from underground (see ASX announcement ‘Underground Scoping Study Gives Confidence
To Proceed With Pre-Feasibility Work’ dated 12 April 2022).
In Hole EQ030 the results contain the highest per meter tungsten (WO3 contained) intersected outside the BFS
Pit with Hole EQ030 (5.51m @ 3.20% WO3 from 387.25m) having 10-times the grade of the Open Pit Ore Reserve
as reported (0.33% WO3).
Holes EQ032 & EQ033 were above the main mineralised level being at the 330-350m RL mark with the zone
Holes EQ032 & EQ033 were above the main mineralised level being at the 330-350m RL mark with the zone
reflected as narrower more separated veins, i.e. intercepts of 0.13m @ 1.03% WO3, 0.29m @ 0.53% WO3 and
reflected as narrower more separated veins, ie. intercepts of 0.13m @ 1.03% WO3, 0.29m @ 0.53% WO3 and 0.33m
0.33m @ 1.33% WO3 were intersected. At a level 100m below these intercepts the mineralisation widens and
@ 1.33% WO3 were intersected. At a level 100m below these intercepts the mineralisation widens, and veins come
veins come together.
together.
resourcing the new economy for a better tomorrow
Figure 18 - Phase 2 2022 Drill program confirmed two significant high grade mineralised systems open along strikes and at depth.
Shown above an orthographic projection of the Mt Carbine Mineral Resource (in red) including the new
systems confirmed this drill program with purple showing the high-grade intersected zones. The BFS Pit is
shown in grey and the historic decline highlighted in orange.
SIGNIFICANT RESULTS OF EQ030 & EQ031:
EQ030
22523E 26495N
Main Zone of Mineralization
Interval
Grade (% WO3)
From
75.11
To
77.59
129.15
132.41
214.32
221.65
2.48m
3.26m
7.33m
Incl.
213.42
214.42
1.00m
387.25
405.49
18.24m
Incl.
387.25
392.76
5.51m
0.69
0.26
0.30
1.90
1.00
3.20
Page 4
36 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
Shown above, an orthographic projection of the Mt Carbine Mineral Resource (in red) including the new systems,
confirmed this drill program with purple showing the high-grade intersected zones. The BFS Pit is shown in grey,
and the historic decline highlighted in orange.
WH Bryan Mining and Research Institute
Co-operation with the University of Queensland Special Research Centre for a full micro XRF program on
Mt Carbine core has given insight into the nature of the mineralisation and the understanding of the high-grade
versus barren vein types.
The figure below show a high-grade vein adjacent to a barren vein in the same sheeted system. Barren veins
appear earlier and are lower temperature gaseous events, whereas high grade are more saline brine events that
occur later in the evolution of the deposit.
Figure 19 - Barren Vein next to a High Grade Vein.
Future Programs
The recent geological work confirms there exists 4 major targets that need continued work and the listed four
programs are still set to be completed by the Company:
1.
Upgrade of the Iron Duke Inferred Resources into Indicated Resources - Iron Duke contains 5.8Mt @ 0.59% WO3.
2. Continue to extend the known veins along strike extents both Grid West and East.
3. Drill to the depth. Away from the South Wall Fault, the depth extent of the mineralisation remains open.
4. Evaluate and test the True Blue, Daisy, MacDonald’s and Red Cap Package Zones.
EQ Resources Limited Annual Report 2023
Operating and Financial Review
1. Upgrade of the Iron Duke Inferred Resources into Indicated Resources - Iron Duke contains 5.8Mt @ 0.59%
WO3.
2. Continue to extend the known veins along strike extents both Grid West and East.
3. Drill to the depth. Away from the South Wall Fault, the depth extent of the mineralisation remains open.
4. Evaluate and test the True Blue, Daisy, MacDonald’s and Red Cap Package Zones.
EQ Resources Limited Annual Report 2023
37
Figure 20 - Soil anomalies around the pit; Red is Inferred Resources; Updated Open Pit design shown for scale in grey.
Figure 21 - Mt Carbine Exploration potential and work areas (Numbering 1-4 as per description above).
On a regional scale, there are over 50 locations with historical workings within EQR’s exploration tenements,
which have reported tungsten or tin mineralisation.
Mt Holmes – EPM 14871
An initial survey at Mt Holmes tin project revealed over 30 massive quartz veins cross the tenement at right
angles to a major feldspar porphyry dyke swarm. 82 rock chip samples of these veins did not reveal any major
mineralisation but minor marginal zones of tin. The remainder of the license will be explored this field season
commencing in July 2023
Other Works
EQ Resources Limited Annual Report 2023
Operating and Financial Review
1. Upgrade of the Iron Duke Inferred Resources into Indicated Resources - Iron Duke contains 5.8Mt @ 0.59%
WO3.
2. Continue to extend the known veins along strike extents both Grid West and East.
3. Drill to the depth. Away from the South Wall Fault, the depth extent of the mineralisation remains open.
4. Evaluate and test the True Blue, Daisy, MacDonald’s and Red Cap Package Zones.
38 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
RC Control Drilling with Orana
Both Orana Drill and Blast Pty Ltd (“Orana”) and
Golding began mobilisation to site during the last
quarter of the 2023 financial year, with the first blast
occurring on 24 June 2023. The blast was planned on
a 228 -hole pattern for 42,000 tonnes which was a
small blast for calibration of blasting parameters in the
restart of open pit mining operations.
The Blast Hole Drill Program will use two rigs and over
the first 12 months of operations it is planned to drill
approximately 12,790 holes for 134,000m of blast hole
drilling and load 1,010 tonnes of emulsion explosives.
Typically, a full blast will be a 325- hole and 2.5m x
2.5m pattern for approximately 60,000t per blast.
Currently EQR has booked a regular weekly blast with
Orica Ltd who will supply the explosives to site.
Orana rigs working on the holes for the first calibration blast.
Exploration Tenements
Mt Carbine Exploration Tenements
On a regional scale, there are over 50 locations with historical workings within EQR’s exploration tenements,
On a regional scale, there are over 50 locations with historical workings within EQR’s exploration tenements,
which have reported tungsten or tin mineralisation.
Figure 22 - Regional and historical Tungsten and Tin workings relative to Mt Carbine.
which have reported tungsten or tin mineralisation.
Mt Holmes – EPM 14871
An initial survey at Mt Holmes tin project revealed over 30 massive quartz veins cross the tenement at right
angles to a major feldspar porphyry dyke swarm. 82 rock chip samples of these veins did not reveal any major
mineralisation but minor marginal zones of tin. The remainder of the license will be explored this field season
commencing in July 2023
Other Works
EQ Resources Limited Annual Report 2023
39
resourcing the new economy for a better tomorrow
“The re-commercialisation of Wolfram Camp is a key action of the Queensland Resources Industry
Development Plan. Queensland has many of the critical minerals needed to make the renewable energy
promising Bamford Hill advanced exploration target
Mt Holmes – EPM 14871
technologies the world needs for a net zero emissions future.
within the Herberton Tin-Tungsten field, this permit
An initial survey at Mt Holmes tin project revealed over
offers immense potential. With access to approximately
30 massive quartz veins across the tenement at right
That’s why we have now also released the Queensland Critical Mineral Strategy, which will oversee
5 million tonnes of Low-Grade Stockpile and Tailings
angles to a major feldspar porphyry dyke swarm. 82
$245 million of investment into growing this sector in Queensland.
material containing valuable resources like Tungsten,
rock chip samples of these veins did not reveal any
Molybdenum, and Bismuth, EQR plans to conduct a
major mineralisation but minor marginal zones of tin
Part of the Strategy will focus on supporting companies looking to extract critical minerals from waste
comprehensive regional assessment, employing soil
were identified. The remainder of the license will be
and tailings at existing and former mines. This tender will not only create more good jobs for the region
and geophysical programs to unlock the area’s hidden
explored this field season commencing in July 2023.
but helps us meet the challenge of leading the world towards a decarbonised future,” commented
potential. This initiative aligns perfectly with EQR’s
Stewart.
Wolfram Camp, QLD
critical mineral hub growth strategy and dovetails
EQR has taken a significant step forward by being
with the Queensland Government’s Critical Minerals
selected as the preferred tenderer for resource
Strategy and Resources Industry Development Plan,
exploration activities encompassing the Wolfram
aimed at revitalising former mines. Acquiring the
Unlocking the Mining Potential of Wolfram Camp
Camp Mine and its surrounding areas (refer ASX
Wolfram Camp permit not only expands EQR’s asset
Announcement
‘EQR Award Permit for Historic
60 kilometres south of the Company’s operating Mt Carbine Tungsten mine, the Wolfram Camp mine
portfolio in the Herberton Tin-Tungsten field but also
Wolfram Camp Mine’ dated 27 July 2023). This
positions the Company to contribute significantly to
represents a unique opportunity for EQR to revitalise a historic mining region that was once a major source of
strategic move is aimed at evaluating the economic
the global supply chain for critical minerals. The rich
critical minerals, including Tungsten and Bismuth. With this EPM, the Company has secured access to assess
feasibility of re-commissioning this historical site.
historical legacy and promising geological attributes of
a 477km² RA442 license area, hosting key targets, the Wolfram Camp mine itself, and the Bamford Hill
Covering a substantial 477km2 RA442 license area,
the Wolfram Camp site make it a potential cornerstone
advanced exploration target.
which includes the Wolfram Camp Mine and the
in fulfilling this visionary objective.
Figure 1: Tender award area indicated in yellow.
Figure 2: Wolfram Camp forms part of the regional
Figure 23: Left, Tender Area indicated in yellow - Right, Wolfram Camp, Watershed and Mt Carbine form part of the regional tungsten
tungsten cluster and critical mineral hub.
cluster and critical mineral hub.
Wolfram Camp mine is located 60 kilometres south of the Company’s operating Mt Carbine Tungsten Mine and
represents a unique opportunity for EQR to revitalise a historic mining region that was once a major source of critical
minerals, including Tungsten and Bismuth. With this EPM, the Company has secured access to a 477km2 RA442
license area, hosting key targets, the Wolfram Camp Mine itself, and the Bamford Hill advanced exploration target.
NSW Exploration Tenements
Sozo Resources has successfully completed the ,Stage 1 Farm-In Conditions and has elected to proceed to Stage 2
Farm-In, providing Sozo the exclusive right to earn a 49% legal and beneficial interest in the Joint Venture Gold
Property, subject to expenditure of $750,000 in exploration being spent by 3 August 2024.
Planned exploration activities include drilling beneath historic workings at the Telephone Line Prospect and
exploring a newly identified gold in soil anomaly along strike from Telephone Line (Panama Hat Project).
Historic rock chip samples at the Telephone Line Prospect returned high-grade gold, including sample PH0018
with 22.1g/t gold from ferruginous quartz vein mine spoils.
At the Crow Mountain Project, the focus will be on drilling IP chargeability anomalies near the Peel Fault and the
Princess Mine area. A recent rock chip sample CMRC025 at Crow Mountain returned 4.9g/t gold on the eastern
margin of an IP chargeability anomaly. Further analysis of 23 drill pulps from the historic ICK001 drillhole has been
submitted for a complete Rare Earth Element analysis.
Figure 3: Gravity plant at
Wolfram Camp.
Figure 4: Waste dump size at
Wolfram Camp.
Figure 5: Waste dump size at
Wolfram Camp.
Page 2
40 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
The achievement strengthens the partnership between
EQR and Sozo and signifies their shared commitment
to exploration and value creation in the NSW gold
tenements. No extensive work was completed, rather
planning of Stage 2 exploration to commence later this
year. An update on the projects remains the same as
follows.
Crow Mountain
A further 20 rock chip samples were taken across
the project area, predominantly targeting surface
expressions of historic
Induced Polarisation (IP)
Chargeability anomalies. Of note is rock chip sample
CMRC025 which returned 4.9g/t gold on the
eastern margin of an IP chargeability anomaly and
approximately 1,000m south-east of the Magnesite Hill
gold discovery. CMRC025 is located in the Woolowin
Group cherts and thereby provides strong support for
a drillhole testing an IP target east of the Peel Fault.
In addition to the grab sampling, 23 drill pulps from the
historic ICK001 drillhole were selected and have been
submitted for a complete Rare Earth Element analysis.
Panama Hat
Exploration focused on the Telephone Line Prospect,
where historic artisanal mine workings lie within a
structural corridor of over 300m in length. Previous
SOZO rock chip samples from these workings have
returned high grade gold as evidenced in sample
PH0018, which contains 22.1g/t gold from ferruginous
quartz vein mine spoils.
The corridor was targeted with detailed geological
mapping and soil samples. The mapping shows the
target corridor is associated with a sub vertical shear
zone trending to the north-east, while gold bearing
structures, commonly associated with quartz veins,
are located orthogonal and dip steeply back to the
southwest. 277 soil samples (-2mm fraction) were also
collected at a combination of 50m x 50m and 25m x
25m centres. As expected, a subtle gold response
was detected across the historic workings, however, a
stronger gold response has been located distal to the
workings. Further soil sampling is currently underway
to validate this distal gold anomaly.
Figure 24 – Location of EL6648.
EQ Resources Limited Annual Report 2023
41
Figure 25 - Panama Hat.
42 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
Tenement Schedule
In accordance with ASX Listing Rule 5.3.3, the following table is submitted with respect to tenements held by the
Company and its controlled entities:
ML4867 & ML4919 were renewed for a further 19 years during the reporting period (refer ASX Announcement
‘’Mt Carbine Mining lease renewed for 19 Years’ dated 24 March 2023). This renewal included a new landowner
agreement with Australian Wildlife Conservatory (AWC) and a submission of an initial Mine Plan for the first 5 years
of mining.
EQ Resources Limited Annual Report 2023
43
Corporate Activities
Collaboration with the European Raw Materials
Alliance
The Company was pleased to announce the signing
of a collaboration agreement with the European Raw
Materials Alliance (‘ERMA’) and ERMA has referred
to the Company in the ‘European Call for Action’
Report published on 16 May 2023 during the EU Raw
Materials Week held in Brussels, Belgium (Refer ASX
Announcement ‘EQR Collaboration with the European
Raw Materials Alliance’ dated 17 May 2023).
ERMA was launched on 29 September 2020 as
part of an Action Plan on Critical Raw Materials by
the European Commission and is a body corporate
supported by the European Institute of Innovation and
Technology (“EIT Raw Materials”). EIT Raw Materials
and ERMA are co-funded by the European Commission,
comprising more than 350 partners from all areas of
the knowledge triangle of industry, universities and
research and development in the raw materials sector.
The collaboration agreement has been signed after
an initial assessment by ERMA of EQR’s capabilities
and recent successes with the development and
reactivation of the Mt Carbine tungsten mine.
The aim of the agreement is to explore a potential
participation by EQR in the European tungsten
mining sector. ERMA provides EQR access to its wide
network of public and private institutions in the raw
materials sector, including financing structures to
support potential project investment in the future.
This entry point to get in touch with European parties
exploring tungsten mining production is highlighting
the significant experience gained from the recent
development at Mt Carbine.
MOU Signed with Masan High-Tech Materials
Memorandum of Understanding (‘MOU’) was signed
with EQR’s existing joint venture partner, CRONIMET
Australia Pty Ltd (‘Cronimet’), and Masan High-Tech
Materials Corporation (‘Masan’) in relation to the Mt
Carbine Tungsten Project. The MOU will establish a
working relationship based on reciprocity and mutual
benefit, exchanging knowledge and experiences
around tungsten exploration, mining, and processing,
potentially assessing new project opportunities, and
new product applications. The MOU is augmented
by an existing long-term offtake agreement the
Cronimet Group has signed with Masan, which will
see approximately 70% of Mt Carbine’s production for
the next four years allocated to Masan. The proposed
strategic partnership between EQR, CRONIMET and
Masan aims to continue Mt Carbine’s growth into a
world-class sustainable tungsten operation.
Dr. Franziska Brantner (State Secretary) and Dr. Markus Ederer
(German Ambassador) in back row, company representatives of
Cronimet, EQ Resources and Masan in front row.
Saloro S.L.U. Acquistion with $25 Million
Oaktree Investment
Subsequent to the end of the financial year, EQR
announced that it has agreed binding terms to acquire
leading European tungsten producer Saloro S.L.U.
from global investment manager, Oaktree.
This is a transformational acquisition for EQR which
will strengthen its relevance in the global tungsten
industry and enhance its capital marketing positioning.
As part of the transaction, global investment manager,
Oaktree will invest $24 million into EQR, through the
subscription of 278 million new ordinary shares at
$0.09 per share (representing a ~30% premium to the
15-day VWAP as at the date of the announcement).
Through this combination of operations, EQR will
become the largest tungsten concentrate producer
in the Western World, with a robust growth pipeline
across two top-tier mining jurisdictions (refer ASX
Announcement “EQR Acquires Leading European
Tungsten Producer, Saloro S.L.U., and Secures $25
Million Investment by Oaktree” dated 10 August 2023).
