Annual 2025 Report
Directors Oliver Kleinhempel Executive Chairman Stephen Layton Non-executive Director Richard Morrow (Retired 30 June 2025) Non-executive Director Stephen Weir Non-executive Director Craig Bradshaw Non-executive Director Zhui Pei Yeo Non-executive Director Company Secretary Melanie Leydin Registered Office Suite 2, Level 11, 385 Bourke Street Melbourne VIC 3000 T +61 (0)7 4094 3072 W www.eqresources.com.au E info@eqresources.com.au 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 +61 (0)2 9698 5414 Auditors Nexia Melbourne Audit Pty Ltd Level 35, 600 Bourke 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 Corporate Directory 1 Chairman’s Address 2 Operating and Financial Review 2 Corporate & Financing Activities 18 Sustainability 24 Mt Carbine Operations 40 Saloro / Barruecopardo Operations 56 EQR Tenement Interests 59 Directors’ Report 72 Consolidated Statement of Profit or Loss and Other Comprehensive Income 73 Consolidated Statement of Financial Position 74 Consolidated Statement of Cash Flows 75 Consolidated Statement of Changes in Equity 76 Notes to the Consolidated Financial Statements 114 Consolidated Entity Disclosure Statement 115 Directors’ Declaration 116 Auditor’s Independence Declaration 117 Independent Auditor’s Report 122 Shareholder Information 126 Forward Looking Statements Contents
Chairman’s Address “ Prosperity and security can only be achieved through a high degree of independence when it comes to essential raw materials.” Dear Shareholders and Friends of EQR, It is my great pleasure to present to you the 2025 Annual Report for EQ Resources Limited. This year’s Annual Report presents a comprehensive overview and review of both our operations, at Barruecopardo in Salamanca/Spain and Mt Carbine in Queensland/ Australia. In this regard, I would like to congratulate and thank our teams for their outstanding commitment to the success of EQ Resources and their dedication to the greater vision of the Company, despite the headwinds emerging mining companies often face during ramp-up periods. Having visited both operations multiple times throughout the year, I experienced great teamwork and spirit of cooperation – each operation faced site-specific challenges, where it was a common understanding and motivation to share experience and knowledge so that each team can overcome problems and solve difficult tasks. I would proudly say that EQ Resources is a strong group of individuals and teams with common goals and aspirations. The Company will benefit from such culture moving forward. Last year I highlighted three key aspects the Company is working on. I called out for: (i) Teamwork Above All, (ii) Continue Developing an Ecosystem, and (iii) Discipline at the Core. Despite delays in our turnaround efforts at Barruecopardo and having to overcome complexities around the transitioning of the open pit operation to an inhouse mining team at Mt Carbine, the Company has progressed well with regards to the above fundamental pillars. We continued to integrate our teams and share resources across both operations to gain synergies. We have extended our industry network by forming new partnerships and strengthened relations with key customers. Furthermore have we added outstanding personalities both to our board of directors and the management teams. My final remarks should address the fundamental mission of EQ Resources: The Company has established itself as a leading Western tungsten raw materials producer and supplier. Tungsten being classified as a critical- and strategic raw material by the largest economies – the EU, the US and China. Trade tensions and geopolitical division started to impact the global tungsten sector, with prices rapidly increasing. China decided to restrict exports and continues reducing domestic output. EQ Resources is striving to stabilise the (Western) market and contribute to resilient supply chains. I strongly believe that prosperity and security can only be achieved through a high degree of independence when it comes to essential raw materials. On behalf of the Board, I would like to thank all shareholders for their continued support. Oliver Kleinhempel Executive Chairman EQ Resources Ltd Oliver Kleinhempel Executive Chairman EQ Resources Limited Annual Report 2025 1
Operating and Financial Review Corporate & Financing Activities Changes in EQR Board & Leadership Team After 4 years on the Board, Mr Richard Morrow retired on 27 June 2025. During his tenure, Mr Morrow has played a valuable role in supporting the Company’s strategic direction and governance framework. EQ Resources is greatly appreciative of his service and support of the Company as a member of the Board and we wish him well. On 1 May 2025, the Company was pleased to announce the appointment of Mr Craig Bradshaw as an independent Non-Executive Director. Mr Bradshaw is an experienced global tungsten industry executive and was a former CEO of Masan High-Tech Materials, the operator of the Nui Phao Tungsten Mine and Processing Complex in Vietnam and Managing Director of H.C. Starck Tungsten Powders GmbH, a global producer of Tungsten chemicals, powders, carbides, and specialty carbides with operations in Germany, China and Canada, prior to its sale to Mitsubishi Materials Group in December 2024. Mr Bradshaw started his mining career with Mt Isa Mines and held further senior management roles with MMG Limited (Sepon operations) and with Toll Holdings. Mr Bradshaw holds a Business Degree and is a qualified CPA as well as a member of the Financial Services Institute of Australasia (FINSIA) and AusIMM. Oliver Kleinhempel Executive Chairman Craig Bradshaw Non-executive Director Stephen Weir Non-executive Director Non-executive Chair since April 2020. Executive Chair since May 2025. Executive career in global resource industry, across project development, finance and commodity trading. Previous roles at Outotec, Ferrostaal Group, CRONIMET. Executive Director at CRONIMET Group. Experienced global tungsten industry executive and former CEO of Masan High-Tech Materials, the operator of the Nui Phao Tungsten Mine and Processing Complex in Vietnam. Qualified CPA as well as a member of the Financial Services Institute of Australasia (FINSIA) and AusIMM. Representative Director of Oaktree Capital Management. Experience in corporate advisory, project finance, construction management. Former CEO of Magnetite Mines Ltd, Member of the Australian Institute of Company Directors, GBA Capital Advisory Board. Zhui Pei Yeo Non-executive Director Stephen Layton Non-executive Director Background in executive management, project planning, resource management. Works in system integration in telecoms in South-East Asia. Executive director at a steel-product manufacturer. 