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
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