Financing Activities
$4.56 Million Share Placement
In October 2022 EQR completed a well-supported
share placement raising $4.56 million at $0.04 per
share, with one (1) free attaching unlisted option
for every four (4) new shares subscribed for and
issued, exercisable at $0.065 (6.5 cents). Following
shareholder approval, the Directors of the Company
finalised their subscription for $200,000
in the
placement (refer ASX Announcement “EQR Raises
$4.56 Million in a Well-Supported Placement” dated
31 October 2023).
44 EQ Resources Limited Annual Report 2023
Operating and Financial Review continued
Proceeds from the placement have been used to fund
the ongoing Mt Carbine expansion program as per
the BFS, additional drilling towards the open pit west
extension and exploration work related to the recently
identified geophysical and soil anomalies north of the
Andy White open pit.
Regal Resources Complementary Royalty Funding
In the first quarter of the 2023 calendar year, the
Company agreed non-binding terms with Regal
Resources Royalties Fund for a $10 million royalty-
based funding package to support the Mt Carbine
Tungsten Project’s development. The agreement
included negotiations for an additional $10 million
in the second stage. The funding involved a royalty
percentage of 3%, which can be bought back by EQR
after recovering the first-stage royalty. This buyback
option can be exercised before the 7th anniversary
of the definitive agreement’s execution. Additionally,
a payment of $2.75 million will reduce the royalty
percentage to 1.5%.
The definitive agreement was signed following the
successful completion of the technical, tax and legal
due diligence conducted by independent advisors
engaged by the parties. The $10 Million funding
package, received in early 2023, allowed for an
accelerated 2023 drilling program targeting the
Open Pit Western Extension and is intended to aid in
advancing the Project’s redevelopment.
Regal Funds Management Pty Limited manages the
Royalties Fund, which seeks to invest in natural and
renewable resource royalty investments to provide
income and growth while minimising risks associated
with mining activities.
EQR Completes First and Second Drawdown From
$6m Federal Grant
The Federal Government’s $6 million grant awarded
to EQR under the Critical Mineral Accelerator Initiative
(CMAI) has been utilised to support the development
programs defined in the Company’s updated BFS
‘Strong BFS Update
(refer ASX announcement
Delivers 47% Increase In NPV’ dated 22 May 2023).
This includes utilising historic mine waste and high-
grade resources mined from the Andy White open
pit (refer to ASX Announcement ‘43% Increase in Mt
Carbine Ore Reserves From Western Pit’ dated 18
May 2023). The $6 million grant is also contributing
towards the ongoing upgrade of the Gravity Plant and
additional resource drilling.
Tungsten bags ready to ship.
Previous CMAI site tour showcased the successful acceleration
of the Mt Carbine Tungsten Project.
EQ Resources Limited Annual Report 2023
45
EQR receives $2.3m through R&D Tax Refund
During the June 2023 quarter, EQR received a $2.3
million tax refund in support of the Company’s extensive
Research and Development (R&D) programs conducted
at its Mt Carbine Tungsten Mine, in preparation for
the Open Pit restart. The various optimisation trials,
comparisons of different technologies and equipment,
and selected modifications in the process flowsheet,
have proven very effective over the past 12 months
with the main process Key Performance Indicators
improving month by month. The R&D program has
been developed in close collaboration with Plotlogic,
our preferred global technology company that aims at
delivering highly accurate ore characterisation in real
time, enabling greater recovery, reducing waste and
enhancing geological models.
Some of the R&D activities conducted during the
period consisted of:
− Jig performance optimisation (including special
effort on ragging material and sizing);
− Air Jig test work for enhanced fines recovery;
− Magnetic separation test work;
− Smelting tests (external with Cronimet);
− Test of new equipment to reduce the wear/abrasion;
− VSI crusher trials;
− Vertical spindle pump trials;
− XRT Sorter optimisation for handling high-grade
open pit ore;
− Impurity removal through flotation; and Plotlogic
hyperspectral scanning of drill core and selected
ore samples.
Currently 90% of our drill core has been scanned on a
multispectral basis. The scanning recognises various
minerals including wolframite and will be utilised on a
larger basis in delineation of ore zones within the open
pit mining. Understanding of the mineralogy of Mt
Carbine assists in the interpretation of fluid flow and
temperature models.
Plotlogic sensor, scanning drill core.
Sample scan for Quartz vein and Wolframite rich ore.
46 EQ Resources Limited Annual Report 2023
Mineral Resources and Reserves Statement
Summary of Results of Annual Review of Resources and Reserves
An updated resource to the September 2022 Resource was released in May 2023 specifically targeting the grade
envelopes within the BFS open cut. The updated Resource Statement has also allowed an updated Reserve
Statement to be issued on 7 May 2023 with a larger pit and longer life mine.
Table 1: Mt Carbine Resource Estimate as of May, 2023
Mt Carbine Mineral Resources
Orebody
Low Grade Stockpile
In Situ (0.05-0.08%)
In Situ (+0.08%)
Total Indicated
Total Inferred
Total I +I Resources
Resource
Classification
Tonnes
(mt)
Grade
(WO3%)
WO3
(mtu)
Indicated
10.126
0.075%
759,450
Indicated
Inferred
Total
Total
Indicated
Inferred
Total
Total
2.75
0.83
3.58
13.71
18.06
10.68
28.74
30.94
11.51
42.45
0.07%
0.06%
0.07%
0.07%
0.30%
0.30%
0.30%
0.21%
0.28%
0.23%
178,517
53,789
232,306
991,756
5,405,905
3,217,311
8,623,212
6,343,868
3,271,100
9,614,968
EQ Resources Limited Annual Report 2023
47
Table 2: Mt Carbine Ore Reserve Estimate at May 2023
Mt Carbine Ore Reserves
Reserve Category
ROM Tonnes (mt)
WO3%
Contained WO3 (mtu)
Open Cut - Proved
Open Cut - Probable
Open Cut - Total
LGS - Proved
LGS - Probable
LGS - Total
Total - Proved
Total - Probable
Total
NOTES:
–
5.93
5.93
–
9.77
9.77
–
13.54
13.54
–
0.28%
0.28%
–
0.075%
0.075%
–
0.142%
0.142%
–
1,660,400
1,660,400
–
732,750
732,750
–
2,393,150
2,393,150
• Total estimates are rounded to reflect confidence and resource categorisation.
•
Classification of Mineral Resources incorporates the terms and definitions from the Australasian Code for Reporting Exploration Results,
Mineral Resources and Ore Reserves (JORC Code, 2012) published by the Joint Ore Reserve Committee (JORC).
• No uppercut was applied to individual assays for this resource, a lower cut of 0.05% was applied within the section
0.06-0.08% WO3 being designate as lower grade In-Situ. This is the grade werhe where Distrint Zones of mineralisation occur.
• Drilling used in this methodology was all diamond drilling with 1/2 core sent according to geological intervals to ALS for XRF15b analysis.
• Resource estimation was completed using the Kriging Methodology.
•
Indicated spacing is approximately 30m x 30m; Inferred in approximately 60m x 60m.
A comparison to the previous Ore Reserve estimate (as September 2022) is summarised below:
− Increase in Probable Reserves by 491,957 Mtu in a new larger pit.
− Increased in the open cut mine lift of 2.5 years for a total of 7 years of open cut mining and
− Strip Ratio remains excellent at 3.9:1 for the waste:ore ratio
The changes in open cut Ore Reserves are predominantly driven by changes in the Resource interpretation
(see ASX Announcement ‘Increased Tungsten in Updated Mt Carbine Mineral Resource’ dated 4 August 2022) with
significantly larger areas of lower grade tungsten included in the Resource Model. This is shown in the following
two figures which show the difference between the previous and current Resource models.
48 EQ Resources Limited Annual Report 2023
Competent Persons Statement
Competent Person’s Statement - Resources
Statements contained in this announcement relating to the Mt Carbine Project Mineral Resource Estimation, 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), Member No 310106. Mr Grove is a full-time
employee of the mineral resource consulting company “Measured Group”, who were contracted by EQ Resources
Limited to prepare an estimate of the Mineral Resource at 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 this information in this announcement in the form and context in which it appears.
EQ Resources’ exploration and Resource work is being managed by Mr Tony Bainbridge, AusIMM. Mr Bainbridge
is engaged as a contractor by the Company and is not “independent” within the meaning of the Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Mr Bainbridge has
sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and
to the activity which he is undertaking to qualify as a Competent Person as defined in JORC Code 2012.
The technical information contained in this announcement relating exploration results are based on, and fairly
represents, information compiled by Mr Bainbridge. Mr Bainbridge has verified and approved the data disclosed in
this release, including the sampling, analytical and test data underlying the information. The diamond core samples
were assayed at the ALS Laboratory in Brisbane, Australia. The mineral Resource estimate as shown in Annex 1
has been prepared by Measured Group. Mr Bainbridge has consented to the inclusion in this release of the matters
based on his compiled information in the form and context in which it appears in this announcement.
Competent Person’s Statement - Reserves
The information in this release relating to the Reserves Estimate is published and based on information compiled
by Mr Tony O’Connell, Principal Mining Consultant and Director of Optimal Mining Solutions Pty Ltd. Mr O’Connell
is a qualified Mining Engineer, (BE (Mining), University of Queensland), has over 24 years of experience and is a
member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr O’Connell has sufficient experience that
is relevant to the style of mineralisation and type of deposit under consideration and the activity being undertaken
to qualify as a Competent Person as defined in the JORC Code 2012. Mr O’Connell consents to the inclusion in the
release of the matters based on his information in the form and context in which it appears.
Neither Mr O’Connell, Measured Group Pty Ltd or Optimal Mining Solutions Pty Ltd has any material interest or
entitlement, direct or indirect, in the securities of EQ Resources Limited or any associated companies.
EQ Resources Limited Annual Report 2023 49
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 2023.
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
50 Directors’ Report
63 Consolidated Statement of Profit or Loss and Other Comprehensive Income
64 Consolidated Statement of Financial Position
65 Consolidated Statement of Cash Flows
66 Consolidated Statement of Changes in Equity
67 Notes to the Consolidated Financial Statements
99 Directors’ Declaration
100 Auditor’s Independence Declaration
101
Independent Auditor’s Report
50 EQ Resources Limited Annual Report 2023
ANNUAL Report June 2023
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 2023.
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
Zhui Pei Yeo, Non-executive Director
Company Secretary
Melanie Leydin
Principal Activities
The principal activities of the Group during the 2023 financial year focused on the:
Issue of 25,000,000 shares @ $0.040 per share
to
07/11/2022
25,000,000
$0.040
1,000,000
continued optimisation of the production processes and recoveries from the Mt Carbine Gravity and XRT
Sorter Plants 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;
securing funding for the Mt Carbine Project and undertaking activities to advance the Project, including
significant capital upgrades to plant and equipment to ensure the site’s preparedness for the
commencement of open cut operations;
the continuation of focused drilling programs to further define the Mt Carbine Tungsten resource;
Mining contract execution with Golding Contractors Pty Ltd for the commencement of the open-cut mining;
and
the continued assessment of the exploration potential of the Group’s tungsten tenements in Far North
Queensland whilst entering into a Farm-In and Joint Venture Agreement over 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
$3,716,846 (2022: loss of $6,063,051).
Dividends
No dividends were paid or proposed during the period.
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.
8
ANNUAL Report June 2023
Directors’ Report
Corporate Structure
Significant Changes
EQ Resources is a limited company that is incorporated and domiciled in Australia.
Significant changes in the state of affairs of the Group for the financial year were as follows:
(a) Additional drilling results along with the reinterpretation of the Resource Model and the successful
implementation of the XRT Ore Sorting Operations at lower grades resulted in a significant increase in
the estimated open cut Ore Reserve to 3.5mt and a 29% increase in contained WO3 to 1.161m mtu (refer
ASX “Material Increase in Mt Carbine Ore Reserve” dated 16 September 2022.
(b) The raising of $4.56 million in a well-supported share placement at $0.04 per share, with one (1) free
attaching unlisted option for every four (4) new shares subscribed for and issued, exercisable at $0.065
(6.5 cents). Following shareholder approval, the Directors of the Company finalised their subscription for
$200,000 in the placement (refer ASX Announcement “EQR Raises $4.56 Million in a Well-Supported
Placement” dated 31 October 2022).
(c)
Increase in contributed equity of $5,332,000 (before share issue costs):
Shares
Price
$
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 7 November 2022)
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 10 November
Issue of 47,670,615 shares @ $0.040 per share
to
10/11/2022
47,670,615
$0.040
1,906,825
2022)
2022)
2022)
Issue of 19,599,064 shares @ $0.040 per share
to
14/11/2022
19,599,064
$0.040
783,962
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 14 November
Issue of 16,730,321 shares @ $0.040 per share
to
15/11/2022
16,730,321
$0.040
669,213
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 15 November
Issue of 6,300,000 shares @ $0.040 per share to convertible
21/11/2022
6,300,000
$0.040
252,000
Issue of 5,000,000 shares @ $0.040 per share to sophisticated
01/02/2023
5,000,000
$0.040
200,000
note holders for annual interest payable on the convertible
notes (refer ASX announcement dated 21 November 2022)
shareholders, approved by shareholders on 25 January 2023,
as part of
the October 2022 placement
(refer ASX
announcement dated 1 February 2023)
exercise of unlisted options granted to Key Management
Personnel (refer ASX announcement dated 1 May 2023)
exercise of unlisted options granted to Key Management
Personnel (refer ASX announcement 16 May 2023)
Issue of 2,000,000 shares @ $0.040 per share upon the
01/05/2023
2,000,000
$0.040
80,000
Issue of 3,000,000 shares @ $0.060 per share upon the
16/05/2023
3,000,000
$0.060
180,000
Issue of 2,000,000 shares @ $0.040 per share upon the
26/06/2023
2,000,000
$0.040
80,000
exercise of unlisted options (refer ASX announcement dated 26
Issue of 3,000,000 shares @ $0.060 per share upon the
26/06/2023
3,000,000
$0.060
180,000
exercise of unlisted options (refer ASX announcement dated 26
June 2023)
June 2023)
TOTAL
5,332,000
9
EQ Resources Limited Annual Report 2023
51
ANNUAL Report June 2023
Directors’ Report
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) Additional drilling results along with the reinterpretation of the Resource Model and the successful
implementation of the XRT Ore Sorting Operations at lower grades resulted in a significant increase in
the estimated open cut Ore Reserve to 3.5mt and a 29% increase in contained WO3 to 1.161m mtu (refer
ASX “Material Increase in Mt Carbine Ore Reserve” dated 16 September 2022.
(b) The raising of $4.56 million in a well-supported share placement at $0.04 per share, with one (1) free
attaching unlisted option for every four (4) new shares subscribed for and issued, exercisable at $0.065
(6.5 cents). Following shareholder approval, the Directors of the Company finalised their subscription for
$200,000 in the placement (refer ASX Announcement “EQR Raises $4.56 Million in a Well-Supported
Placement” dated 31 October 2022).
(c)
Increase in contributed equity of $5,332,000 (before share issue costs):
Issue of 25,000,000 shares @ $0.040 per share
to
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 7 November 2022)
Issue of 47,670,615 shares @ $0.040 per share
to
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 10 November
2022)
Issue of 19,599,064 shares @ $0.040 per share
to
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 14 November
2022)
Issue of 16,730,321 shares @ $0.040 per share
to
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 15 November
2022)
Issue of 6,300,000 shares @ $0.040 per share to convertible
note holders for annual interest payable on the convertible
notes (refer ASX announcement dated 21 November 2022)
Issue of 5,000,000 shares @ $0.040 per share to sophisticated
shareholders, approved by shareholders on 25 January 2023,
(refer ASX
the October 2022 placement
as part of
announcement dated 1 February 2023)
Issue of 2,000,000 shares @ $0.040 per share upon the
exercise of unlisted options granted to Key Management
Personnel (refer ASX announcement dated 1 May 2023)
Issue of 3,000,000 shares @ $0.060 per share upon the
exercise of unlisted options granted to Key Management
Personnel (refer ASX announcement 16 May 2023)
Issue of 2,000,000 shares @ $0.040 per share upon the
exercise of unlisted options (refer ASX announcement dated 26
June 2023)
Issue of 3,000,000 shares @ $0.060 per share upon the
exercise of unlisted options (refer ASX announcement dated 26
June 2023)
Shares
Price
$
07/11/2022
25,000,000
$0.040
1,000,000
10/11/2022
47,670,615
$0.040
1,906,825
14/11/2022
19,599,064
$0.040
783,962
15/11/2022
16,730,321
$0.040
669,213
21/11/2022
6,300,000
$0.040
252,000
01/02/2023
5,000,000
$0.040
200,000
01/05/2023
2,000,000
$0.040
80,000
16/05/2023
3,000,000
$0.060
180,000
26/06/2023
2,000,000
$0.040
80,000
26/06/2023
3,000,000
$0.060
180,000
TOTAL
5,332,000
9
52 EQ Resources Limited Annual Report 2023
Directors’ Report continued
ANNUAL Report June 2023
Directors’ Report
(d) Non-binding terms agreed with Regal Resources Royalties on a first stage $10 million royalty-based
funding package for the Mt Carbine Tungsten Project, with parties intending to negotiate in good faith the
terms for an additional (second stage) $10 million. This funding package consists of a 3% royalty with a
buy-back clause after recovery of the first stage royalty (and prior to the 7th anniversary of the execution
of the definitive agreements) and payment of $2.75 million reducing the royalty to 1.5% (refer ASX
announcement “Complementary Royalty Funding for Mt Carbine Development” dated 21 October 2022).
