Notes to the Consolidated Financial Statements continued ANNUAL Report June 2023 Notes to the Consolidated Financial Statements 44 18. INVESTMENT IN SUBSIDIARIES Equity Interest Cost of Parent Entity’s Investment Parent Entity EQ Resources Limited 2023 % 2022 % 2023 $ 2022 $ Controlled Entities Mt Carbine Mining Pty Ltd2 100 100 2 2 Mt Carbine Retreatment Pty Ltd 100 100 200 200 Troutstone Resources Pty Ltd 100 100 1 1 Mt Carbine Quarrying Operations Pty Ltd 100 100 100 100 Mt Carbine Quarries Pty Limited 100 100 8,130,000 8,130,000 Icon Resources Africa Pty Ltd 100 100 10 10 Mt Carbine Retreatment Management Pty Ltd1 50 50 50 50 1 Mt Carbine Retreatment Management Pty Ltd acts as the agent for the unincorporated joint venture between Mt Carbine 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. 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); o IRR of 477%; and 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. 86 EQ Resources Limited Annual Report 2023
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