ANNUAL Report June 2022 Notes to the Consolidated Financial Statements 34 2022 $ 2021 $ 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 2,807,615 2,254,941 Additions 5,111,648 1,070,671 Disposals (36,421) (105,490) Plant and equipment written down - - Depreciation expense (866,847) (412,507) 7,015,995 2,807,615 10. DEFERRED EXPLORATION AND EVALUATION 2022 $ 2021 $ Costs brought forward 8,280,353 6,896,994 Costs incurred during the period 2,616,884 1,572,597 Capitalised portion of R&D tax offset (20,518) (13,200) Total deferred exploration and evaluation 10,876,719 8,456,391 Amortisation deferred exploration and evaluation (72,745) (176,038) Costs carried forward 10,803,974 8,280,353 Exploration expenditure costs carried forward are made up of: Expenditure on joint venture areas - - Expenditure on non-joint venture areas 10,803,974 8,280,353 Costs carried forward 10,803,974 8,280,353 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 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 25 November 2021. EQ Resources Limited Annual Report 2022 65
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