35+ years in equity capital markets in the UK and Australia. Experience in ASX listings and corporate advisory. Directorships at Mithril Resources & Pursuit Minerals. Strong capital markets, operations and industry backgrounds Board of Directors 2 EQ Resources Limited Annual Report 2025
Kevin MacNeill Chief Technical Officer (EQR Group) Jonathan Kort Chief Financial Officer (EQR Group) Former CEO (from January 2020), transitioned to CTO in April 2025. 35+ years in mining project development globally. Expertise in mineral processing, specifically tungsten. Past President of Etruscan Diamonds, founded Specialized Metallurgical Projects. Experienced global executive whose career has spanned listed and private companies in resources and infrastructure. He was most recently Chief Development Officer and CFO at PanAust Limited. Chartered Accountant Australia and New Zealand and holder a Master of Science in Mineral Economics. Evren Oeren Chief Operating Officer (Saloro SLU) Alvaro Serrano Chief Executive Officer (Saloro SLU) Experienced M.Sc. Mining Engineer and MBA with an academic background from globally renowned universities. Proven expertise from field operations to senior management, overseeing international mineral processing projects and leading multinational teams. 25+ years as senior financial roles in in industrial companies, mainly in pharmaceutical, biomedical and mining industry. Degree in economics and business sciences and executive MBA. from the IE Business School. CFO roles across a number of leading Spanish and subsidiaries of multinational companies. Experienced Leadership Team driving Operations in both Australia and Spain Executive Management Team EQ Resources Limited Annual Report 2025 3
During FY2025, EQ Resources Limited (ASX: EQR) strengthened its leadership structure to support operational excellence, international growth ambitions, and continued expansion along the tungsten supply chain. On 1 April 2025, long-serving Chief Executive Officer Kevin MacNeill transitioned to the role of Chief Technical Officer (CTO). This change enables Mr MacNeill to focus on technical improvements at the Saloro and Mt Carbine operations while working reduced hours for personal reasons. Since his appointment as CEO in 2019, Mr MacNeill has been instrumental in EQR’s transformation, and he will continue to play a critical role in driving operational innovation and supporting the Company’s expansion and M&A pipeline. Effective the same date, Mr Oliver Kleinhempel, previously Non-Executive Chairman, assumed the role of Executive Chairman pending the appointment of a new CEO/Managing Director. Once a new appointment is finalised, Mr Kleinhempel will revert to a Non-Executive capacity. A key architect of EQR’s strategy since 2019, he will continue to guide capital management and long-term corporate direction. In addition, Mr Kleinhempel resigned as a director of CRONIMET Australia Pty Ltd, prior to the company’s transfer of its Mt Carbine joint-venture interest to EQR in July 2024. On 1 June 2025, Mr Jonathan Kort commenced as Chief Financial Officer and joined EQR’s Global Leadership Team. Mr Kort brings over 20 years of experience in mining and infrastructure, including senior roles at PanAust, BHP, and Coronado Global Resources. A Chartered Accountant with a Master’s in Mineral Economics, he has an extensive track record in financial leadership and operational execution. He will lead EQR’s financial, governance, and strategic planning functions, ensuring strong discipline and alignment as the Company advances its next phase of development. Further strengthening the operational leadership team, Mr David Laulau was appointed Mining Manager at Mt Carbine. Mr Laulau brings more than 26 years of open-pit and underground mining experience across Papua New Guinea and Australia, managing large-scale workforces and multimillion-dollar budgets with a strong emphasis on safety, efficiency, and environmental stewardship. He holds a Bachelor of Mining Engineering from the Papua New Guinea University of Technology and completed postgraduate studies at Tohoku University, Japan. His appointment further enhances the Company’s ability to deliver operational excellence at its flagship Australian asset. Operating and Financial Review continued EQR also broadened its government relations capabilities, given its global operations and M&A activities. Mr Andrew Goledzinowski AM was appointed as Senior Advisor for Government Relations, effective 1 July 2025. Mr Goledzinowski brings more than 40 years of diplomatic experience, having served as Ambassador to Vietnam, High Commissioner to Malaysia, and Deputy Permanent Representative to the United Nations. In this role, he will support EQR’s engagement with government stakeholders across Australia, Europe, the United States, and Vietnam. He has already been involved in several strategic initiatives for the Company, including stakeholder engagement and due diligence relating to the TMG smelter acquisition. Collectively, these leadership changes ensure EQR has the right mix of technical, financial, and strategic expertise to deliver on its international tungsten growth ambitions and to position the Company for long-term success. Financing Activities FY2025 was a decisive year in strengthening EQ Resources Limited’s (“EQR” or “the Company”) financial position. By financial year-end, EQR had completed a multi-pronged funding program that combined equity, debt reduction, offtake