Directors’ Report continued ANNUAL Report June 2025 Directors’ Report 4 ▪ Continued optimisation of the production processes and recoveries from the Gravity and XRT Sorter Plants at the Mt Carbine and Barruecopardo operations with a third XRT Sorter installed at the Barruecopardo operations during Q2CY2025. ▪ Securing funding for the Mt Carbine and Barruecopardo operations and undertaking activities to advance each project which included: – Five (5) long-term offtake agreements covering the next 24 months production from both operations in Australia and Spain for an estimated total of US $124m, representing volumes of 470 containers with each container holding 20 metric tonnes of 50% WO3 concentrate. ▪ The continuation of focused drilling programs to further define the Mt Carbine Tungsten resource. Financial Position In accordance with the Company’s accounting policy, the recoverability of the carrying amounts of Deferred Exploration and Evaluation Expenditures were reassessed during the 2025 financial year with an amount of $1,204,830 impairment being recognised. This amount relates to the costs associated with the mobilisation of the Golding plant and equipment that was removed from site upon the Group’s transition to owner-operating mining at Mt Carbine during August 2024. During the period exploration and evaluation expenses of $362,013 before amortisation and R&D Tax Offset, were capitalised. The carrying value of the exploration assets as at 30 June 2025 is $11,903,517 (2024: $14,922,119). At 30 June 2025, the Group had a net working capital deficit of $96,768,984 (2024: $55,567,286). The deficit in net working capital is predominately due to: - The recognition of $34,872,268 (2024: $40,226,904) of borrowings from the acquisition of Saloro on 18 January 2024. All borrowings are classified as current due to their renewal extensions falling within 12 months of reporting date; - The recognition as short-term borrowings the advanced upfront Subscription Security payment of $8,735,000 from OCM Luxembourg Tungsten Holdings S.a.r.l. (Oaktree) prior to the issue of the Subscription Securities as part of the share placement on 22 May 2025. The loan is non-interest bearing unless the Company fails to satisfy the Subscription Approval by 31 August 2025, interest will accrue at a rate of 10% per year accruing daily. At the EGM held on 19 July 2025 shareholder approved the issue of 249,585,714 shares in full satisfaction of the short-term borrowings. - The Company’s growth initiatives being funded via short-term financing facilities such as equipment leases, government grants and trade payables. It should be noted that: - Whilst the offtake advance facility of $13,143,209 is classified as a current liability, due to the Company not having an unconditional right to defer settlement for at least 12 months after the reporting date, it is scheduled to be repaid over the life of the Mt Carbine Mine rather than within the next 12 months as depicted on the Statement of Financial Position. During the year, the Company’s issued share capital increased by $31,280,135 (before share issue costs). Refer to Significant Changes on Page 61 for further details. Indemnification and Insurance of Officers and Auditors Indemnification The Company has not, during or since the end of the financial period, in respect of any person who is or has been an Officer of the Company or a related body corporate indemnified or made any relevant agreement for indemnifying against a liability incurred as an Officer, including costs and expenses in successfully defending legal proceedings. 70 EQ Resources Limited Annual Report 2025
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