The first $5 million drawdown was completed in in January 2023 with the second $5 million upon receipt
of final environmental permitting for the restarting of open pit mining operations (refer ASX announcement
“EQR Completes First Drawdown of $5M Royalty Funding for Mt Carbine Tungsten” dated 6 January
2023). The second $5M tranche draw down from Regal Resources Royalties was completed in March
2023 (refer ASX announcement “EQR Receives Second Tranche of Regal Royalty Payment” dated 31
March 2023).
(e) November 2022 Update of the Company’s Bankable Feasibility Study for the Mt Carbine Expansion
Program delivered an:
NPV, of $209.6 million (59% increase compared to initial BFS, December 2021);
IRR of 397%;
Payback period of 1.5 years; and
Life of Mine EBITDA of $324 million.
(Refer ASX announcement “Strong BFS Update Delivers 59% Increase in NPV” dated 9 November 2022)
A further update of the BFS, in the May 2023, resulted in the following strong Pre-Tax Economics*:
NPV8 of $307.1 million (47% increase in the November 2022 BFS Update of $209);
IRR of 477%; and
Life of Mine EBITDA of $450 million.
* Concentrate sales price basis US$340/mtu (mtu = metric tonne unit, 10kg) in 2023, with a long-term forecast average of US
$369/mtu (2024 – 2040) calculated using the average of the Roskill Base Case and High Case price level scenarios (see Chapter
16 of 2021 BFS).
ANNUAL Report June 2023
Directors’ Report
(f) First drawdown equalling to 30% of the awarded $6 million grant received from the Federal Government’s
Critical Minerals Accelerator Initiative (CMAI). The CMAI co-investment was utilised to implement the
scope defined in the Company’s Bankable Feasibility (refer ASX announcement “EQR Receives First
Draw Down from $6M Federal Grant” dated 2 December 2022).
The second draw down of $3.96 million was received as announced on 2 June 2023 (refer ASX
announcement “EQR Completes Second Draw Down from $6M Federal Grant).
(g) First assays from the Phase 2, 2022 diamond drilling program continue to confirm high-grade tungsten
mineralisation zones west of the Andy White Open Pit. The Iron Duke northern extension hole confirmed
high-grade Scheelite zones and marks a significant discovery located from soil anomalies (refer ASX
announcement “Drilling Results Highlight Significant Iron Duke Discovery and Potential for Additional Pit
Expansion” dated 13 February 2023).
Additional 4 holes from the Phase 2, 2022 diamond drilling program showed a significant size high-grade
mineralised system emerging 150m west of the updated Mt Carbine BFS Pit, remaining open along strike
and depth. Assays contain the highest per meter tungsten (WO3 contained) intersected outside the BFS
Pit with Hole EQ030 having 10-times the grade of the Open Pit Ore Reserve as reported (0.33% WO3)
(refer ASX Announcement “Drilling Confirms High-Grade Mineralised System in Western Extension”
dated 27 February 2023).
(h) Environmental Authority secured to resume open cut mining at Mt Carbine (refer ASX announcement
“EQR Secures Environmental Authority to Resume Open Pit Mining at Mt Carbine” dated 6 March 2023).
(i) Mt Carbine Mining Leases ML 4867 and ML 4919 were renewed for a further 19 years (refer ASX
announcement “Mt Carbine Mining Leases Renewed for 19 Years” dated 24 March 2023).
(j) Updated Mt Carbine Mineral Resource Estimate (MRE) confirms an increase of 64% metal contained in
Indicated Resources (In-situ), adding ~2.11 million mtu. Global MRE inventory went up by 28.6% for a
total increase of 2,136,338 mtu. The extension drilling around the Dyke West Zone and Northern Iron
Duke Zone was principally responsible for the significant increase in metal inventory at Mt Carbine (refer
ASX announcement “64% Increase of Mt Carbine Indicated Resources (In-Situ)” dated 4 April 2023).
(k) Updated Ore Reserves for the Mt Carbine Tungsten Project following the successful 2022 drilling
campaigns and corresponding update of the Mt Carbine Mineral Resource Estimate formed the basis for
the significant increase in the estimated open cut Ore Reserves tonnage and contained WO3 metal (refer
ASX announcement “43% Increase in Mt Carbine Ore Reserves from Western Pit Extension” dated 18
May 2023).
(Refer ASX announcement “Strong BFS Update delivers 47% Increase in NPV” dated 22 May 2023.)
(l) Mining Services Agreement executed with Golding Contractors Pty Ltd for the restart of open pit mining
operations at Mt Carbine (refer ASX announcement “EQR & Golding Execute Mining Contract for Mt
Carbine” dated 29 May 2023).
(m) $2.3 million tax R&D Tax refund received as a result of the Company’s extensive R&D programs
conducted in preparation for the Open Cut restart from the end of June 2023 (refer ASX announcement
“EQR Receives $2.3M through R&D Tax Refund” dated 20 June 2023).
(n) First blast on 25 June 2023 restarts Open Cut production at Mt Carbine (refer ASX announcement “First
Blast at Mt Carbine Restarts Open Cut Production” dated 26 June 2023).
10
11
EQ Resources Limited Annual Report 2023
53
ANNUAL Report June 2023
Directors’ Report
(f) First drawdown equalling to 30% of the awarded $6 million grant received from the Federal Government’s
Critical Minerals Accelerator Initiative (CMAI). The CMAI co-investment was utilised to implement the
scope defined in the Company’s Bankable Feasibility (refer ASX announcement “EQR Receives First
Draw Down from $6M Federal Grant” dated 2 December 2022).
The second draw down of $3.96 million was received as announced on 2 June 2023 (refer ASX
announcement “EQR Completes Second Draw Down from $6M Federal Grant).
(g) First assays from the Phase 2, 2022 diamond drilling program continue to confirm high-grade tungsten
mineralisation zones west of the Andy White Open Pit. The Iron Duke northern extension hole confirmed
high-grade Scheelite zones and marks a significant discovery located from soil anomalies (refer ASX
announcement “Drilling Results Highlight Significant Iron Duke Discovery and Potential for Additional Pit
Expansion” dated 13 February 2023).
Additional 4 holes from the Phase 2, 2022 diamond drilling program showed a significant size high-grade
mineralised system emerging 150m west of the updated Mt Carbine BFS Pit, remaining open along strike
and depth. Assays contain the highest per meter tungsten (WO3 contained) intersected outside the BFS
Pit with Hole EQ030 having 10-times the grade of the Open Pit Ore Reserve as reported (0.33% WO3)
(refer ASX Announcement “Drilling Confirms High-Grade Mineralised System in Western Extension”
dated 27 February 2023).
(h) Environmental Authority secured to resume open cut mining at Mt Carbine (refer ASX announcement
“EQR Secures Environmental Authority to Resume Open Pit Mining at Mt Carbine” dated 6 March 2023).
(i) Mt Carbine Mining Leases ML 4867 and ML 4919 were renewed for a further 19 years (refer ASX
announcement “Mt Carbine Mining Leases Renewed for 19 Years” dated 24 March 2023).
(j) Updated Mt Carbine Mineral Resource Estimate (MRE) confirms an increase of 64% metal contained in
Indicated Resources (In-situ), adding ~2.11 million mtu. Global MRE inventory went up by 28.6% for a
total increase of 2,136,338 mtu. The extension drilling around the Dyke West Zone and Northern Iron
Duke Zone was principally responsible for the significant increase in metal inventory at Mt Carbine (refer
ASX announcement “64% Increase of Mt Carbine Indicated Resources (In-Situ)” dated 4 April 2023).
(k) Updated Ore Reserves for the Mt Carbine Tungsten Project following the successful 2022 drilling
campaigns and corresponding update of the Mt Carbine Mineral Resource Estimate formed the basis for
the significant increase in the estimated open cut Ore Reserves tonnage and contained WO3 metal (refer
ASX announcement “43% Increase in Mt Carbine Ore Reserves from Western Pit Extension” dated 18
May 2023).
(l) Mining Services Agreement executed with Golding Contractors Pty Ltd for the restart of open pit mining
operations at Mt Carbine (refer ASX announcement “EQR & Golding Execute Mining Contract for Mt
Carbine” dated 29 May 2023).
(m) $2.3 million tax R&D Tax refund received as a result of the Company’s extensive R&D programs
conducted in preparation for the Open Cut restart from the end of June 2023 (refer ASX announcement
“EQR Receives $2.3M through R&D Tax Refund” dated 20 June 2023).
(n) First blast on 25 June 2023 restarts Open Cut production at Mt Carbine (refer ASX announcement “First
Blast at Mt Carbine Restarts Open Cut Production” dated 26 June 2023).
11
54 EQ Resources Limited Annual Report 2023
Directors’ Report continued
ANNUAL Report June 2023
Directors’ Report
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
20,033,600
55,431,559
5,991,471
71,482,310
10,312,500
4,312,500
4,312,500
4,312,500
-
-
-
-
Directors’ interests in shares, options and performance rights as at 30 June 2023 are set out under Section (e)
of the Remuneration Report.
Company Secretary
Company Secretary:
Melanie Leydin
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. Following Leydin Freyer’s acquisition by Vistra Australia in
November 2021, Ms Leydin now holds the position of Australian Managing Director of Vistra Australia which
provides outsourced Company Secretarial and accounting services to public and private companies across a
host of industries.
Meetings of Directors
During the financial year, six (6) Board Meetings and two (2) Audit Committee Meetings were held.
the parent company.
Director
Meetings Eligible to Attend
Meetings Attended
O. Kleinhempel
S. Layton
R.D. Morrow
Z.P. Yeo
8
8
8
8
7
8
8
8
ANNUAL Report June 2023
Directors’ Report
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):
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
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
Director
O. Kleinhempel
S. Layton
R.D. Morrow
Z.P. Yeo
Share Options and Performance Rights
No Share Options nor Performance Rights were granted during the reporting period, as remuneration, to Key
Management Personnel of the Group.
There are 130,782,346 unissued ordinary shares of EQ Resources under vested options at the date of this
report, 33,250,000 of which relate to options issued to Key Management Personnel. Refer to Remuneration
Report for further details.
Remuneration Report - Audited
This report for the year ended 30 June 2023 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
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.
12
13
EQ Resources Limited Annual Report 2023
55
ANNUAL Report June 2023
Directors’ Report
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):
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
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
Director
O. Kleinhempel
S. Layton
R.D. Morrow
Z.P. Yeo
Share Options and Performance Rights
No Share Options nor Performance Rights were granted during the reporting period, as remuneration, to Key
Management Personnel of the Group.
There are 130,782,346 unissued ordinary shares of EQ Resources under vested options at the date of this
report, 33,250,000 of which relate to options issued to Key Management Personnel. Refer to Remuneration
Report for further details.
Remuneration Report - Audited
This report for the year ended 30 June 2023 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.
13
56 EQ Resources Limited Annual Report 2023
Directors’ Report continued
ANNUAL Report June 2023
Directors’ Report
(a) Policy Used to Determine the Nature and Amount of Remuneration
(c) Details 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 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.
Voting and Comments made at the Group’s 2022 Annual General Meeting
The Group received votes against its Remuneration Report for the 2022 financial year however did not
receive any specific feedback on its remuneration practices at the 2022 Annual General Meeting or during
the year.
(b) Key Management Personnel
The following persons were Key Management Personnel of the Group during the 2023 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
Interim Chief Executive Officer &
Senior Technical Advisor
Chief Executive Officer
4 May 2020
1 April 2021
-
-
-
-
-
-
14
ANNUAL Report June 2023
Directors’ Report
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 2023 are set out in
the following tables:
Short-term benefits
Share-based payments
Non-
monetary
benefits
Post-
employment
benefits
Leave
$
provisions $
Shares
$
$
Performance
rights and
options1
$
%
Total
Performance
$
based
K.B. MacNeill
300,000
15,661
25,991
25,413
367,065
6.9%
492,000
15,661
25,991
120,830
654,482
Salary &
fees
$
48,000
48,000
48,000
48,000
48,000
48,000
48,000
48,000
2023
Directors
O. Kleinhempel
S. Layton
R. Morrow
Z.P. Yeo
Executives
Total KMP
compensation
2022
Directors
O. Kleinhempel
S. Layton
R. Morrow
Z.P. Yeo
Executives
K.B. MacNeill
Total KMP
compensation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term benefits
Share-based payments
Salary &
fees
$
Non-
monetary
benefits
$
Leave
provisions
Post-
employment
benefits
$
$
Shares
$
Performance
rights and
options1
$
Total
Performance
$
based
%
98,280
39,312
39,312
39,312
146,280
87,312
87,312
87,312
67.2%
45.0%
45.0%
45.0%
37,967
19,150
19,150
19,150
85,967
67,150
67,150
67,150
44.2%
28.5%
28.5%
28.5%
300,000
105,004
23,149
76,167
504,320
15.1%
492,000
105,004
23,149
292,383
912,536
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.
(d) Cash Bonuses
No cash bonuses were paid during the period.
(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.
15
EQ Resources Limited Annual Report 2023
57
ANNUAL Report June 2023
Directors’ Report
(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 2023 are set out in
the following tables:
Short-term benefits
Share-based payments
Salary &
fees
$
Non-
monetary
benefits
$
Leave
provisions $
Post-
employment
benefits
$
Performance
rights and
options1
$
Shares
$
Total
$
%
Performance
based
2023
Directors
O. Kleinhempel
S. Layton
R. Morrow
Z.P. Yeo
Executives
48,000
48,000
48,000
48,000
-
-
-
-
-
-
-
-
K.B. MacNeill
300,000
15,661
25,991
Total KMP
compensation
492,000
15,661
25,991
-
-
-
-
-
-
-
-
-
-
-
-
37,967
19,150
19,150
19,150
85,967
67,150
67,150
67,150
44.2%
28.5%
28.5%
28.5%
25,413
367,065
6.9%
120,830
654,482
Short-term benefits
Share-based payments
Salary &
fees
$
Non-
monetary
benefits
$
Leave
provisions
$
Post-
employment
benefits
$
Performance
rights and
options1
$
Shares
$
Total
$
%
Performance
based
48,000
48,000
48,000
48,000
-
-
-
-
-
-
-
-
300,000
105,004
23,149
492,000
105,004
23,149
-
-
-
-
-
-
-
-
-
-
-
98,280
39,312
39,312
39,312
146,280
87,312
87,312
87,312
67.2%
45.0%
45.0%
45.0%
76,167
504,320
15.1%
292,383
912,536
2022
Directors
O. Kleinhempel
S. Layton
R. Morrow
Z.P. Yeo
Executives
K.B. MacNeill
Total KMP
compensation
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.
(d) Cash Bonuses
No cash bonuses were paid during the period.
(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.
15
58 EQ Resources Limited Annual Report 2023
Directors’ Report continued
ANNUAL Report June 2023
Directors’ Report
(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 2023
Directors
O. Kleinhempel
S. Layton
R. Morrow
Z.P. Yeo
Executives
K.B. MacNeill
Balance at
1 July 2022
Granted as
compensation
Received on
exercise of
Performance
Rights
Other
Changes
Balance at
30 June 2023
Balance held
nominally
18,783,600
54,181,559
4,422,000
70,232,310
439,989
148,059,458
-
-
-
-
-
-
-
-
-
-
1,250,000
20,033,600
1,250,000
55,431,559
1,569,471
5,991,471
1,250,000
71,482,310
5,000,000
(1,278,200)
4,161,789
5,000,000
3,721,800
157,100,729
-
-
-
-
-
-
(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 2022
Granted
Exercised
Balance
Total vested
and
exercisable
Total unvested
and unexercisable
30 June 2023
Directors
O. Kleinhempel
10,000,000
S. Layton
R. Morrow
Z.P. Yeo
Executives
4,000,000
4,000,000
4,000,000
312,500
312,500
312,500
312,500
-
-
-
-
10,312,500
10,312,500
4,312,500
4,312,500
4,312,500
4,312,500
4,312,500
4,312,500
K.B. MacNeill
15,000,000
-
5,000,000
10,000,000
10,000,000
37,000,000
1,250,000
5,000,000
33,250,000
33,250,000
-
-
-
-
-
-
(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
No other transactions were entered into with Key Management Personnel during the financial year
other than those disclosed in Note 33 (d).
(f) Options and Performance Rights Granted as Remuneration
No Options or Performance Rights were granted by the Company to Key Management Personnel of the
Group during the financial year as part of their remuneration.