agreements, government grants, credit extensions, and prospective export-credit support: − Equity raised (FY2025): ~A$28.47 million before costs, comprising: − A$3.0 million placement (Square Resources) at A$0.042/share with a strategic collaboration for Asian FeW marketing and potential tradefinance support (18 Nov 2024); − A$4.9 million placement at A$0.040/share with 122.5 million one-for-one free attaching unlisted options exercisable at A$0.0675 (December 2024); − SPP at A$0.035/share, A$1,77 million raised (before costs), 50,599,919 new shares issued (closing January 2025); − A$18.8 million capital raising announced May 2025. − Long-term offtake contract, securing a 5-year tungsten concentrate offtake arrangement valued at approximately A$30 million with an advance payment of A$2.0 million and establishes a framework for collaboration on US Government critical minerals initiatives, including a joint United States Defence Industrial Base Consortium (“DIBC”) grant application. 4 EQ Resources Limited Annual Report 2025
− Queensland Government Grant: A$0.25 million to support bulk ore sorting trials at Wolfram Camp − European deleveraging: €5 million debt repaid at Saloro (February 2025). − Credit facility support: €20 million of €25 million Letters of Credit extended to end-2025 with Oaktree support (May 2025). − Export-credit pathway: United States EXIM LOI for up to US$34 million (A$52 million), 10-year tenor (June 2025). Queensland Government Grant In early October 2024, the Company was awarded A$250,000 in funding from the Queensland Government’s METS Collaborative Project Fund to support the commencement of advanced XRT ore sorting trials at the Wolfram Camp tungsten mine. The funding is part of the Queensland Government’s broader initiative to reinvigorate former mines, aligning with their Critical Minerals Strategy and Resources Industry Development Plan, focusing on economic growth and sustainable practices. The initiative will be a collaborative project involving EQR, Tomra Sorting Pty Ltd (“Tomra”), and the University of Queensland’s Sustainable Minerals Institute. Tomra will supply advanced XRT Ore Sorters and support technology optimisation, while the University of Queensland will conduct mineralogical and geochemical analysis to ensure the effectiveness of the ore sorting technology. See ASX Announcement 15th October 2024: ‘Queensland Government and EQR Invest In Ore Sorter Trials at Wolfram Camp Mine’ EQ Resources Limited Annual Report 2025 5
Equity Raisings and Strategic Partnerships In November 2024, EQR announced a A$3.0 million investment from Square Resources Pty Ltd, issued at A$0.042 per share through convertible notes issued by the Company. Beyond the growth capital, this investment established a strategic collaboration whereby EQR can utilise Square Resources’ network across the Asian steelmaking industry (excluding China) and explore trade-finance solutions for the sales and distribution of ferrotungsten (FeW) in Asia. This alignment links funding directly to downstream market access, supporting the Company’s broader strategy to build a regional tungsten hub and expand exposure to value-added products. See ASX Announcement 29th November 2024: ‘EQR Secures A$3 Million Investment from Square Resources’ In December 2024, the Company completed a further A$4.9 million placement before costs via a share placement of 122.5 million new fully paid ordinary shares, with an issue price of A$0.04 (4 cents) per share, along with 122.5 million one-for-one free attaching unlisted options, exercisable at A$0.0675 (6.75 cents) each. This structure provided investors with leveraged exposure to the Company’s growth trajectory and, if exercised in future periods, a potential additional source of capital at a premium to the placement price. Proceeds from the November and December placements were directed to Mt Carbine’s expansion works (including deployment of a third ore sorter), working capital, and general corporate purposes in support of the operational ramp-up. See ASX Announcement 13th December 2024:’EQR Successful A$4.9 Million Placement’ To ensure existing shareholders could participate on similar terms, EQR launched a Share Purchase Plan (SPP). The SPP was priced at A$0.035 per share and raised A$1,771,000 before costs, resulting in the issue of 50,599,919 new shares. The SPP broadened participation to retail investors and complemented the institutional and strategic placements completed earlier in the year. Importantly, in May 2025 the Company announced an additional capital raising of A$18.8 million. This funding further strengthened the balance sheet late in the financial year and provided incremental flexibility to advance priority programs, including Mt Carbine’s capacity expansion, Saloro’s Ore Sorter Plant expansion and other associated working capital requirements. (Terms such as pricing, securities issued and allocation were as set out in the May ASX announcement.) With this transaction included, total equity raised during FY2025 amounted to approximately A$28.47 million before costs. See ASX Announcement 22nd may 2025: ‘EQR Announces Significant Equity Raise and Share Purchase Plan’ See ASX Announcement 20th June 2025: ‘EQR Announces Completion of Share Purchase Plan’ Taken together, the financial-year equity program combined strategic capital (via Square Resources and its Asian steelmaking network), institutional support (through the December placement and options), and retail participation (via the SPP). The staged approach provided a measured increase in equity across the Operating and Financial Review continued Pictured: CTO Kevin MacNeill and team during a site inspection at Wolfram Camp. 6 EQ Resources Limited Annual Report 2025
