ANNUAL Report June 2022 Directors’ Report 16 (i) EQ Resources’ Financial Performance EQ Resources’ financial performance for the five years to 30 June 2022 is summarised below and the relationship between results and performance is discussed. Year ended Measure 2022 2021 2020 2019 2018 Net profit / (loss) after tax $ (6,063,051) (4,574,191) (3,015,680) 3,808,863 (1,478,746) Net assets $ 14,317,218 16,725,734 14,936,296 10,905,040 2,672,436 Cash and cash equivalents $ 1,723,426 3,504,721 2,989,859 217,962 602,675 Cash flows from operating activities $ (3,112,770) (3,816,722) (2,948,321) (1,627,127) (1,368,767) EBITDA $ (4,478,339) (3,947,550) (2,789,350) 3,847,034 (1,022,747) Share price at 30 June $ $0.047 $0.028 $0.028 $0.031 $0.019 Basic earnings / (loss) per share Cents (0.45) (0.39) (0.30) 0.67 (0.29) Financial Performance The loss for the consolidated Group for the financial year after tax amounted to $6,063,051 (2021: loss of $4,574,191). This result was primarily brought about by an increase in operating costs associated with the continued ramp-up of its operations from the Mt Carbine Tailings Retreatment and Stockpile Projects. 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 upon the finalisation of the Bankable Feasibility Study covering a 12-year operation with the early years focused on the high-grade ore from the Company’s 100% owned Andy White Open Pit, supplemented by the Low-Grade Stockpile. ▪ Underground Scoping Study findings providing significant confidence to progress to a Pre-Feasibility Study on the potential for an underground operation at Mt Carbine. ▪ Execution of an Early Engagement Contract with Golding Contractors Pty Ltd for the restart of open pit operations. 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 2022 financial year with no impairments recognised, resulting in exploration and evaluation expenses of $2,616,884, before amortisation and R&D Tax Offset, being capitalised for the 2022 financial year. The carrying value of the exploration assets as at 30 June 2022 is $10,803,974 (2021: $8,280,353). At 30 June 2022, the Group had a net working capital deficit of $4,090,968 (2021: $234,358 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 and trade payables. It should be noted that whilst the offtake advance facility of $3,266,190 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 Balance Sheet. As the Group is an exploration and development entity, ongoing exploration and development activities are reliant upon future capital raisings. EQ Resources Limited Annual Report 2022 47
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