(g) Equity Instruments Issued on Exercise of Remuneration Options or Rights
5,000,000 equity instruments were issued during the 2023 financial year to Key Management Personnel
as a result of options or rights exercised that had previously been granted as remuneration.
ANNUAL Report June 2023
Directors’ Report
No equity instruments were issued to the Directors of the Group 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.
There is a written agreement with Mr Kleinhempel dated 12 August 2019 in his role as 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 2023 financial year.
There is a written agreement with Mr Layton dated 9 November 2017 in his role as Non-executive Director
of the Company. Cash payments and benefits totalling $48,000 were paid to Mr Layton during the 2023
financial year. The payments were made through Bodie Investments Pty Ltd, a company in which Mr
Layton has a substantial interest.
There is a written agreement with Mr Morrow dated 22 February 2021 in his role as Non-executive Director
of the Company. Payments and benefits totalling $48,000 were paid to Mr Morrow during the 2023
There is a written agreement with Mr Yeo dated 12 August 2019 in his role as Non-executive Director of
the Company. Cash payments and benefits totalling $48,000 were paid to Mr Yeo during the 2023
Directors
O. Kleinhempel
S. Layton
R.D. Morrow
financial year.
Z.P. Yeo
financial year.
Executives
K.B. MacNeill
financial year.
There was a written 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 non-monetary benefits totalling $367,065 were received by Mr MacNeill during the 2023
(i) EQ Resources’ Financial Performance
EQ Resources’ financial performance for the five years to 30 June 2023 is summarised below and the
relationship between results and performance is discussed.
Year ended
Measure
2023
2022
2021
2020
2019
Net profit / (loss) after tax
Net assets
(3,716,846)
(6,063,051)
(4,574,191)
(3,015,680)
3,808,863
16,304,564
14,317,218
16,725,734
14,936,296
10,905,040
Cash and cash equivalents
5,335,596
1,723,426
3,504,721
2,989,859
217,962
Cash flows from operating activities
(1,392,628)
(3,112,770)
(3,816,722)
(2,948,321)
(1,627,127)
EBITDA
Share price at 30 June
Basic earnings / (loss) per share
Cents
(829,258)
(4,478,339)
(3,947,550)
(2,789,350)
3,847,034
$0.070
(0.26)
$0.047
(0.45)
$0.028
(0.39)
$0.028
(0.30)
$0.031
0.67
$
$
$
$
$
$
16
17
EQ Resources Limited Annual Report 2023
59
ANNUAL Report June 2023
Directors’ Report
No equity instruments were issued to the Directors of the Group 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 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 2023 financial year.
S. Layton
There is a written agreement with Mr Layton dated 9 November 2017 in his role as Non-executive Director
of the Company. Cash payments and benefits totalling $48,000 were paid to Mr Layton during the 2023
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 Non-executive Director
of the Company. Payments and benefits totalling $48,000 were paid to Mr Morrow during the 2023
financial year.
Z.P. Yeo
There is a written agreement with Mr Yeo dated 12 August 2019 in his role as Non-executive Director of
the Company. Cash payments and benefits totalling $48,000 were paid to Mr Yeo during the 2023
financial year.
Executives
K.B. MacNeill
There was a written 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 non-monetary benefits totalling $367,065 were received by Mr MacNeill during the 2023
financial year.
(i) EQ Resources’ Financial Performance
EQ Resources’ financial performance for the five years to 30 June 2023 is summarised below and the
relationship between results and performance is discussed.
Year ended
Measure
2023
2022
2021
2020
2019
Net profit / (loss) after tax
Net assets
Cash and cash equivalents
Cash flows from operating activities
EBITDA
Share price at 30 June
$
$
$
$
$
$
Basic earnings / (loss) per share
Cents
(3,716,846)
(6,063,051)
(4,574,191)
(3,015,680)
3,808,863
16,304,564
14,317,218
16,725,734
14,936,296
10,905,040
5,335,596
1,723,426
3,504,721
2,989,859
217,962
(1,392,628)
(3,112,770)
(3,816,722)
(2,948,321)
(1,627,127)
(829,258)
(4,478,339)
(3,947,550)
(2,789,350)
3,847,034
$0.070
(0.26)
$0.047
(0.45)
$0.028
(0.39)
$0.028
(0.30)
$0.031
0.67
17
60 EQ Resources Limited Annual Report 2023
Directors’ Report continued
ANNUAL Report June 2023
Directors’ Report
Financial Performance
The loss for the consolidated Group for the financial year after tax amounted to $3,716,846 (2022: loss of
$6,063,051). This result was primarily brought about by an ~111% increase in revenues and other income
with only a ~37% increase in total expenses.
The Group has created value for shareholders through:
its continued focus on optimising production and recoveries from the Mt Carbine Retreatment and XRT
Sorter Plants;
ongoing investment in drilling programs to further define the Mt Carbine Tungsten Resource and
Reserves; and
delivery of strong pre-tax economics from the May 2023 Update of the Bankable Feasibility Study
which focused on the high-grade ore from the Company’s 100% owned Andy White Open Pit,
supplemented by the Low-Grade Stockpile; and
Commencement of open cut mining operations from the Andy White Open Pit following the Mining
Contract execution with Golding Contractors Pty Ltd for the restart of open pit operations in late June
2023.
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 2023 financial year with no
impairments recognised, resulting in exploration and evaluation expenses of $3,469,157, before
amortisation and R&D Tax Offset, being capitalised for the 2023 financial year. The carrying value of the
exploration assets as at 30 June 2023 is $14,273,131 (2022: $12,598,157).
At 30 June 2023, the Group had a net working capital deficit of $13,978,417 (2022: $4,090,968 deficit).
The deficit in net working capital is predominately due to the Company funding its capital growth initiatives
via short-term financing facilities such as equipment leases, offtake advance extension, government
grants and trade payables.
It should be noted that:
- Whilst the offtake advance facility of $4,901,961 is classified as a current liability, due to the Company
not having an unconditional right to defer settlement for at least 12 months after reporting date, it is
scheduled to be repaid over the life of the joint venture between EQ Resources Limited and Cronimet
Australia Pty Ltd rather than within the next 12 months as depicted on the Statement of Financial
Position; and
- The Convertible Notes are classified as a current liability of $3,494,215 due to their expiry in
September 2023 along with the note holders having an option to convert into cash or shares. The
Company believes there is a high probability that the holders will convert to shares upon expiry
thereby converting this liability into equity.
With these two factors taken into consideration the net working capital deficit for the consolidated entity
reduces to $4,201,981.
During the year, the Company’s issued share capital increased by $5,332,000 (before share issue costs)
due to a capital raising in October 2022 and the conversion of 10,000,000 convertible notes in the first 6
months of 2023.
ANNUAL Report June 2023
Directors’ Report
Indemnification
legal proceedings.
Insurance Premiums
Indemnification and Insurance of Officers and Auditors
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
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.
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:
Amounts paid or payable to Nexia Melbourne Audit Pty Ltd
Audit-related services
- Audit services
Taxation services
Amounts paid or payable to Nexia Melbourne Pty Ltd
- Tax compliance services (tax returns)
- Other tax advice
2023
$
2022
$
88,680
65,100
16,700
-
105,380
13,000
-
78,100
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.
18
19
EQ Resources Limited Annual Report 2023
61
ANNUAL Report June 2023
Directors’ Report
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.
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
2023
$
2022
$
88,680
65,100
16,700
-
105,380
13,000
-
78,100
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.
19
62 EQ Resources Limited Annual Report 2023
Directors’ Report continued
ANNUAL Report June 2023
Directors’ 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 28h day of September 2023 in accordance with a resolution of Directors.
[Insert Signature]
Oliver Kleinhempel
Non-executive Chairman
20
ANNUAL Report June 2023
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 2023
Revenue
Other income
Total revenue & other income
Administration expenses
Consultant expenses
Depreciation
Amortisation – deferred exploration & evaluation
Development and testwork costs
Exploration expenses written-off
ESG initiatives
Finance costs
Foreign exchange gains (losses)
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
Note
2
2
9
10
28
3
14
14
2023
$
5,138,414
7,981,238
13,119,652
(1,077,473)
(450,804)
(1,292,283)
(131,796)
(710,998)
(3,187)
(45,540)
(1,491,341)
(221,964)
(276,104)
(87,946)
2022
$
4,072,177
2,159,086
6,231,263
(783,403)
(121,490)
(866,847)
(72,745)
(462,779)
(3,868)
-
(643,185)
(397,138)
(135,303)
(36,421)
(4,547,603)
(3,950,231)
(5,248,052)
(4,047,291)
(674,837)
(406,687)
(169,496)
(411,648)
(287,224)
(76,674)
(16,836,111)
(12,296,247)
(3,716,459)
(6,064,984)
-
-
(3,716,459)
(6,064,984)
(387)
1,933
(3,716,846)
(6,063,051)
Cents
(0.26)
(0.24)
Cents
(0.45)
(0.42)
21
ANNUAL Report June 2023
Consolidated Statement of Profit or Loss and Other Comprehensive Income
EQ Resources Limited Annual Report 2023
63
Consolidated Statement of Profit or Loss
Consolidated Statement of Profit or Loss and Other
and Other Comprehensive Income
Comprehensive Income
For the year ended 30 June 2023
For the Year ended 30 June 2023
Revenue
Other income
Total revenue & other income
Administration expenses
Consultant expenses
Depreciation
Amortisation – deferred exploration & evaluation
Development and testwork costs
Exploration expenses written-off
ESG initiatives
Finance costs
Foreign exchange gains (losses)
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
Note
2
2
9
10
28
3
14
14
2023
$
5,138,414
7,981,238
13,119,652
(1,077,473)
(450,804)
(1,292,283)
(131,796)
(710,998)
(3,187)
(45,540)
(1,491,341)
(221,964)
(276,104)
(87,946)
2022
$
4,072,177
2,159,086
6,231,263
(783,403)
(121,490)
(866,847)
(72,745)
(462,779)
(3,868)
-
(643,185)
(397,138)
(135,303)
(36,421)
(4,547,603)
(3,950,231)
(5,248,052)
(4,047,291)
(674,837)
(406,687)
(169,496)
(411,648)
(287,224)
(76,674)
(16,836,111)
(12,296,247)
(3,716,459)
(6,064,984)
-
-
(3,716,459)
(6,064,984)
(387)
1,933
(3,716,846)
(6,063,051)
Cents
(0.26)
(0.24)
Cents
(0.45)
(0.42)
21
64 EQ Resources Limited Annual Report 2023
ANNUAL Report June 2023
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
As at 30 June 2023
Consolidated Statement of Financial Position
For the Year ended 30 June 2023
Current Assets
Cash assets
Trade and other receivables
Prepayments
Inventory
Financial assets
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
Convertible notes
Financial liabilities
Contract liability – offtake
Contract liability - sublease
Total Current Liabilities
Non-Current Liabilities
Employee benefits
Lease liability
Convertible notes
Financial liabilities
Contract liability - sublease
Other borrowings
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated profit / (loss)
Total Equity
Note
21(b)
7
7
4
5
8
9
4
10, 19
5
11, 27
29
25, 27
13
24
22
22
29
25, 27
13
24
22
23
2023
$
2022
$
5,335,596
3,933,612
634,064
877,740
815,649
1,723,426
2,323,599
632,292
876,438
-
11,596,661
5,555,755
4,487,440
14,014,956
8,213,656
1,081,292
7,015,995
6,812,875
14,273,131
10,803,974
2,560,468
5,543
43,549,651
25,719,679
55,146,312
31,275,434
11,309,854
5,026,531
439,919
910,822
3,494,215
1,369,196
4,901,961
1,768,851
282,397
665,754
-
-
3,266,190
405,851
24,194,818
9,646,723
31,868
1,176,523
-
11,787,921
-
1,650,618
15,418
1,335,829
3,004,651
-
1,432,259
1,523,336
14,646,930
7,311,493
38,841,748
16,958,216
16,304,564
14,317,218
12
27,222,060
22,192,705
3,523,413
2,848,576
(14,440,909)
(10,724,063)
16,304,564
14,317,218
ANNUAL Report June 2023
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
For the Year ended 30 June 2023
Note
2023
$
2022
$
Net Cash Flows Used in Operating Activities
21(a)
(1,392,628)
(3,112,770)
Proceeds from government COVID-19 relief packages
Cash Flows from Operating Activities
Proceeds from sales to customers
Proceeds from R & D tax offset
Proceeds from diesel fuel rebate
Proceeds from grants
Proceeds from other sources
Payment to suppliers and employees
Interest paid
Interest paid for lease liabilities
Interest received
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
Payment of loan to other entities (unincorporated joint venture)
Proceeds from release of other security deposits
Payments for the purchase of tenements
Payments / proceeds for tenement security deposits
Net Cash Flows Used in Investing Activities
Cash Flows from Financing Activities
Proceeds from the issue of shares
Proceeds from the issue of convertible notes
Payments for share / convertible note issue costs
Proceeds from long-term loan facilities
Proceeds from short-term loan facilities (unincorporated joint venture)
Proceeds from short-term loan facilities (other related parties)
Payments for lease liabilities
Payments for loans and borrowing cost
Proceeds from offtake advance extension
Proceeds from working capital loan (unincorporated joint venture)
Proceeds from prepayments for sales of concentrate and quarry materials
(16,499,915)
(10,120,348)
(4,293,175)
(3,350,052)
(3,085,926)
(3,098,868)
118,291
(3,694,544)
(10,955,354)
(6,444,565)
6,236,356
2,346,937
271,989
5,983,000
307,160
(55,834)
17,679
4,812,000
224,307
10,000,000
100,000
(289,658)
(317,689)
1,482,960
-
-
-
-
-
-
-
-
-
4,809,948
1,501,199
229,063
451,000
-
44,436
(4,185)
(25,278)
1,395
4,100
255
6,000,000
(302,422)
1,500,000
(93,729)
689,266
-
-
-
-
-
-
-
-
-
Net Cash Flows from Financing Activities
16,011,920
7,793,115
Net (decrease)/increase in cash held
Add opening cash brought forward
Effect of movement in exchange rates on cash held
3,663,939
1,723,426
(51,769)
(1,764,220)
3,504,721
(17,075)
Closing Cash Carried Forward
21(b)
5,335,596
1,723,426
22
23
EQ Resources Limited Annual Report 2023
65
ANNUAL Report June 2023
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
Consolidated Statement of Cash Flows
For the Year ended 30 June 2023
Cash Flows from Operating Activities
Proceeds from sales to customers
Proceeds from R & D tax offset
Proceeds from diesel fuel rebate
Proceeds from grants
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
2023
$
2022
$
6,236,356
2,346,937
271,989
5,983,000
-
307,160
4,809,948
1,501,199
229,063
451,000
-
44,436
(16,499,915)
(10,120,348)
-
(55,834)
17,679
(4,185)
(25,278)
1,395
Net Cash Flows Used in Operating Activities
21(a)
(1,392,628)
(3,112,770)
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
Payment of loan to other entities (unincorporated joint venture)
Proceeds from release of other security deposits
Payments for the purchase of tenements
Payments / proceeds for tenement security deposits
Net Cash Flows Used in Investing Activities
Cash Flows from Financing Activities
Proceeds from the issue of shares
Proceeds from the issue of convertible notes
Payments for share / convertible note issue costs
Proceeds from long-term loan facilities
Proceeds from short-term loan facilities (unincorporated joint venture)
Proceeds from short-term loan facilities (other related parties)
Payments for lease liabilities
Payments for loans and borrowing cost
Proceeds from offtake advance extension
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
(4,293,175)
(3,350,052)
(3,085,926)
(3,098,868)
118,291
(3,694,544)
-
-
-
-
-
4,100
-
255
(10,955,354)
(6,444,565)
4,812,000
-
224,307
10,000,000
100,000
-
6,000,000
(302,422)
-
-
-
1,500,000
(289,658)
(317,689)
1,482,960
-
-
(93,729)
-
689,266
-
-
16,011,920
7,793,115
3,663,939
1,723,426
(51,769)
(1,764,220)
3,504,721
(17,075)
Closing Cash Carried Forward
21(b)
5,335,596
1,723,426
23
66 EQ Resources Limited Annual Report 2023
ANNUAL Report June 2023
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
For the year ended 30 June 2023
For the Year ended 30 June 2023
Attributable to the Shareholders of EQ Resources Limited
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidated
At 1 July 2021
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
At 1 July 2022
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
Issued Capital
$
Accumulated
Losses
$
Reserves
$
20,603,915
(4,661,012)
782,831
-
-
-
-
(6,064,984)
-
1,933
(6,063,051)
Total Equity
$
16,725,734
(6,064,984)
-
1,933
(6,063,051)
2,004,100
(415,310)
2,065,745
3,654,535
14,317,218
14,317,218
(3,716,459)
-
(387)
(3,716,846)
5,332,000
(302,645)
674,837
5,704,192
-
-
-
-
-
-
2,065,745
2,065,745
2,848,576
-
-
-
-
-
-
674,837
674,837
-
-
-
-
-
-
-
-
2,004,100
(415,310)
-
5,332,000
(302,645)
-
22,192,705
(10,724,063)
2,848,576
-
-
-
-
(3,716,459)
-
(387)
(3,716,846)
Total transactions with owners in their capacity as owners
1,588,790
Balance at 30 June 2022
22,192,705
(10,724,063)
Total transactions with owners in their capacity as owners
5,029,355
Balance at 30 June 2023
27,222,060
(14,440,909)
3,523,413
16,304,564
24
25
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
(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 2023, the consolidated entity incurred a total comprehensive loss of
$3,716,846 (2022: loss of $6,063,051), incurred cash outflows from operating activities of $1,392,628
(2022: $3,112,770) and had a net working capital deficit of $12,598,157 (2022: $4,090,968 deficit). The
deficit in net working capital is predominately due to the Company funding its capital growth initiatives via
short-term financing facilities such as equipment leases, offtake advance extension, government grants
and trade payables.