year while aligning capital with near-term execution priorities at site and creating new commercial pathways for medium-term downstream sales. European Debt Repayment and Credit Facilities In parallel with the equity program, EQR continued to strengthen the European balance sheet associated with its Spanish operations at Saloro S.L.U. (Barruecopardo Mine, Spain). In June 2025, the Company repaid €5 million of debt, materially deleveraging the subsidiary and improving its financial resilience following the ramp-up in operating performance through late 2024 and early 2025. This repayment results in a 25% reduction of Saloro’s debt facilities with Santander bank. See ASX Announcement 16th June 2025: ‘Saloro Debt Repayment of EUR5M Completed’ To support ongoing banking arrangements, Oaktree Capital Management—EQR’s major shareholder and former owner of Saloro—confirmed in May 2025 the extension of €20 million of the €25 million Letters of Credit that underpin Saloro’s facilities with Banco Santander S.A. and CaixaBank S.A. through to the end of 2025. As at 31st December 2024, the balance of these facilities stood at A$41.4 million. The extension reflects strengthening operating metrics at Barruecopardo (including record production late in CY2024 and unaudited positive EBITDA of €4.4 million across Q4 CY2024 and Q1 CY2025) and provides the runway to progress discussions with Spanish lenders on converting the short-dated lines into longer-tenor structures. The objective is to reduce reliance on shareholder guarantees over time and to enhance Saloro’s stand-alone credit profile as the operation generates stable cash flow. See ASX Announcement 15th may 2025: ‘Saloro Credit Facilities in Process of Extension’ International Financing Support for Mt Carbine Expansion At the close of the financial year, EQR received an important endorsement of its Australian growth program. In June 2025, the Export-Import Bank of the United States (US EXIM) issued a Letter of Interest (LOI) under its Supply Chain Resiliency Initiative (SCRI), outlining its willingness to consider a 10-year debt facility of up to US$34 million (A$52 Million) to support the Mt Carbine expansion. The contemplated facility would underpin the planned doubling of processing capacity, including additional lines to treat the historic ~10 Mt low-grade stockpile and support future underground ore, thereby enhancing throughput, recovery, and unit-cost performance. Engagement with US EXIM also recognises tungsten’s strategic importance to global supply chains and Mt Carbine’s role as a long-life supplier outside China. See ASX Announcement 27th June 2025: ‘US EXIM Issue Letter of Interest for Mt Carbine’ Long-Term Offtake Contract and Strategic Collaboration with Elmet Technologies LLC During FY2025, EQR strengthened its global tungsten supply chain position through the execution of a Strategic Collaboration and Long-Term Offtake Agreement with Elmet Technologies LLC (“Elmet”), a leading US-owned and fully integrated tungsten manufacturer. The arrangement, first announced in September 2024 and finalised in November 2024, provides for the supply of tungsten concentrate to Elmet over a five-year term, with an estimated contract value of A$30 million at prevailing market prices. To secure offtake allocations, Elmet committed to an advance payment of A$2.0 million, underlining the strength of the partnership and confidence in EQR’s long-term production base. In recognition of the strategic nature of the collaboration, EQR granted Elmet 20,000,000 options, exercisable at A$0.10 per share with a twoyear expiry. The Agreement extends beyond a traditional offtake arrangement, establishing a strategic platform for collaboration across the US tungsten supply chain. Key elements include: − A framework for joint engagement on US Government funding opportunities, particularly those aimed at enhancing the resilience of critical minerals supply chains; − The submission of a joint white paper under the DIBC grant program, open to strategic partners in Australia, Canada, and the UK, with outcomes expected in FY2026; and − A pathway for greater downstream integration of EQR’s tungsten concentrate into the US market, strengthening alignment with long-term demand growth outside of China. Operationally, EQR’s commitments under this offtake agreement are supported by the ongoing expansion of production at its Barruecopardo Operations in Spain, which delivered record quarterly output in FY2025. This ensures both security of supply to Elmet and the ability for EQR to diversify its offtake channels while capturing favourable margins in the US market. EQ Resources Limited Annual Report 2025 7
Taken together, the Elmet agreement marks a significant milestone in EQR’s commercial strategy: it not only provides predictable cash flow visibility but also embeds the Company within the US critical minerals ecosystem at a time of heightened geopolitical focus on tungsten security of supply. For more information refer to: ASX Announcement 2nd September 2024: ‘Strategic Collaboration Agreed with Elmet Technologies’ ASX Announcement 12th November 2024: ‘Elmet Agreement Executed’ Corporate Activities Acquisition of 100% of the Mt Carbine Retreatment Joint Venture In July 2024, EQ Resources executed a Definitive Agreement with CRONIMET Asia Pte Ltd and CRONIMET Australia Pty Ltd to acquire CRONIMET’s remaining 50% interest in the Mt Carbine Retreatment Joint Venture. This transaction consolidates EQR’s ownership of the Mt Carbine operations, streamlining management and operational control. As part of the transaction, EQR agreed to issue new shares valued at US$7.5 million at a price of A$0.09 per share, representing a ~100% premium to the 15-day VWAP at the time. EQR also assumed all JV assets and liabilities, including obligations under the offtake agreement covering 25,000 tonnes of tungsten concentrate. In addition, CRONIMET will remain an important partner, taking a marketing role for Saloro’s production and receiving a 1% net marketing fee over five years. The acquisition not only secures 100% of the Mt Carbine Retreatment JV assets for EQR but also simplifies the commercial structure, enhances transparency in financial reporting, and positions the Company to fully capture the value of its processing and mining operations at Mt Carbine. See ASX announcement 5th July 2024 ‘Final Agreement to Acquire Mt Carbine JV from Cronimet’ Tungsten Metals Group Limited Acquisition Progressing On 18 November 2024, the