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. * 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 *** $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 resourcing the new economy for a better tomorrow 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. EQR Chief Executive Officer, Kevin MacNeill, commented: “The successful drill campaigns and strong trends of conversion of resource from inferred to indicated along with a fully functioning processing operation has 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 Figure 16 - Comparison of Consolidated Project Economics. The BFS Update now contemplates a 10-year production schedule with the Project delivering impressive economics including a NPV8 of $307 million and an IRR of 477%. EQ Resources Limited Annual Report 2023 33
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