It should be noted that:
- Whilst the offtake advance facility of $4,901,961 is classified as a current liability, due to the Company
not having an unconditional right to defer settlement for at least 12 months after reporting date, it is
scheduled to be repaid over the life of the joint venture between EQ Resources Limited and Cronimet
Australia Pty Ltd rather than within the next 12 months as depicted on the Statement of Financial
Position; and
- The Convertible Notes are classified as a current liability of $3,494,215 due to their expiry in
September 2023 along with the note holders having an option to convert into cash or shares. The
Company believes there is a high probability that the holders will convert to shares upon expiry
thereby converting this liability into equity.
With these two factors taken into consideration the net working capital deficit for the consolidated entity
reduces to $4,201,981.
The ability of the Company to continue to adopt the going concern assumption is based upon:
- The commencement of open-cut mining operations in late June 2023 with increased volume and
higher grade material resulting in strong positive cashflows. This assumption is supported by the Mt
Carbine Operations achieving daily concentrate production records in-line with he open-cut ramp up
scheduled in September 2023; along with
- Continued income stream from the Mt Carbine Quarrying operations.
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.
EQ Resources Limited Annual Report 2023
67
ANNUAL Report June 2023
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 2023, the consolidated entity incurred a total comprehensive loss of
$3,716,846 (2022: loss of $6,063,051), incurred cash outflows from operating activities of $1,392,628
(2022: $3,112,770) and had a net working capital deficit of $12,598,157 (2022: $4,090,968 deficit). The
deficit in net working capital is predominately due to the Company funding its capital growth initiatives via
short-term financing facilities such as equipment leases, offtake advance extension, government grants
and trade payables.
It should be noted that:
- Whilst the offtake advance facility of $4,901,961 is classified as a current liability, due to the Company
not having an unconditional right to defer settlement for at least 12 months after reporting date, it is
scheduled to be repaid over the life of the joint venture between EQ Resources Limited and Cronimet
Australia Pty Ltd rather than within the next 12 months as depicted on the Statement of Financial
Position; and
- The Convertible Notes are classified as a current liability of $3,494,215 due to their expiry in
September 2023 along with the note holders having an option to convert into cash or shares. The
Company believes there is a high probability that the holders will convert to shares upon expiry
thereby converting this liability into equity.
With these two factors taken into consideration the net working capital deficit for the consolidated entity
reduces to $4,201,981.
The ability of the Company to continue to adopt the going concern assumption is based upon:
- The commencement of open-cut mining operations in late June 2023 with increased volume and
higher grade material resulting in strong positive cashflows. This assumption is supported by the Mt
Carbine Operations achieving daily concentrate production records in-line with he open-cut ramp up
scheduled in September 2023; along with
- Continued income stream from the Mt Carbine Quarrying operations.
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.
25
68 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
(d) Basis of Consolidation
Impairment
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.
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 are 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.
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.
(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.
26
27
EQ Resources Limited Annual Report 2023
69
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
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.
(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.
27
70 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
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.
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 & Other Income
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
Interest
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.
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.
Research and Development Refundable Tax Offset
The Research and Development (R&D) Refundable Tax Offset is recognised as other income when it is
received as it relates to expenditure incurred in the past. That part of the R&D Tax Offset that relates to
capitalised expenditure recognised in a prior period (if any) is offset against that capitalised expenditure.
Government Grants
Government grant(s) are recognised when there is a reasonable assurance that the Company will comply
with the relevant conditions and that the grant will be received. If the conditions are met, the government
grant is recognised in profit or loss on a systematic basis in line with its recognition of the expenses that
the grant(s) are intended to compensate.
(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.
payments made.
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
28
29
EQ Resources Limited Annual Report 2023
71
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
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.
Research and Development Refundable Tax Offset
The Research and Development (R&D) Refundable Tax Offset is recognised as other income when it is
received as it relates to expenditure incurred in the past. That part of the R&D Tax Offset that relates to
capitalised expenditure recognised in a prior period (if any) is offset against that capitalised expenditure.
Government Grants
Government grant(s) are recognised when there is a reasonable assurance that the Company will comply
with the relevant conditions and that the grant will be received. If the conditions are met, the government
grant is recognised in profit or loss on a systematic basis in line with its recognition of the expenses that
the grant(s) are intended to compensate.
(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.
29
72 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
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.
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.
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 Statement of Financial Position.
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:
30
31
EQ Resources Limited Annual Report 2023
73
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
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.
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 Statement of Financial Position.
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:
31
74 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
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 18.
(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 28.
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.
Measurement of Fair Values
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs
used in the value in the valuation techniques as follows:
Level 1: quoted prices (unadjusted in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset of liability,
directly (ie. as prices) or indirectly (ie. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following
notes:
Note 24 – Other Financial Liabilities; and
Note 27 – Financial Risk Management Objectives and Policies.
(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).
32
33
EQ Resources Limited Annual Report 2023
75
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
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.
Measurement of Fair Values
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs
used in the value in the valuation techniques as follows:
Level 1: quoted prices (unadjusted in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset of liability,
directly (ie. as prices) or indirectly (ie. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following
notes:
Note 24 – Other Financial Liabilities; and
Note 27 – Financial Risk Management Objectives and Policies.
(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).
33
76 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
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 wage subsidies
AMGC grant
CMAI grant
R&D tax offset
Diesel fuel rebates
Other income
Total revenue and other income
3.
INCOME TAX
2023
$
2022
$
5,039,906
4,014,380
69,259
29,249
54,768
3,029
5,138,414
4,072,177
322,050
190,000
4,824,818
2,307,510
336,860
-
52,726
392,000
-
1,501,200
205,959
7,201
7,981,238
2,159,086
13,119,652
6,231,263
2023
$
2022
$
(a) Reconciliation of income tax expense to prima facie tax payable
Profit / (loss) before income tax
(3,716,846)
(6,063,052)
Tax at the statutory rate of 25% (30 June 2022: 25%)
(929,212)
(1,515,763)
Tax effect of amounts which are not taxable in calculating taxable income:
Non-deductible expenses
Non-assessable income
Deferred tax assets not recognised
Income tax benefit
(b) Unrecognised deferred tax assets
Balance at beginning of year
Current year not recognised
Adjustments in respect of prior year tax balances
Tax rate change 26% to 25% (Prior Year: Tax rate change from 26% to 25%)
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
1,418,709
(586,734)
1,533,746
1,436,510
4,511,295
180,749
638,668
-
852,912
(375,300)
1,038,151
-
5,123,772
(612,477)
-
-
5,330,712
4,511,295
9,772,349
7,685,998
(4,441,637)
(3,174,703)
5,330,712
4,511,295
No provision for income tax is considered necessary in respect of the Company for the period ended 30
June 2023.
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 2023
of $39,089,398 (2022: $30,743,977). A future income tax benefit which may arise from tax losses of 25%
of approximately $9,772,349 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.
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
Finished goods
Raw materials
2023
$
2022
$
341,447
218,517
39,094
278,682
877,740
353,889
364,552
72,547
85,450
876,438
1,690,023
6,523,633
8,213,656
-
6,812,875
6,812,875
9,091,396
7,689,313
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 since acquisition. 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 do not include any write-downs of inventory to NRV.
34
35
EQ Resources Limited Annual Report 2023
77
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
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.
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
Finished goods
Raw materials
2023
$
2022
$
341,447
218,517
39,094
278,682
877,740
353,889
364,552
72,547
85,450
876,438
1,690,023
6,523,633
8,213,656
-
6,812,875
6,812,875
9,091,396
7,689,313
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 since acquisition. 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 do not include any write-downs of inventory to NRV.
35
78 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
5. FINANCIAL ASSETS
Shares in listed companies:1
Critical Resources Limited (ASX: CRR)
Capitalised borrowing costs:2
Current
Non-current
Unexpired interest:2
Current
Non-current
Deferred acquisition costs:3
Non-Current
2023
$
5,156
5,156
108,417
200,084
308,501
707,232
2,133,500
2,840,732
221,729
221,729
2022
$
5,543
5,543
-
-
-
-
-
-
-
3,376,118
5,543
1 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.
2 During the reporting period the Company entered into a Royalty Funding Package with Regal Resources Royalties Fund with
the Group receiving $10 million in two separate tranches. The financing consists of a royalty percentage of 3% with a buy-back
option after the recovery of the first stage royalty, $10 million, (and prior to the 7th anniversary of the definitive agreement
execution) and a payment of $2.75 million reducing the liability to 1.5% for the life of mine.
The capitalised borrowing costs represent those costs directly attributable to securing this funding package and will be amortised
over the period in which the first stage royalty of $10 million will be repaid.
The unexpired interest component will be recognised over the life of mine in line with each of the scheduled periodic repayments
to Regal Resources Royalties Fund. A discounted cash flow method using a discount rate of 5.455% (2021: n/a) was used to
capture the net present value of the revenues for the life of mine as determined in the May 2023 Update of the BFS.
3 Deferred acquisition costs represent those costs directly attributable to the acquisition of leading European tungsten producer
Saloro S.L.U. from global investment manager, Oaktree. These costs will be amortised over the life of mine.
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
2023
$
2022
$
88,680
65,100
16,700
-
105,380
13,000
-
78,100
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
7. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Allowance for doubtful debts
Other taxation
Other receivables
Total trade & other receivables
Prepayments
Trade Receivables
receivables.
8. RECEIVABLES
Receivables from related entities
Tenement security deposits
Other security deposits
The average credit period on sales of product is 30 days. No interest is charged on outstanding trade
The collectability of trade receivables is assessed continuously, and individual receivables are written off
when management deems them unrecoverable. A provision has been made for those receivables whose
recovery was deemed doubtful as at reporting date.
Tenement deposits are restricted in that they are available for rehabilitation that may be required on the
mining leases and/or exploration tenements (refer to Notes 16 and 17).
Receivables from related entities relate to the Company’s 50% portion of loans provided to the
unincorporated joint venture during the reporting period. These loans are unsecured and non-interest
bearing.
2022
$
-
2023
$
(549)
2,495,980
1,645,546
2,495,431
1,645,546
808,648
629,533
484,950
193,103
3,933,612
2,323,599
634,064
632,292
2023
$
3,306,742
1,172,598
8,100
2022
$
-
1,075,130
6,162
4,487,440
1,081,292
36
37
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
7. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Allowance for doubtful debts
Other taxation
Other receivables
Total trade & other receivables
Prepayments
Trade Receivables
EQ Resources Limited Annual Report 2023
79
2023
$
2022
$
2,495,980
1,645,546
(549)
-
2,495,431
1,645,546
808,648
629,533
484,950
193,103
3,933,612
2,323,599
634,064
632,292
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. A provision has been made for those receivables whose
recovery was deemed doubtful as at reporting date.
8. RECEIVABLES
Receivables from related entities
Tenement security deposits
Other security deposits
2023
$
3,306,742
1,172,598
8,100
2022
$
-
1,075,130
6,162
4,487,440
1,081,292
Tenement deposits are restricted in that they are available for rehabilitation that may be required on the
mining leases and/or exploration tenements (refer to Notes 16 and 17).
Receivables from related entities relate to the Company’s 50% portion of loans provided to the
unincorporated joint venture during the reporting period. These loans are unsecured and non-interest
bearing.
37
80 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
9. PLANT AND EQUIPMENT AT COST
Plant and equipment
Accumulated depreciation
Plant and equipment – right of use assets
Accumulated depreciation
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
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
2023
$
2022
$
14,217,001
6,975,823
(2,578,094)
(1,979,791)
3,617,131
(1,241,082)
2,676,371
(656,408)
14,014,956
7,015,995
7,015,995
8,470,929
(179,685)
-
2,807,615
5,111,648
(36,421)
-
(1,292,283)
(866,847)
14,014,956
7,015,995
2023
$
10,803,974
3,640,380
(39,427)
2022
$
8,280,353
2,616,884
(20,518)
14,404,927
10,876,719
(131,796)
(72,745)
14,273,131
10,803,974
-
-
14,273,131
10,803,974
14,273,131
10,803,974
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.
Farm-In and Joint Venture Agreement – NSW Projects
EQ Resources Limited entered into a binding Farm-In and Joint Venture Agreement with Sozo Resources
Pty Ltd (“Sozo”) in November 2021 whereby Sozo can earn up to an 80% interest in EQR’s 100% owned
NSW projects, Crow Mountain (EL6648) and Panama Hat (EL8024), by completing expenditure of $1.6
million over 4 years as follows:
Stage 1 – Sozo to complete $100K of expenditure within 9 months from the Agreement’s
Commencement date;
Stage 2 – Sozo to spend a further $750K of expenditure within a further 24 months to earn a 49%
interest. If Sozo elects to continue sole funding exploration expenditure at the end of Stage 2, it will
have earnt a further 2% (51% in total) and a Joint Venture will be formed; and
Stage 3 – Sozo to spend a further $750K of expenditure and complete a Scoping Study (as defined
by the 2012 JORC Code) within a further 24 months to earn a further 29% (in total $1.6M for 80%).
Sozo Resources has successfully completed the Stage 1 Farm-In Conditions and has elected to proceed
to Stage 2 Farm-In, providing Sozo the exclusive right to earn a 49% legal and beneficial interest in the
Joint Venture gold properties subject to conditions.
11. TRADE AND OTHER PAYABLES
PAYABLES
Trade payables
Other taxation
Unearned revenue
Accrued expenses
Other
12. ISSUED CAPITAL
Share Capital
1,474,486,938 (2022: 1,344,186,938) ordinary shares fully paid
(a) Movements in Ordinary Share Capital
2023
$
2022
$
8,390,574
3,747,115
779,477
461,247
1,678,556
-
316,960
284,550
677,906
-
11,309,854
5,026,531
2023
$
2022
$
27,222,060
22,192,705
27,222,060
22,192,705
1 July 2022 to 30 June 2023
Date
Shares
Issue Price
$
Balance b/fwd
1,344,186,938
22,192,705
Issue of 25,000,000 shares @ $0.040 per share
to
07/11/2022
25,000,000
$0.040
1,000,000
Number of
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 7 November 2022)
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 10 November
Issue of 47,670,615 shares @ $0.040 per share
to
10/11/2022
47,670,615
$0.040
1,906,825
2022)
2022)
2022)
Issue of 19,599,064 shares @ $0.040 per share
to
14/11/2022
19,599,064
$0.040
783,962
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 14 November
Issue of 16,730,321 shares @ $0.040 per share
to
15/11/2022
16,730,321
$0.040
669,213
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 15 November
Issue of 6,300,000 shares @ $0.040 per share to convertible
21/11/2022
6,300,000
$0.040
252,000
Issue of 5,000,000 shares @ $0.040 per share to sophisticated
01/02/2023
5,000,000
$0.040
200,000
note holders for annual interest payable on the convertible
notes (refer ASX announcement dated 21 November 2022)
shareholders, approved by shareholders on 25 January 2023,
as part of
the October 2022 placement
(refer ASX
announcement dated 1 February 2023)
exercise of unlisted options granted to Key Management
Personnel (refer ASX announcement dated 1 May 2023)
exercise of unlisted options granted to Key Management
Personnel (refer ASX announcement 16 May 2023)
Issue of 2,000,000 shares @ $0.040 per share upon the
01/05/2023
2,000,000
$0.040
80,000
Issue of 3,000,000 shares @ $0.060 per share upon the
16/05/2023
3,000,000
$0.060
180,000
38
39
EQ Resources Limited Annual Report 2023
81
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
Stage 3 – Sozo to spend a further $750K of expenditure and complete a Scoping Study (as defined
by the 2012 JORC Code) within a further 24 months to earn a further 29% (in total $1.6M for 80%).
Sozo Resources has successfully completed the Stage 1 Farm-In Conditions and has elected to proceed
to Stage 2 Farm-In, providing Sozo the exclusive right to earn a 49% legal and beneficial interest in the
Joint Venture gold properties subject to conditions.