Company announced the execution of a binding Heads of Agreement (HoA) to acquire 100% of the shares in Tungsten Metals Group Limited (TMG)—a public unlisted company—and its subsidiaries, along with Mr George Chen’s interest in Asia Tungsten Products Co Ltd (ATC). Collectively referred to as the TMG Group, the acquisition would provide EQR with full ownership of an established and globally significant downstream tungsten business. The TMG Group currently owns and operates the largest ferrotungsten (FeW) facility outside of China, located in Vietnam. With a potential nameplate capacity of 4,000 tonnes per annum of FeW, the plant is recognised for its scale, cost competitiveness, and efficiency. Its strategic positioning outside of China gives it unique advantages in serving global customers with reliable, diversified supply. The transaction is of high strategic importance to EQR, marking a deliberate step toward vertical integration. By moving downstream into ferrotungsten production, EQR will diversify its revenue base beyond concentrate sales and position itself across the broader tungsten value chain. This will allow the Company to leverage its upstream production from Mt Carbine and other future assets, while gaining exposure to more resilient pricing dynamics in the FeW market. The Company is in ongoing engagement with TMG to close out remaining due diligence items. Pictured: the TMG ferrotungsten plant located in Vietnam. Source: (www.tungstenmetalsgroup.com) For more information refer to: ASX Announcement 18th November 2024: ‘EQR to Acquire 100% Interest in Tungsten Metal Group’ ASX Announcement 14th February 2025: ‘EQR Provides Update to Ferrotungsten Producer Acquisition’ Operating and Financial Review continued 8 EQ Resources Limited Annual Report 2025
Focus : Saloro Turnaround Success Story - Rapid Transition to Cash Positivity In mid-January 2024, EQR assumed full management of the Saloro tungsten operations in Spain, marking a significant milestone in the Company’s European growth strategy. From the outset, the transition was structured around a comprehensive metallurgical and operational assessment, designed to identify immediate efficiency gains and longer-term performance improvements. By February and March 2024 (last financial year), EQR implemented a series of targeted optimisation measures—“quick wins” that delivered early positive impacts, particularly in recovery performance and plant efficiency. These initiatives provided the foundation for broader upgrades that followed in Q4 FY2024, when major modifications to the production plant were successfully executed. Importantly, these upgrades were carried out without major interruptions to operations, ensuring a seamless transition for the workforce and maintaining steady output during the changeover. In the first half of FY2025, all planned modifications were systematically completed, with results evident in both improved tungsten recovery rates and increased production volumes. Key enhancements included: − Deployment of XRT Ore Sorting technology, enabling more precise ore characterisation and feed quality control; − Commissioning of a fines recovery circuit, improving material separation efficiency and significantly reducing tungsten losses to tailings; and − Workforce development through structured training programs, embedding continuous improvement and technical upskilling. These measures quickly translated into operational and financial success. By the close of Q2 FY2025 and Q3 FY2025, Saloro delivered a record unaudited EBITDA of A$7.8 million, a clear demonstration of the effectiveness of EQR’s intervention strategy. Notably, the operation achieved cash-positive status within nine months of acquisition, reinforcing the Company’s ability to extract value through disciplined operational oversight, targeted investment, and strong local engagement. Saloro now stands as a model of EQR’s capability to revitalise and optimise critical mineral operations, positioning the asset as both a cornerstone of the Company’s European platform and a key contributor to EQR’s consolidated financial strength heading into FY2026. EQ Resources Limited Annual Report 2025 9
Corporate Development Milestones Fast-track (re)development of Mt Carbine, efficient integration of Saloro and focused M&A 4 stones d focused M&A 4 t Milestones ion of Saloro and focused M&A Operating and Financial Review continued Corporate Development Milestones Fast-track (re)development of Mt Carbine, efficient integration of Saloro and focused M&A 10 EQ Resources Limited Annual Report 2025
Tungsten Market The tungsten market entered FY2025 against a backdrop of tightening supply, intensifying geopolitical competition, and accelerating demand from both traditional and emerging industries. Over the course of the year, the global pricing environment strengthened markedly, with ammonium paratungstate (APT) prices rising from approximately US$330/mtu (≈A$500/mtu) at the start of the period to US$463/mtu (≈A$700/mtu) by June 2025 — representing a 37% increase year-onyear. This upward trajectory reflects both structural deficits in global supply and the heightened strategic importance of tungsten as a critical mineral. Geopolitics as a Price Catalyst Geopolitical factors were the dominant influence on tungsten market dynamics during the year. In February 2025, China imposed new export controls on tungsten and related rare metals, implementing a “one-item, one-certificate” licensing regime. This followed retaliatory tariffs introduced by the United States in late 2024, underscoring tungsten’s role as a strategic material with military and industrial applications. China also reduced its domestic mining quota by 6.5% starting in Q3 FY2025, further tightening global supply. At the same time, China doubled imports of Western tungsten raw materials in 2024, interpreted as a deliberate effort to build strategic stockpiles while disrupting supply security for Western consumers. The resulting imbalance is stark: while more than 90% of tungsten raw materials continue to originate from China and other opaque jurisdictions such as Russia, North Korea, and Central Africa, over 50% of global end-use demand is concentrated in Western economies (the U.S., EU, Japan, and South Korea). This mismatch has left critical industries — including automotive, aerospace, energy storage, defence, and semiconductors — exposed to increasingly politicised supply dynamics. Structural Tightness and Emerging Demand The supply-side contraction has been reinforced by resource depletion and rising environmental pressures. Average ore grades in China have fallen steadily, from 0.42% WO₃ in 2004 to around 0.28% in 2024, increasing costs and constraining new production. While non-Chinese projects such as Barruecopardo (Spain), Mt Carbine (Australia), and Sangdong (South Korea - not producing yet) have advanced, their combined output has yet to offset China’s reductions. EQ Resources Limited Annual Report 2025 11
On the demand side, FY2025 marked a turning point as new energy and high-tech applications added significant incremental volumes to traditional markets. Tungsten wire for photovoltaic wafer cutting saw penetration rates rise to 40% globally, doubling yearon-year, while use in lithium-ion batteries increased by over 20%. Defence demand also surged, with tungsten’s critical role in armour-piercing munitions, aerospace components, and next-generation aircraft securing long-term procurement contracts in the U.S. and Europe. Analysts now forecast global tungsten demand to exceed 130,000 tonnes of concentrate in 2025, a 6% year-on-year increase. Market Behaviour and Pricing Trends Throughout FY2025, tungsten prices tracked this evolving “perfect storm” of tighter supply and surging demand. After stabilising around A$490–520/mtu in Q1FY2025, prices began a steady climb through Q2 and Q3 before accelerating sharply in Q4FY2025 as Chinese controls tightened and stockpiling intensified. In parallel, ferrotungsten (FeW) prices outperformed concentrate, increasing by nearly 19% in USD terms over 18 months, reflecting robust demand from the global steel industry and the decoupling of FeW from APT price cycles. The broader tungsten product chain also saw record highs by August 2025: − Tungsten powder reached ~A$96,000/t. − Concentrate peaked at ~A$43,200/t − APT prices exceeded A$64,000/t, and APT quotes rose above A$68,000/t in Europe, This narrow gap with the aforementioned Chinese price indicates that both the western and Chinese markets are experiencing tight supply. One might have expected that the export restrictions would free up more material for the domestic market in China, but this does not seem to be the case, as evidenced by the similarly high prices. Shift Toward Long-Term Contracts A defining feature of FY2025 was the transition away from spot-market trading toward long-term, relationship-based contracts. Western buyers, wary of China’s export-licence regime, increasingly sought multi-year agreements with secure suppliers such as EQR. In Q3 FY2025, EQR signed five new offtake contracts worth an estimated US$124 million (≈A$190 million) over 24 months, each including prepayment provisions to mitigate licence-timing risks. These contracts diversified sales across Europe, North America, and Asia, providing greater revenue visibility and underpinning investment in EQR’s operations. This trend is consistent with broader industry dynamics, where downstream manufacturers are prepared to pay premiums to secure non-Chinese supply. For producers, these contracts reduce exposure to policy shocks and volatile spot prices, while requiring greater workingcapital commitments to manage larger inventories. FY2025 Market Outcome and Outlook By the close of the financial year, the tungsten market was characterised by: − Strong price appreciation: APT up 37% year-onyear, from US$338/mtu to US$463/mtu, (A$506/ mtu to A$712/mtu) with FeW premiums sustained. − Geopolitical reshaping of trade: China’s export controls and stockpiling strategy contrasted with Western efforts to secure supply independence. − Structural supply deficits: Declining Chinese grades and limited new mine output kept the market tight. − Emerging demand growth: Photovoltaics, energy storage, defence, and semiconductors added new layers of consumption. − Strategic contracting: Western buyers locked in supply with multi-year agreements, providing stability for producers. 480 530 580 630 680 730 320 340 360 380 400 420 440 460 480 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 12 months - APT Mid Price (CIF EU/US) $US & $AU US$ AU$ Figure above: 12 months history APT Mid Price. Source: Fastmarkets. Tungsten APT 88.5% WO3 min cif Rotterdam and Baltimore duty-free, $/mtu WO3 Looking forward, analysts expect tungsten prices to remain elevated and volatile over the medium term. Structural drivers — including resource scarcity, sustained defence restocking, and growth in high-tech applications — support a long-term upward trajectory. Risks remain in the form of global economic slowdown, potential substitution technologies, and speculative volatility, but the strategic value of tungsten is now firmly entrenched. Operating and Financial Review continued APT Mid Price (SUS/mtu) APT Mid Price ($AU/mtu) 12 EQ Resources Limited Annual Report 2025
For EQ Resources, FY2025’s tungsten market dynamics validated its strategy of operating in secure jurisdictions, expanding downstream exposure, and leveraging long-term contracts. With operations in Australia and Spain, and plans to integrate processing capabilities, EQR is well positioned to capture value in a market defined by scarcity, strategic importance, and sustained demand growth. Aviation Medical Military EV battery Development Green Energy Science & Technology Micro Electronics Aerospace Automotive Heavy Machinery Heavy Industry Tools & Construction 2024 End-use Sectors Tungsten Uses Mining & Construction Transport Industrial Use Defence Chemical/Petrochemical Consumer Durables Energy Medical & Pharmaceutical 2024 26% 25% 13% 11% 9% 8% 7% 1% Sources: ITIA, Company internal EQ Resources Limited Annual Report 2025 13