11. TRADE AND OTHER PAYABLES
PAYABLES
Trade payables
Other taxation
Unearned revenue
Accrued expenses
Other
12. ISSUED CAPITAL
Share Capital
1,474,486,938 (2022: 1,344,186,938) ordinary shares fully paid
(a) Movements in Ordinary Share Capital
1 July 2022 to 30 June 2023
Date
Balance b/fwd
Issue of 25,000,000 shares @ $0.040 per share
to
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 7 November 2022)
Issue of 47,670,615 shares @ $0.040 per share
to
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 10 November
2022)
Issue of 19,599,064 shares @ $0.040 per share
to
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 14 November
2022)
to
Issue of 16,730,321 shares @ $0.040 per share
sophisticated investors as part of the October 2022 share
placement (refer ASX announcement dated 15 November
2022)
Issue of 6,300,000 shares @ $0.040 per share to convertible
note holders for annual interest payable on the convertible
notes (refer ASX announcement dated 21 November 2022)
Issue of 5,000,000 shares @ $0.040 per share to sophisticated
shareholders, approved by shareholders on 25 January 2023,
as part of
(refer ASX
the October 2022 placement
announcement dated 1 February 2023)
Issue of 2,000,000 shares @ $0.040 per share upon the
exercise of unlisted options granted to Key Management
Personnel (refer ASX announcement dated 1 May 2023)
Issue of 3,000,000 shares @ $0.060 per share upon the
exercise of unlisted options granted to Key Management
Personnel (refer ASX announcement 16 May 2023)
2023
$
2022
$
8,390,574
3,747,115
779,477
461,247
1,678,556
-
316,960
284,550
677,906
-
11,309,854
5,026,531
2023
$
2022
$
27,222,060
22,192,705
27,222,060
22,192,705
Number of
Shares
Issue Price
$
1,344,186,938
22,192,705
07/11/2022
25,000,000
$0.040
1,000,000
10/11/2022
47,670,615
$0.040
1,906,825
14/11/2022
19,599,064
$0.040
783,962
15/11/2022
16,730,321
$0.040
669,213
21/11/2022
6,300,000
$0.040
252,000
01/02/2023
5,000,000
$0.040
200,000
01/05/2023
2,000,000
$0.040
80,000
16/05/2023
3,000,000
$0.060
180,000
39
82 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
1 July 2022 to 30 June 2023
Date
Number of
Shares
Issue Price
$
The following table illustrates outstanding options that have vested and are exercisable at year end:
1 July 2021 to 30 June 2022
Date
26/06/2023
2,000,000
$0.040
80,000
26/06/2023
3,000,000
$0.060
180,000
1,474,486,938
Number of
Shares
(302,645)
27,222,060
Issue Price
$
Issue of 2,000,000 shares @ $0.040 per share upon the
exercise of unlisted options (refer ASX announcement dated 26
June 2023)
Issue of 3,000,000 shares @ $0.060 per share upon the
exercise of unlisted options (refer ASX announcement dated 26
June 2023)
Share issue costs
Balance as at 30 June 2023
Balance b/fwd
1,313,354,631
20,603,915
Issue of 11,560,592 shares @ $0.065 per share on the
conversion of 750,000 convertible notes plus accrued interest
to conversion date (refer ASX announcement dated 28
September 2021)
Issue of 9,646,535 shares @ $0.065 per share on the
conversion of 625,800 convertible notes plus accrued interest
to conversion date (refer ASX announcement dated 29
September 2021)
Issue of 9,625,180 shares @ $0.065 per share on the
conversion of 624,200 convertible notes plus accrued interest
to conversion date (refer ASX announcement dated 30
September 2021)
Convertible note issue costs
Balance as at 30 June 2022
Terms and Conditions of Contributed Equity
Ordinary Shares
28/08/2021
11,560,592
$0.065
751,438
Outstanding at 30 June 2023
130,782,346
130,782,346
29/09/2021
9,646,535
$0.065
627,025
No performance rights were issued nor outstanding at the end of the reporting period.
30/09/2021
9,625,180
$0.065
625,637
On 17 September 2021 the Company issued 6,000,000 convertible notes with an aggregate principal
(c) Movements in Performance Rights
13. CONVERTIBLE NOTES
value of $6,000,000.
1,344,186,938
(415,310)
22,192,705
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
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 2022
Options recognised as share-based payments expense
Options recognised as share issue costs
Options recognised as capitalised borrowing costs
Amortisation share based payments
Forfeited / cancelled
Exercised
Expired
Number
WAEP
$
111,000,000
0.058
6,401,000
-
-
-
30,075,000
(292,654)
(10,000,000)
-
-
-
-
-
-
-
0.065
1,954,875
(0.065)
(0.050)
-
(19,023)
(500,000)
-
Balance at 30 June 2023
130,782,346
0.060
7,836,852
40
Issue EQRAF
Issue EQRAI
Issue EQRAJ
Issue EQRAH
Issue EQRAG
Issue EQRAK
Issue EQRAM
Issue EQRAN
Number
outstanding
Number vested
and exercisable
Exercise price
Expiry Date
Remaining
Contractual
Life (Years)
2,000,000
12,000,000
10,000,000
22,000,000
30,000,000
25,000,000
28,532,346
1,250,000
2,000,000
12,000,000
10,000,000
22,000,000
30,000,000
25,000,000
28,532,346
1,250,000
0.040
0.060
0.060
0.060
0.432
0.065
0.065
0.065
01/02/24
23/06/24
23/06/24
25/05/24
19/03/24
17/09/23
07/11/25
31/01/26
0.59
0.98
0.98
0.90
0.72
0.22
2.36
2.59
The notes are convertible at the option of the noteholders into ordinary shares at a conversion price of
$0.065 per share at any time after issuance and up to the close of business on the maturity date.
Noteholders have an option to redeem the notes at the end of 2 years at face value plus any accrued
interest. Any convertible notes not converted will be redeemed on 17 September 2023 at the principal
amount together with accrued but unpaid interest thereon. The notes carry interest at a coupon rate of
7.00% per annum (effective interest rate of 1.4% per month based on a 2-year amortisation period on
estimated cashflow timing in line with the 2-year redemption option) which is payable annually in arrears
in September.
included in reserves.
The fair value of the liability component was estimated at issuance date using an “Interest Rate
Differential” methodology which discounts the convertible notes’ cash flows at a commercial discount
(interest) rate to a present value. The residual amount is assigned as the equity component and is
Subsequent to issue, 2,000,000 notes plus accrued interest were converted into 30,832,307 ordinary
shares on 28 September, 29 September and 30 September 2021.
The noteholders opted for the first year’s interest at the coupon rate of 7% per annum to be converted
into 6,300,000 ordinary shares rather than the Company making a cash payment for this amount.
The notes are due to expire on 17 September 2023 and the Company is confident that the noteholders
will opt to convert to shares rather than being paid in cash, thus reclassifying the liability as equity.
The convertible notes issued and converted during the period have been split into liability and equity
Nominal value of convertible notes issued on 17 September 2021
2,852,667
1,147,333
4,000,000
components as follows:
Opening balance at 1 July 2022
Notes converted during the period
Balance as at 30 June 2023
Debt ($)
Equity ($)
Number
-
-
-
-
2,852,667
1,147,333
4,000,000
-
-
41
EQ Resources Limited Annual Report 2023
83
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
The following table illustrates outstanding options that have vested and are exercisable at year end:
Issue EQRAF
Issue EQRAI
Issue EQRAJ
Issue EQRAH
Issue EQRAG
Issue EQRAK
Issue EQRAM
Issue EQRAN
Number
outstanding
Number vested
and exercisable
Exercise price
Expiry Date
Remaining
Contractual
Life (Years)
2,000,000
12,000,000
10,000,000
22,000,000
30,000,000
25,000,000
28,532,346
1,250,000
2,000,000
12,000,000
10,000,000
22,000,000
30,000,000
25,000,000
28,532,346
1,250,000
0.040
0.060
0.060
0.060
0.432
0.065
0.065
0.065
01/02/24
23/06/24
23/06/24
25/05/24
19/03/24
17/09/23
07/11/25
31/01/26
0.59
0.98
0.98
0.90
0.72
0.22
2.36
2.59
Outstanding at 30 June 2023
130,782,346
130,782,346
(c) Movements in Performance Rights
No performance rights were issued nor outstanding at the end of the reporting period.
13. CONVERTIBLE NOTES
On 17 September 2021 the Company issued 6,000,000 convertible notes with an aggregate principal
value of $6,000,000.
The notes are convertible at the option of the noteholders into ordinary shares at a conversion price of
$0.065 per share at any time after issuance and up to the close of business on the maturity date.
Noteholders have an option to redeem the notes at the end of 2 years at face value plus any accrued
interest. Any convertible notes not converted will be redeemed on 17 September 2023 at the principal
amount together with accrued but unpaid interest thereon. The notes carry interest at a coupon rate of
7.00% per annum (effective interest rate of 1.4% per month based on a 2-year amortisation period on
estimated cashflow timing in line with the 2-year redemption option) which is payable annually in arrears
in September.
The fair value of the liability component was estimated at issuance date using an “Interest Rate
Differential” methodology which discounts the convertible notes’ cash flows at a commercial discount
(interest) rate to a present value. The residual amount is assigned as the equity component and is
included in reserves.
Subsequent to issue, 2,000,000 notes plus accrued interest were converted into 30,832,307 ordinary
shares on 28 September, 29 September and 30 September 2021.
The noteholders opted for the first year’s interest at the coupon rate of 7% per annum to be converted
into 6,300,000 ordinary shares rather than the Company making a cash payment for this amount.
The notes are due to expire on 17 September 2023 and the Company is confident that the noteholders
will opt to convert to shares rather than being paid in cash, thus reclassifying the liability as equity.
The convertible notes issued and converted during the period have been split into liability and equity
components as follows:
Opening balance at 1 July 2022
Debt ($)
Equity ($)
Number
-
-
-
Nominal value of convertible notes issued on 17 September 2021
2,852,667
1,147,333
4,000,000
Notes converted during the period
Balance as at 30 June 2023
-
-
-
2,852,667
1,147,333
4,000,000
41
84 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
Debt Component – Convertible Notes
Opening balance at 1 July 2022
Accrued interest at effective interest rate
Interest paid at coupon rate
Capitalised borrowing costs
Balance as at 30 June 2023
Opening balance at 1 July 2021
Convertible notes issued on 17 September 2021
Notes converted 28, 29 & 30 September 2021
Convertible notes on issue as at 30 September 2022
Captialised borrowing costs as at 30 September 2022
Accrued interest at effective interest rate
Capitalised borrowing costs recognised at FVPL
Balance as at 30 June 2022
Accounting Policy
2023
$
3,004,651
586,963
(280,000)
182,601
3,494,215
2022
$
4,279,000
(1,426,333)
2,852,667
(365,202)
380,235
136,951
3,004,651
The component of convertible notes that exhibits characteristics of a liability is recognised as a liability in
the Statement of Financial Position, net of transaction costs. The increase in liability due to passage of
time is recognised as a finance cost. The remainder of the proceeds are included in shareholders’ equity,
net of transaction costs. The carrying amount of the conversion option is not remeasured in subsequent
years. Transaction costs are apportioned between the liability and equity components of the convertible
notes based on the allocation of proceeds to the liability and equity components when the instruments
are first recognised. The liability component of the convertible notes has been classified as a current
liability in accordance with AASB 101 Amendments to Australian Accounting Standards – Classification
of Liabilities as Current or Non-Current due to the Company not having a right to defer settlement for at
least twelve months after the reporting period.
14. 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)
2023
$
2022
$
(3,716,846)
(6,063,051)
Number
Number
1,420,196,670
1,336,589,754
1,547,960,515
1,444,252,768
(0.26)
(0.24)
(0.45)
(0.42)
15. KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment benefits
Share based payments
Balance at the end of period
16. CONTINGENT LIABILITIES
2023
$
533,652
-
120,830
654,482
2022
$
618,347
1,806
292,383
912,536
The Group has provided guarantees totalling $1,172,598 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.
17 COMMITMENTS
Queensland
Exploration Licence Expenditure Requirements
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 November 2021 EQ Resources Limited entered into a binding Farm-In and Joint Venture Agreement
with Sozo Resources Pty Ltd (“Sozo”) whereby Sozo can earn up to an 80% interest in EQR’s 100%
owned NSW projects, Crow Mountain (EL6648) and Panama Hat (EL8024), by completing expenditure
of $1.6 million over 4 years as follows:
Stage 1 – Sozo to complete $100K of expenditure within 9 months from the Agreement
Commencement Date;
Stage 2 – Sozo to spend a further $750K of expenditure within a further 24 months to earn a 49%
interest. If Sozo elects to continue sole funding exploration expenditure at the end of Stage 2, it will
have earnt a further 2% (51% in total) and a Joint Venture will be formed; and
Stage 3 – Sozo to spend a further $750K of expenditure and complete a Scoping Study (as defined
by the 2012 JORC Code) within a further 24 months to earn a further 29% (in total $1.6M for 80%).
For further details refer to ASX announcement “EQR Farms-Out NSW Projects to Focus on Mt Carbine
Tungsten Mine” dated 26 November 2021.
This agreement ensures that the Company’s minimum expenditure requirements, as shown in the table
below, will be satisfied in order to maintain each tenement in good standing.
Payable not later than 1 year (NSW only)
Payable later than one year but not later than two years
2023
$
118,000
160,000
278,000
2022
$
118,000
278,000
396,000
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.
42
43
EQ Resources Limited Annual Report 2023
85
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
15. KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment benefits
Share based payments
Balance at the end of period
16. CONTINGENT LIABILITIES
2023
$
533,652
-
120,830
654,482
2022
$
618,347
1,806
292,383
912,536
The Group has provided guarantees totalling $1,172,598 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.
17 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 November 2021 EQ Resources Limited entered into a binding Farm-In and Joint Venture Agreement
with Sozo Resources Pty Ltd (“Sozo”) whereby Sozo can earn up to an 80% interest in EQR’s 100%
owned NSW projects, Crow Mountain (EL6648) and Panama Hat (EL8024), by completing expenditure
of $1.6 million over 4 years as follows:
Stage 1 – Sozo to complete $100K of expenditure within 9 months from the Agreement
Commencement Date;
Stage 2 – Sozo to spend a further $750K of expenditure within a further 24 months to earn a 49%
interest. If Sozo elects to continue sole funding exploration expenditure at the end of Stage 2, it will
have earnt a further 2% (51% in total) and a Joint Venture will be formed; and
Stage 3 – Sozo to spend a further $750K of expenditure and complete a Scoping Study (as defined
by the 2012 JORC Code) within a further 24 months to earn a further 29% (in total $1.6M for 80%).
For further details refer to ASX announcement “EQR Farms-Out NSW Projects to Focus on Mt Carbine
Tungsten Mine” dated 26 November 2021.
This agreement ensures that the Company’s minimum expenditure requirements, as shown in the table
below, will be satisfied in order to maintain each tenement in good standing.
Payable not later than 1 year (NSW only)
Payable later than one year but not later than two years
2023
$
118,000
160,000
278,000
2022
$
118,000
278,000
396,000
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.
43
50
50
10
10
50
50
100
100
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
86 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
18. INVESTMENT IN SUBSIDIARIES
Parent Entity
EQ Resources Limited
Controlled Entities
Mt Carbine Mining Pty Ltd2
Mt Carbine Retreatment Pty Ltd
Troutstone Resources Pty Ltd
Mt Carbine Quarrying Operations Pty Ltd
Mt Carbine Quarries Pty Limited
Equity Interest
2023
%
2022
%
100
100
100
100
100
100
100
100
100
100
Cost of Parent Entity’s
Investment
2023
$
2
200
1
100
2022
$
2
200
1
100
8,130,000
8,130,000
As announced on 8 May 2023 Sozo Resources has successfully completed the Stage 1 Farm-
In Conditions and has elected to proceed to Stage 2 Farm-In, providing Sozo the exclusive right
to earn a 49% legal and beneficial interest in the Joint Venture gold properties subject to
conditions.
o
Three (3) tungsten focused Exploration Permits being as EPM 27394, EPM 14871 and 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.
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.
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
Tenement and other security deposits – increase / (decrease)
Amortisation
TOTAL
Receivables – increase / (decrease)
Plant and equipment – additions
Plant and equipment – WDV of disposals
Plant and equipment – depreciation expense
Inventory – increase / (depletion)
Tenement & other security deposits – increase
Capitalised exploration and evaluation expenses
Capitalised exploration and evaluation expenses - R&D Tax Offset
Capitalised exploration and evaluation – amortisation
2023
$
2022
$
4,487,440
4,487,440
1,081,292
1,081,292
15,307,239
9,652,194
(1,292,283)
(2,636,199)
14,014,956
7,015,995
8,812,714
7,603,863
278,682
85,450
9,091,396
7,689,313
14,554,304
10,876,719
99,406
(380,579)
-
(72,745)
14,273,131
10,803,974
41,866,923
26,590,574
3,306,742
8,470,929
(179,685)
(1,292,283)
1,402,083
99,406
3,640,380
(39,427)
(131,796)
-
5,111,648
(36,421)
(866,847)
(125,887)
(779)
2,616,884
(20,518)
(72,745)
Reconciliation of the carrying amount of Mt Carbine assets at the beginning and end
of the current and previous financial year:
2023
$
2022
$
Combined assets carrying amount at the beginning of the year
26,590,574
19,985,239
TOTAL
41,866,923
26,590,574
Retreatment Pty Ltd and CRONIMET Australia Pty Ltd.