Material Business Risks The Board is committed to the proactive identification, assessment, and management of risk across all areas of EQ Resources’ business activities. The Company’s Risk Management Policy recognises risk management as a cornerstone of good corporate governance and fundamental to achieving both strategic and operational objectives. Effective risk oversight not only mitigates material exposures but also enhances decision-making, identifies opportunities, and underpins the preservation and creation of security holder value. The Board reviews the Company’s risk management framework at least annually, ensuring its continued relevance and effectiveness. Management reports identified risks through regular operational reporting and, where necessary, through direct and timely communication to the Board. The Company does not currently maintain a dedicated internal audit function; however, oversight is supported through the Audit and Risk Committee, which has ongoing responsibility for monitoring risk management practices and financial compliance. During the reporting period, management confirmed to the Board that the Company’s systems of risk management, internal compliance, and control remain sound and effective in all material respects. The CEO and CFO jointly attested that the Financial Statements are underpinned by a robust system of internal control, and that the Company’s risk management framework, particularly as it relates to financial risk, has operated effectively throughout the year. While the Company faces risks inherent to the resources sector — including economic, financial, and operational risks that may influence short-, medium-, or long-term outcomes — the Board does not consider EQ Resources to be materially exposed to environmental or social sustainability risks at this stage. Policies and procedures continue to be refined and updated to address emerging challenges and evolving regulatory expectations. Through its governance framework and oversight processes, EQ Resources maintains a disciplined and structured approach to risk, ensuring resilience in operations while remaining focused on delivering sustainable growth and long-term value to its stakeholders. Operating and Financial Review continued 14 EQ Resources Limited Annual Report 2025
Macroeconomic and Market Risks As a participant in the global tungsten industry, EQ Resources is exposed to macroeconomic and market-related risks that can materially influence its performance. Tungsten pricing is subject to cyclical demand patterns across key end-use sectors such as construction, mining, aerospace, defence, and automotive manufacturing. These industries are sensitive to broader economic conditions, interest rate cycles, and geopolitical developments, which can drive volatility in demand for tungsten products. While ferrotungsten pricing has demonstrated relative resilience compared to ammonium paratungstate (APT) in recent years, both markets remain susceptible to fluctuations in global industrial output and trade flows. In addition, the Company faces risks associated with supply chain dynamics, including shifts in export policies from dominant producers, currency exchange volatility, and the availability of financing for international trade. Such factors may affect the Company’s realised pricing, sales volumes, and margins over the short and medium term. Currency risk also plays a role: as EQR invoices in U.S. dollars but reports in Australian dollars, fluctuations in the USD/AUD exchange rate materially affect revenue and cash flow. The upward trend in USD/AUD during FY2025 provided a favourable tailwind, but any rapid reversal could erode realised margins. The shift from spot trading toward multi-year offtake agreements in FY2025 enhanced revenue visibility but requires maintaining production volumes and securing financing. In a rising-price environment, the ability to deliver under fixed-price off-take contracts supported cash flow, though it could become a constraint if market prices exceed contracted terms significantly. Geopolitical tensions—particularly U.S.–China technology rivalries and stricter export licensing—add uncertainty to market access and policy continuity. EQR’s broader strategy to diversify into non-Chinese markets and downstream integration (e.g., through the Elmet offtake or TMG acquisition) helps mitigate exposure, but global economic conditions, trade policy shifts, and macroeconomic cycles remain material risks requiring ongoing management. Graph Above showing the Critical versus non-critical classification of mineral resources based on supply risk-economic importance relationship (data from European Commission, 2020). EQ Resources Limited Annual Report 2025 15
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 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 higherthan-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. Operating and Financial Review continued Operational Risks EQR’s operations at Mt Carbine (Australia) and Saloro’s Barruecopardo Mine (Spain) are exposed to the full spectrum of risks inherent in mining and processing activities. These include potential interruptions from equipment breakdowns, difficulties in sourcing replacement parts, challenges in product separation and screening, and adverse weather impacts. Since the commencement of open-pit mining at Mt Carbine in June 2023, the site has evolved from a junior exploration project into a fully integrated mining operation. The leadership transition has instilled a strong, hands-on management culture focused on empowering teams, streamlining decision-making, and driving efficiency. In Spain, Barruecopardo benefits from established European infrastructure—roads, ports, and utilities— that support efficient logistics and reduce supply chain risks. Nevertheless, both sites remain subject to uncertainties such as labour availability, industrial disputes, rising input costs (labour, consumables, spare parts, and energy), and potential IT or regulatory disruptions. Broader global events—such as pandemics, geopolitical instability, or significant policy changes—may also materially affect operations and supply