2 Formerly South Eastern Resourses Pty Ltd.
EQ Resources Limited and all of its subsidiaries are located and incorporated in Australia.
Combined Deferred Expenditure, Plant and Equipment and Financial Assets
19. 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 2023 financial
year the Directors took the following into consideration:
- The commencement of open-cut mining operations in July 2023 with the May 2023 Bankable
Feasibility Study Update delivering the following strong Pre-Tax Economics* for the Mt Carbine
Expansion Program:
o NPV8 of $3071 million (47% increase compared to the November 2022 BFS update of $209
million);
IRR of 477%; and
o
o Life of Mine EBITDA of $450 million;
1 Concentrate sales price basis US$340/mtu (mtu = metric tonne unit, 10kg) in 2023, with a long-term forecast average of US
$369/mtu (2024 – 2040) calculated using the average of the Roskill Base Case and High Case price level scenarios (see
Chapter 16 of 2021 BFS).
- Updated Ore Reserves for the Mt Carbine Tungsten Project following the successful 2022 drilling
campaigns and corresponding update of the Mt Carbine Mineral Resource Estimate formed the basis
for the significant increase in the estimated open cut Ore Reserves tonnage and contained WO3
metal.
- The Company’s wholly owned subsidiary, Mt Carbine Quarrying Operations Pty Ltd, continues to
dedicate resources to the development of its ‘green aggregates’ business to enable the repurposed
Mt Carbine aggregates to be classified as a recycled product. This will open additional opportunities
in both the local and regional markets with the potential to increase future sales as regional industries
demand more recycled products. The Company continues to submit tenders for substantial civil
projects in the Quarry’s operational area, all of which are dependent upon either Federal or State
funding.
- The Company continues to hold:
o
Two (2) gold prospects in NSW and has entered into Farm-In and Joint Venture Agreement (the
“Agreement”) executed with Sozo Resources Pty Ltd (“Sozo”) whereby Sozo can earn up to an
80% interest in EQR’s Panama Hat and Crow Mountain Projects (EL’s 6648 and 8024) by
completing expenditure of A$1.6M over 4 years.
44
45
EQ Resources Limited Annual Report 2023
87
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
As announced on 8 May 2023 Sozo Resources has successfully completed the Stage 1 Farm-
In Conditions and has elected to proceed to Stage 2 Farm-In, providing Sozo the exclusive right
to earn a 49% legal and beneficial interest in the Joint Venture gold properties subject to
conditions.
o
Three (3) tungsten focused Exploration Permits being as EPM 27394, EPM 14871 and 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.
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.
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
Tenement and other security deposits – increase / (decrease)
Amortisation
TOTAL
2023
$
2022
$
4,487,440
4,487,440
1,081,292
1,081,292
15,307,239
9,652,194
(1,292,283)
(2,636,199)
14,014,956
7,015,995
8,812,714
7,603,863
278,682
85,450
9,091,396
7,689,313
14,554,304
10,876,719
99,406
(380,579)
-
(72,745)
14,273,131
10,803,974
41,866,923
26,590,574
Reconciliation of the carrying amount of Mt Carbine assets at the beginning and end
of the current and previous financial year:
2023
$
2022
$
Combined assets carrying amount at the beginning of the year
26,590,574
19,985,239
Receivables – increase / (decrease)
Plant and equipment – additions
Plant and equipment – WDV of disposals
Plant and equipment – depreciation expense
Inventory – increase / (depletion)
Tenement & other security deposits – increase
Capitalised exploration and evaluation expenses
Capitalised exploration and evaluation expenses - R&D Tax Offset
Capitalised exploration and evaluation – amortisation
3,306,742
8,470,929
(179,685)
(1,292,283)
1,402,083
99,406
3,640,380
(39,427)
(131,796)
-
5,111,648
(36,421)
(866,847)
(125,887)
(779)
2,616,884
(20,518)
(72,745)
TOTAL
41,866,923
26,590,574
45
88 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
20. SUBSEQUENT EVENTS
There have been no material events subsequent to 30 June 2023 that have not previously been reported
other than:
115 Grade Control drill holes, from a total of 155 planned holes that will form the basis of a detailed
‘Dig Model’ for the Ore Reserves over the next 12 months, confirms initial Ore Reserve section at the
Mt Carbine Mine (refer ASX announcement “Infill Grade Control Drillings Confirms Initial Ore Reserve
at Mt Carbine” dated 19 July 2023).
EQR appointed preferred tenderer for resource exploration activities at the historic Wolfram Camp
Mine Site and surrounding areas with the goal to assess the economic viability of re-commissioning
(refer ASX announcement “EQR Awarded Permit for Historic Wolfram Camp Mine” dated 27 July
2023).
Secondary variation to extend the repayment date of the Loan Agreement executed between
shareholder and Director Mr Zhui Pei Yeo and the Company on 19 April 2022, and varied as
announced on 30 September 2022, from 31 July 2023 to 31 July 2024 (refer ASX announcement
“Variation to Loan Agreement” dated 31 July 2023).
EQR agreed binding terms to acquire leading European tungsten producer Saloro S.L.U. from global
investment manager, Oaktree. This transformational acquisition will not only strengthen EQR’s
relevance in the global tungsten industry and enhance the Company’s capital market positioning but
will also result in a $25 Million investment from Oaktree through the subscription of 278 million new
ordinary shares at $0.09 per share (refer ASX announcement “EQR Acquires Leading European
Tungsten Producer, Saloro S.L.U., and Secures $25 Million Investment by Oaktree” dated 10 August
2023).
Exploration works towards the Eastern Extension of the Andy White open Pit uncovered a 20.8m @
0.63% WO3 zone in trench sampling (east of Iron Duke Fault) which EQR postulates could be the
eastern offset of the main ore zone (refer ASX announcement “Brownfield Discovery at Ruby and
Eastern Extension with Drill Targets Defined” dated 28 August 2023).
Mt Carbine achieves daily concentrate production record with 11.1* tonnes of 50% WO3 concentrate
produced in a 24-hour period (refer ASX announcement “EQR Achieves Daily Concentrate
Production Record in line with Ramp-up Schedule” dated 14 September 2023. *Wet tonnes as weighed
on scales at the gravity processing plant as each bag is produced.
XRT Ore Sorter commissioning at the Barruecopardo Mine yields 85% recovery and a 10-times
upgrade. Technical teams of EQR will join the Saloro team late September and through October
2023 on further implementation of key recovery improvement programs (refer ASX announcement
“XRT Ore Sorter Trials at Barruecopardo Mine Hitting Targets” dated 19 September 2023).
21. STATEMENT OF CASH FLOWS
Reconciliation of net cash outflow from operating activities to operating loss after
income tax
(a) Operating profit / (loss) after income tax
Depreciation and amortisation
Share based payments expense
Amortised finance expense
Gain on disposal of assets
Loss on disposal of assets
(Revaluation) Devaluation of investment to market value
Unrealised foreign exchange (gains) losses
R&D tax offset capitalisation
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
The balance at 30 June 2022 comprised:
Cash assets
Cash on hand and at Bank
22. CONTRACT LIABILITIES
Contract Liability - Sublease1
Current
Non-current
Contract Liability - Offtake2
Balance at beginning of the year
Plus: Offtake extension (final draw down)
Less: Unrealised foreign exchange (gain) / loss
(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.
(3,716,846)
(6,063,051)
2023
$
1,424,079
674,837
1,072,449
-
119,352
387
221,964
39,427
2022
$
939,592
411,648
540,523
36,421
(1,933)
372,958
-
-
(6,349,632)
(322,694)
5,444,049
(702,863)
98,068
1,255,867
(1,392,628)
(3,112,770)
5,335,596
5,335,596
1,723,426
1,723,426
2023
$
2022
$
1,768,851
-
1,768,851
3,266,190
1,482,960
152,811
4,901,961
405,851
1,432,259
1,838,110
2,323,423
689,265
253,502
3,266,190
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.
A further offtake prepayment facility of US $3 million was secured from the Company’s joint venture and offtake partner,
CRONIMET Asia Pte Ltd with US $1 million of this additional facility being drawn as at 30 June 2022 (refer ASX Announcement
“CAPEX Funding for Mt Carbine Expansion Secured” dated 2 May 2022). Note: The Company’s wholly owned subsidiary and
50% unincorporated joint venture partner, Mt Carbine Retreatment Pty Ltd’s, interest in the offtake prepayment equates to 50%
of the total prepayment facility.
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
general security deed from CRONIMET Australia Pty Ltd over all its present and subsequent acquired
assets;
assets; and
46
47
EQ Resources Limited Annual Report 2023
89
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
21. STATEMENT OF CASH FLOWS
Reconciliation of net cash outflow from operating activities to operating loss after
income tax
2023
$
2022
$
(a) Operating profit / (loss) after income tax
(3,716,846)
(6,063,051)
Depreciation and amortisation
Share based payments expense
Amortised finance expense
Gain on disposal of assets
Loss on disposal of assets
(Revaluation) Devaluation of investment to market value
Unrealised foreign exchange (gains) losses
R&D tax offset capitalisation
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 2022 comprised:
Cash assets
Cash on hand and at Bank
22. CONTRACT LIABILITIES
Contract Liability - Sublease1
Current
Non-current
Contract Liability - Offtake2
Balance at beginning of the year
Plus: Offtake extension (final draw down)
Less: Unrealised foreign exchange (gain) / loss
1,424,079
674,837
1,072,449
-
119,352
387
221,964
39,427
939,592
411,648
540,523
-
36,421
(1,933)
372,958
-
(6,349,632)
(322,694)
5,444,049
(702,863)
98,068
1,255,867
(1,392,628)
(3,112,770)
5,335,596
5,335,596
1,723,426
1,723,426
2023
$
2022
$
1,768,851
-
1,768,851
3,266,190
1,482,960
152,811
4,901,961
405,851
1,432,259
1,838,110
2,323,423
689,265
253,502
3,266,190
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.
A further offtake prepayment facility of US $3 million was secured from the Company’s joint venture and offtake partner,
CRONIMET Asia Pte Ltd with US $1 million of this additional facility being drawn as at 30 June 2022 (refer ASX Announcement
“CAPEX Funding for Mt Carbine Expansion Secured” dated 2 May 2022). Note: The Company’s wholly owned subsidiary and
50% unincorporated joint venture partner, Mt Carbine Retreatment Pty Ltd’s, interest in the offtake prepayment equates to 50%
of the total prepayment facility.
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
47
90 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
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.
23. OTHER BORROWINGS
Unsecured at amortised cost
Principal
Accrued interest
2023
$
2022
$
1,500,000
1,500,000
150,618
23,336
1,650,618
1,523,336
A 6-month unsecured loan facility was provided by a related party of the Group, Director and shareholder,
Zhui Pei Yeo, at an interest rate of 8% per annum charged on the outstanding loan balance. As announced
on 31 July 2023 a secondary Variation Agreement was entered into to extend the repayment date from
31 July 2023 to 31 July 2024, hence its classification as a non-current liability in the Statement of Financial
Position.
24. OTHER FINANCIAL LIABILITIES
Financial liabilities carried at fair value through profit or loss:1
Current
Non-current
Deferred interest:2
Current
Non-current
Total Financial Liabilities
2023
$
2022
$
-
-
-
-
-
-
-
1,334,992
11,505,740
12,840,732
34,204
282,181
316,385
13,157,117
1 A discounted cash flow method using a discount rate of 5.455% (2021: n/a) was used to capture the net present value of the
revenues for the life of mine as determined in the May 2023 Update of the BFS.
2 Deferred interest relates to that portion of the Regal Resources Royalties Fund where actual payments did not satisfy the interest
component due to the staged ramp-up of Open Cut operations. These costs will be amortised over the period in which the first
stage royalty of $10 million is scheduled to be repaid.
The Company entered into a Royalty Funding Package with Regal Resources Royalties Fund with the
Group receiving $10 million in two separate tranches. The financing consists of a royalty percentage of
3% with a buy-back option after the recovery of the first stage royalty, $10 million, (and prior to the 7
anniversary of the definitive agreement execution) and a payment of $2.75 million reducing the liability to
1.5% for the life of mine.
.
25. LEASES
Right-of-use assets
Balance at 1 July 2022
Additions:
- Plant & equipment
- Heavy & light vehicles
Disposals
Depreciation charge for the year
Balance at 30 June 2023
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
26. CORPORATE INFORMATION
2023
$
2022
$
2,019,963
1,118,930
180,005
930,146
(115,768)
(638,297)
2,376,049
1,269,864
129,047
(11,749)
(486,129)
2,019,963
-
-
910,822
665,754
1,176,523
1,335,829
2,087,345
2,001,583
115,168
93,238
115,168
93,238
345,492
119,007
-
-
The Financial Report of the Group for the year ended 30 June 2023 was authorised for issue in
accordance with a resolution of the Directors on 28 September 2023.
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”.
27. 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.
48
49
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
25. LEASES
Right-of-use assets
Balance at 1 July 2022
Additions:
- Plant & equipment
- Heavy & light vehicles
Disposals
Depreciation charge for the year
Balance at 30 June 2023
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
26. CORPORATE INFORMATION
EQ Resources Limited Annual Report 2023
91
2023
$
2022
$
2,019,963
1,118,930
180,005
930,146
(115,768)
(638,297)
2,376,049
1,269,864
129,047
(11,749)
(486,129)
2,019,963
910,822
665,754
1,176,523
1,335,829
-
-
2,087,345
2,001,583
115,168
-
115,168
93,238
-
93,238
345,492
119,007
The Financial Report of the Group for the year ended 30 June 2023 was authorised for issue in
accordance with a resolution of the Directors on 28 September 2023.
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”.
27. 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.
49
92 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
(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.
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
The following table shows the valuation techniques used in measuring fair values for financial instruments
in the Statement of Financial Position:
Contracted Maturities for Payables
<6 Months
6 - 12 Months
1 - 5 Years
>5 Years
Total
Type
Valuation technique
2023
Trade and other payables
Lease liabilities
Financial liabilities
Total
2022
11,309,854
379,509
387,283
-
531,313
947,709
-
1,176,523
-
-
11,309,854
2,087,345
9,474,113
2,031,627
12,840,732
12,076,647
1,479,022
10,650,636
2,031,627
26,237,932
Trade and other payables
Lease liabilities
Convertible note interest payable
5,026,531
277,397
280,000
-
-
388,357
1,335,829
-
-
Total
5,583,928
388,357
1,335,829
5,026,531
2,001,583
280,000
7,308,114
Refer Note 1 for commentary on going concern assumptions.
The carrying amounts of trade receivables and trade payables are assumed to approximate their fair
values due to their short-term nature.
(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 – 2023
Total assets
Deferred acquisition costs
Capitalised borrowing costs
Shares held in listed entities
Unexpired Interest
Total liabilities
Deferred interest
Financial liability
Consolidated – 2022
Assets
Shares held in listed entities
Total assets
Total liabilities
Level 1
Level 2
Level 3
Total
221,729
308,500
5,156
-
535,385
-
-
-
2,840,732
2,840,732
-
-
-
316,385
12,840,732
13,157,117
-
-
-
-
-
-
-
-
Level 1
5,543
5,543
-
Level 2
Level 3
-
-
-
-
-
-
221,729
308,500
5,156
2,840,732
3,376,117
316,385
12,840,732
13,157,117
Total
5,543
5,543
-
50
There were no transfers between levels during the financial year.
Equity securities
Quoted market share price.
Deferred Costs
Actual costs incurred.
Other financial assets & liabilities*
Discounted cash flows: the valuation model considers the present value of expected
payments, discounted using a risk-adjusted discount rate.**
* Other financial assets include unexpired interest.
Other financial liabilities include deferred interest and financial liabilities.
**Refer Note 24 for the inputs used in the discounted cash flows valuation model.
(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 2023 was 57% as opposed to 41% at 30 June 2022.
The increase in the ratio is predominately due to the Company financing its capital growth initiatives for
the Mt Carbine Tungsten Project via debt rather than equity.
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.
51
EQ Resources Limited Annual Report 2023
93
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
The following table shows the valuation techniques used in measuring fair values for financial instruments
in the Statement of Financial Position:
Type
Valuation technique
Equity securities
Quoted market share price.
Deferred Costs
Actual costs incurred.
Other financial assets & liabilities*
Discounted cash flows: the valuation model considers the present value of expected
payments, discounted using a risk-adjusted discount rate.**
* Other financial assets include unexpired interest.
Other financial liabilities include deferred interest and financial liabilities.
**Refer Note 24 for the inputs used in the discounted cash flows valuation model.
(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 2023 was 57% as opposed to 41% at 30 June 2022.
The increase in the ratio is predominately due to the Company financing its capital growth initiatives for
the Mt Carbine Tungsten Project via debt rather than equity.