chains. EQR mitigates these risks through proactive maintenance programs, investment in workforce training, and embedding resilience within its operational planning. Environmental Risks The Company’s projects operate under stringent environmental obligations, with compliance central to maintaining licences to operate. Regulatory frameworks in both Australia and Spain require detailed reporting and performance against environmental criteria, creating the risk of financial or operational penalties if standards are not met or if requirements increase in scope. To manage these exposures, EQR has developed detailed environmental management plans under its risk framework and invests in continuous monitoring and reporting. At Barruecopardo, Saloro holds ISO 14001:2015 certification, which provides a structured approach to environmental management and continuous improvement. This framework guides resource efficiency, waste reduction, performance tracking, and stakeholder engagement. At Mt Carbine, environmental controls continue to be embedded into the site’s integrated systems, with a focus on reducing tailings, optimising water use, and monitoring biodiversity impacts. These measures provide resilience against regulatory change while reinforcing the Company’s commitment to sustainable operations. 16 EQ Resources Limited Annual Report 2025
Social Risks Mining operations involve a wide network of stakeholders, including employees, contractors, local communities, government agencies, customers, and suppliers. Risks in this area include workplace safety incidents, community opposition, reputational damage, and claims arising from the Company’s activities or those of its representatives. A failure to meet expectations in these areas could materially impact EQR’s social licence to operate and its financial performance. To mitigate these risks, EQR applies Board-approved stakeholder engagement policies and actively maintains open consultation channels at both Mt Carbine and Barruecopardo. The Company’s operations are underpinned by robust safety frameworks: Mt Carbine applies an Integrated Management System aligned with ISO 9001:2015 to ensure health and safety outcomes, while Barruecopardo is certified under ISO 45001, the global standard for occupational health and safety management. These systems allow risks to be identified, assessed, and addressed in a systematic way, helping to reduce incidents and strengthen workforce and community trust. Governance Risks As an ASX-listed entity operating across multiple jurisdictions, EQR is required to adhere to rigorous governance, compliance, and reporting standards. Failure to maintain these standards, or material changes in regulatory requirements, could expose the Company to penalties, reputational harm, or additional costs. EQR manages this exposure through a formal governance framework, including Board-approved policies on risk oversight, compliance, and corporate governance. These policies are reviewed regularly to ensure alignment with evolving requirements. Governance risks are also managed through the Audit and Risk Committee, which provides structured oversight of risk identification, financial integrity, and internal controls. Through these mechanisms, EQR aims to uphold transparency, accountability, and investor confidence in all jurisdictions in which it operates. Risk Category Key Exposures Mitigation Measures Operational Equipment failures, supply chain disruptions, labour availability, rising costs, IT breakdowns Preventive maintenance, workforce training, streamlined decisionmaking, infrastructure leverage Environmental Compliance with reporting obligations, potential regulatory changes, increased costs Saloro: ISO 14001 certification, Mt Carbine: EMS frameworks, site-specific monitoring and environmental plans Social Safety incidents, community opposition, reputational damage, stakeholder claims Saloro: ISO 45001 certification, Mt Carbine: IMS safety systems, stakeholder consultation, community engagement Governance ASX listing compliance, regulatory changes, corporate governance standards Governance framework, Audit & Risk Committee oversight, policy reviews and updates Macroeconomic Tungsten price volatility, FX fluctuations, inflation, interest rates, geopolitical instability Diversified customer base, longterm contracts, efficiency programs, operational flexibility Mineral Resources & Reserves Geological uncertainty, resource estimation errors, metallurgical variability JORC Code compliance, independent verification, regular model updates, advanced ore sorting EQ Resources Limited Annual Report 2025 17
Sustainability As an early adopter of Environmental, Social, Governance (ESG) practices, EQ Resources is committed to responsible resource development, aligning its values with sustainable operations to drive economic growth while protecting the environment. EQR’s ESG strategy, built on the Turner and Townsend framework, aligns with global Sustainability Standards, including ICMM, GRI, UN SDGs, and Australian Climate Related Financial Disclosures. The program focuses on key areas important to the business and stakeholders, with a commitment to ongoing development of both environmental and social initiatives. For more details, visit the Sustainability page of EQR’s website. EQR Core Values ESG Achievements The year 2023-24 has been a productive year for EQ Resources’ ESG progress, below are the key milestones: FY2025 Q4 Finalists for the 2025 Premier of Queensland’s Export Award, entry submitted Q4FY2025 in the categories: − Sustainability and Green Economy, for outstanding international success in the Green Economy. − Resources and Energy, for outstanding international success in the resources and energy sectors. FY2025 EQR continues to track GHG emissions at Mt Carbine FY2025 Q3 2025 ESG Roadmap and the Operational Initiatives Roadmap FY2025 Q2 Sustainability and Climate Risk Workshop conducted 2024 Q4 Planned Decarbonisation planning to commence Operating and Financial Review continued 18 EQ Resources Limited Annual Report 2025
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