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.
51
94 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
The capital risk management policy remains unchanged from the 30 June 2021 Annual Report. The
consolidated entity is not subject to externally imposed capital requirements.
(b) Options Issued
28. 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:
FV at
Grant Date
Expensed /
Capitalised in
prior years
Lapsed /
Forfeited
Expensed
2023 Year
Capitalised
2023 Year
AASB 2
Not yet
Expensed
Options issued to directors
334,876
239,458
Options issued to employees /
consultants / sophisticated
investors
2,041,204
1,461,785
Total share-based payments
2,376,080
1,701,243
-
-
-
95,418
579,419
674,837
-
-
-
-
-
-
The fair value of options issued during the year, as part of the October 2022 share placement, were
calculated by using a black-scholes pricing model applying the following inputs:
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
Sophisticated
Investors
Sophisticated
Investors
Sophisticated
Investors
Sophisticated
Investors
07/11/2022
5,957,3461
09/11/2022
11,917,654
11/11/2022
14/11/2022
4,899,766
4,182,580
$0.041
$0.065
3 Years
81.530%
3.37%
$0.046
$0.065
3 Years
81.666%
3.40%
$0.01776
$0.01778
None
None
$0.048
$0.065
3 Years
81.648%
3.16%
$0.01769
None
$0.047
$0.065
3 Years
81.648%
3.26%
$0.01769
None
Sophisticated
Investors
18/11/2022
1,575,000
$0.05
$0.65
3 Years
81.648%
3.21%
$0.01763
None
Directors
31/01/2023
1,250,000
$0.046
$0.065
3 Years
81.530%
3.17%
$0.02114
None
1 6,500,000 Options were issued on 7 November 2022 with 292,654 options being subsequently cancelled by agreement between
the Company and the holder on 5 June 2023. The Options were cancelled as the beneficial holder’s Constitution did not allow it to
hold the Options.
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.
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
37,000,000
0.058
42,000,000
2023
Number
2023
WAEP
2022
Number
-
-
-
-
-
-
-
-
-
(5,000,000)
0.050
(5,000,000)
32,000,000
32,000,000
0.061
0.061
37,000,000
21,000,000
2022
WAEP
0.058
-
-
-
-
0.058
0.058
1 Options are deemed exercised upon the resignation of Key Management Personnel. The 1,250,000 Options issued to Directors
as part of the October 2022 placement have been excluded as they were not issued as remuneration.
(c) Performance Rights / Options lapsed during the reporting period
There were no Performance rights issued during the reporting period.
29. EMPLOYEE BENEFITS
Granted
Forfeited / cancelled
Exercised1
Expired
Outstanding at year end
Exercisable at year end
Current
Annual leave benefits
Long service leave benefits
Non-current
Long service leave benefits
Total employee benefits
2023
$
2022
$
413,798
26,121
439,919
31,868
471,787
263,736
18,661
282,397
15,418
297,815
30. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Adoption of New Standards and Interpretations
Changes in accounting policies on initial application of Accounting Standards
From 1 July 2022, the Company has adopted all the standards and interpretations mandatory for annual
periods beginning on or after 1 July 2022. Adoption of these standards and interpretations did not have
any effect on the statements of financial position or performance of the Company. The Company has not
elected to early adopt any new standards or amendments.
52
53
EQ Resources Limited Annual Report 2023
95
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
(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
37,000,000
0.058
42,000,000
2023
Number
2023
WAEP
2022
Number
Granted
Forfeited / cancelled
Exercised1
Expired
Outstanding at year end
Exercisable at year end
-
-
-
-
-
-
(5,000,000)
0.050
(5,000,000)
-
32,000,000
32,000,000
-
0.061
0.061
-
37,000,000
21,000,000
2022
WAEP
0.058
-
-
-
-
0.058
0.058
1 Options are deemed exercised upon the resignation of Key Management Personnel. The 1,250,000 Options issued to Directors
as part of the October 2022 placement have been excluded as they were not issued as remuneration.
(c) Performance Rights / Options lapsed during the reporting period
There were no Performance rights issued during the reporting period.
29. EMPLOYEE BENEFITS
Current
Annual leave benefits
Long service leave benefits
Non-current
Long service leave benefits
Total employee benefits
2023
$
2022
$
413,798
26,121
439,919
31,868
471,787
263,736
18,661
282,397
15,418
297,815
30. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Adoption of New Standards and Interpretations
Changes in accounting policies on initial application of Accounting Standards
From 1 July 2022, the Company has adopted all the standards and interpretations mandatory for annual
periods beginning on or after 1 July 2022. Adoption of these standards and interpretations did not have
any effect on the statements of financial position or performance of the Company. The Company has not
elected to early adopt any new standards or amendments.
53
96 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
31. 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 gains / (losses)
TOTAL EQUITY
FINANCIAL PERFORMANCE
Profit (loss) for the year
Other comprehensive income/(loss) for the year
Total comprehensive profit/(loss)
Contingent Liabilities
2023
$
2022
$
22,913,935
12,969,887
27,512,937
19,921,558
50,426,872
32,891,445
9,365,121
9,974,439
19,339,560
4,236,606
5,347,157
9,583,763
31,087,312
23,307,682
27,222,110
22,192,755
3,523,413
2,848,576
341,789
(1,733,649)
31,087,312
23,307,682
2,075,825
(1,228,489)
(387)
1,933
2,075,438
(1,226,556)
As at 30 June 2023 and 30 June 2022 the Company had no contingent liabilities other than those
disclosed in Note 16.
Contractual Commitments
The following contractual commitments were entered into during the period:
- Contract to purchase property, plant and equipment for $5,497,350. Non-refundable deposits of
$1,780,000 were paid during the year with the balance expected to be settled via a supplier finance
facility consisting of 5.75% interest p.a. with repayments spread over 48 months. This commitment
is expected to be settled in the 2025 – 2026 financial year.
- Compensation contract with Australian Wildlife Conservancy, the underlying leaseholder of the Mt
Carbine Mining Leases (ML 4867 & ML 4919). This contract will give rise to an annual expense of
$68,474 for the life of mine.
- Mining Services Agreement with Golding Contractors Pty Ltd for the Andy White Open Cut mining
operations. The committed contract period is for 70 months, has an estimated value of $179 million.
The first 12-18 month period of the contract is based on a cost-plus model which will be transitioned
to rise-and-run matrix rates once a site-specific baseline cost has been established.
Guarantees Entered into by Parent Entity
As at 30 June 2023, the Group has not provided any financial guarantees.
32. OPERATING SEGMENTS
Segment Information
Identification of Reportable Segments
During the 2023 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 2023
Total
Queensland
$
$
NSW
$
Total
$
June 2022
Australia
$
NSW
$
Revenue & Other Income
13,119,652
13,153,179
Total segment revenue
13,119,652
13,153,719
6,231,263
6,231,263
6,231,263
6,231,263
Profit / (loss) before income tax
(3,716,846)
(3,713,798)
(6,063,051)
(6,063,051)
-
-
-
-
Profit/ (loss) after income tax
(3,716,846)
(3,716,459)
(6,063,051)
(6,063,051)
-
-
-
-
-
REVENUE
RESULTS
Income tax
ASSETS AND LIABILITIES
Assets
Liabilities
1 2022 Disclosure Correction.
55,146,312
54,950,009
196,303
31,275,434
31,079,962
195.4721
(38,841,749)
(38,841,749)
-
(16,958,216)
(16,958,216)
-
-
-
-
-
-
33. 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
Appointed Non-executive Director, 12 August 2019
(Sonnenalee Investments Limited)
Appointed Non-executive Chairman, 24 April 2020
Appointed Non-executive Director, 14 November 2017
Stephen Layton
(Bodie Investments Pty Ltd)
(Sindel Nominees Proprietary Limited)
Richard Damon Morrow
(Yavern Creek Holdings Pty Ltd)
Appointed Non-executive Director, 16 March 2021
Zhui Pei Yeo
Appointed Non-executive Director, 12 August 2019
(Whitfords Holdings Investments PtyLtd)
Kevin Bruce MacNeill
Appointed Chief Executive Officer, 1 April 2021
For details of disclosures relating to key management personnel, refer to Key Management Personnel
disclosures Directors and Remuneration Report.
54
55
EQ Resources Limited Annual Report 2023
97
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
32. OPERATING SEGMENTS
Segment Information
Identification of Reportable Segments
During the 2023 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 2023
Total
$
Queensland
$
NSW
$
Total
$
June 2022
Australia
$
NSW
$
REVENUE
Revenue & Other Income
13,119,652
13,153,179
Total segment revenue
13,119,652
13,153,719
RESULTS
Profit / (loss) before income tax
(3,716,846)
(3,713,798)
Income tax
-
-
Profit/ (loss) after income tax
(3,716,846)
(3,716,459)
-
-
-
-
-
6,231,263
6,231,263
6,231,263
6,231,263
(6,063,051)
(6,063,051)
-
-
(6,063,051)
(6,063,051)
-
-
-
-
-
ASSETS AND LIABILITIES
Assets
Liabilities
1 2022 Disclosure Correction.
55,146,312
54,950,009
196,303
31,275,434
31,079,962
(38,841,749)
(38,841,749)
-
(16,958,216)
(16,958,216)
195.4721
-
33. 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
Appointed Non-executive Director, 12 August 2019
(Sonnenalee Investments Limited)
Appointed Non-executive Chairman, 24 April 2020
Stephen Layton
(Bodie Investments Pty Ltd)
(Sindel Nominees Proprietary Limited)
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
Appointed Chief Executive Officer, 1 April 2021
For details of disclosures relating to key management personnel, refer to Key Management Personnel
disclosures Directors and Remuneration Report.
55
98 EQ Resources Limited Annual Report 2023
Notes to the Consolidated Financial Statements continued
ANNUAL Report June 2023
Notes to the Consolidated Financial Statements
(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
During the reporting period, the Group obtained a $1.5 million, 6-month unsecured loan facility from
Director and shareholder, Zhui Pei Yeo, at an interest rate of 8% per annum (refer ASX
Announcement “CAPEX Funding for Mt Carbine Expansion Secured” dated 2 May 2022). The
repayment of this loan was subsequently extended to July 2024 hence its classification as a non-
current liability in the Statement of Financial Position.
There were no loans to or from related parties as at the previous reporting date.
(e) Parent entity
EQ Resources Limited is the parent entity.
(f) Subsidiaries
Interests in subsidiaries are set out in Note 18.
ANNUAL Report June 2023
Directors’ Declaration
ANNUAL Report June 2023
Directors’ Declaration
Directors’ Declaration
Directors’ Declaration
The Directors of the Company declare that:
1.
the Financial Statements, comprising the Statement of Profit or Loss and Other Comprehensive Income,
The Directors of the Company declare that:
Statement of Financial Position, Statement of Cash Flows, Statement of Changes in Equity and
1.
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
a) comply with Accounting Standards, which, as stated in the accounting policy Note 1, to the financial
accompanying Notes, are in accordance with the Corporations Act 2001 and:
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
b) give a true and fair view of the financial position as at 30 June 2023 and of the performance for the
Standards (IFRS); and
year ended on that date of the company and consolidated group;
b) give a true and fair view of the financial position as at 30 June 2023 and of the performance for the
the directors have been given the declaration required by s.295A of the Corporations Act 2001 by the
year ended on that date of the company and consolidated group;
Interim Chief Executive Officer declaring that:
the directors have been given the declaration required by s.295A of the Corporations Act 2001 by the
the financial records of the company for the financial year have been properly maintained in
a)
Interim Chief Executive Officer declaring that:
accordance with s 286 of the Corporations Act 2001;
a)
b)
the financial records of the company for the financial year have been properly maintained in
the Financial Statements and notes for the financial year comply with Accounting Standards; and
accordance with s 286 of the Corporations Act 2001;
c)
b)
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 comply with Accounting Standards; and
2.
2.
3.
in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its
the Financial Statements and notes for the financial year give a true and fair view; and
c)
debts as and when they become due and payable.
3.
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.
This declaration is made in accordance with the resolution of the Board of Directors.
On behalf of the Board
This declaration is made in accordance with the resolution of the Board of Directors.
On behalf of the Board
[Insert signature]
[Insert signature]
Oliver Kleinhempel
Non-executive Chairman
Oliver Kleinhempel
28 September 2023
Non-executive Chairman
28 September 2023
56
57
57
EQ Resources Limited Annual Report 2023
99
ANNUAL Report June 2023
Directors’ Declaration
ANNUAL Report June 2023
Directors’ Declaration
Directors’ Declaration
Directors’ Declaration
Directors’ Declaration
The Directors of the Company declare that:
1.
The Directors of the Company declare that:
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
a) comply with Accounting Standards, which, as stated in the accounting policy Note 1, to the financial
accompanying Notes, are in accordance with the Corporations Act 2001 and:
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
b) give a true and fair view of the financial position as at 30 June 2023 and of the performance for the
Standards (IFRS); and
year ended on that date of the company and consolidated group;
a)
b)
year ended on that date of the company and consolidated group;
b) give a true and fair view of the financial position as at 30 June 2023 and of the performance for the
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
a)
the financial records of the company for the financial year have been properly maintained in
Interim Chief Executive Officer declaring that:
accordance with s 286 of the Corporations Act 2001;
the financial records of the company for the financial year have been properly maintained in
the Financial Statements and notes for the financial year comply with Accounting Standards; and
accordance with s 286 of the Corporations Act 2001;
the Financial Statements and notes for the financial year give a true and fair view; and
c)
the Financial Statements and notes for the financial year comply with Accounting Standards; and
b)
in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its
c)
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.
the Financial Statements and notes for the financial year give a true and fair view; and
This declaration is made in accordance with the resolution of the Board of Directors.
1.
2.
2.
3.
3.
On behalf of the Board
This declaration is made in accordance with the resolution of the Board of Directors.
On behalf of the Board
[Insert signature]
[Insert signature]
Oliver Kleinhempel
Non-executive Chairman
Oliver Kleinhempel
28 September 2023
Non-executive Chairman
28 September 2023
57
57
100 EQ Resources Limited Annual Report 2023
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EQ Resources Limited Annual Report 2023 101
Independent Auditor’s Report
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Australia
Australia
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Nexia Melbourne Audit Pty Ltd
Level 35, 600 Bourke St
Melbourne VIC 3000
E: info@nexiamelbourne.com.au
P: +61 3 8613 8888
F: +61 3 8613 8800
nexia.com.au
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102 EQ Resources Limited Annual Report 2023
Independent Auditor’s Report continued
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Australia
Australia
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EQ Resources Limited Annual Report 2023 103
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Australia
Australia
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104 EQ Resources Limited Annual Report 2023
Independent Auditor’s Report continued
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Australia
Australia
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ANNUAL Report June 2023
Shareholder Information
Shareholder Information
Registered Office
Level4, 96-100 Albert Road
South Melbourne VIC 3205, Australia
Phone: +61 3 9692 7222
Company Secretary
Ms Melanie Leydin
Shareholder Enquiries
Company’s share registry:
Automic Registry Services
Holder Identification Number (HIN).
Change of Address
address details via their broker.
Annual General Meeting
Shareholder’s information in relation to shareholding or share transfer can be obtained by contacting the
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
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
The Annual General Meeting will be held in Melbourne on 29 November 2023 at 3.00pm (AEDT). 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 11 October 2023. Any nominations
must be received in writing no later than 5.00pm (Melbourne time) on 11 October 2023, 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 2023 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.
63
EQ Resources Limited Annual Report 2023 105
ANNUAL Report June 2023
Shareholder Information
Shareholder Information
Shareholder Information
Registered Office
Level4, 96-100 Albert Road
South Melbourne VIC 3205, Australia
Phone: +61 3 9692 7222
Company Secretary
Ms Melanie Leydin
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 29 November 2023 at 3.00pm (AEDT). 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 11 October 2023. Any nominations
must be received in writing no later than 5.00pm (Melbourne time) on 11 October 2023, 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 2023 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.
63
106 EQ Resources Limited Annual Report 2023
Shareholder Information continued
ANNUAL Report June 2023
Shareholder Information
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).
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 18 September 2023.
Distribution of Equity Securities
Analysis of numbers of ordinary shareholders by size of holding.
Ordinary Shares
Options over Ordinary
Shares
Number
of
Holders
Number
Issued
Number
of
Holders
Number
Issued
Convertible Notes
Number
of
Holders
Number
Issued
1 – 1,000
1,001 – 5,000
5,001 – 10,000
85
47
12,333
154,545
215
1,843,760
10,001 – 100,000
1,084
46,291,322
100,001 – and over
775
1,434,965,650
Total
Holdings less than a
marketable parcel
2,206
1,483,267,610
100%
175
383,213
-
-
-
48
64
112
-
-
-
2,271,250
136,130,424
138,401,674
100%
-
-
-
-
3
3
-
-
-
-
4,000,000
4,000,000
100%
Equity Security Holders
Twenty largest quoted equity security holders.
Position & Holder Name
1. BNP Paribas Noms Pty Ltd
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