ANNUAL Report June 2025 Notes to the Consolidated Financial Statements 10 Notes to the Consolidated Financial Statements 1. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (a) Going Concern Basis for Preparation of Financial Statements These financial statements have been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the discharge of liabilities in the normal course of business. For the full year ended 30 June 2025, the consolidated entity incurred a total comprehensive loss of $39,228,351 (2024: restated loss of $14,425,051), incurred cash outflows from operating activities of $16,916,689 (2024: $12,703,554) and had a net working capital deficit of $96,768,984 (2024: $55,567,286 deficit). The deficit in net working capital is predominately due to: ▪ The recognition of $34,872,268 of remaining borrowing as a result of the acquisition of Saloro on 18 January 2024. All borrowings are classified as current due to their renewal extensions falling within 12 months of the reporting date. ▪ The recognition of the advanced upfront Subscription Security payment of $8,735,500 from OCM Luxembourg Tungsten Holdings S.a.r.l. (Oaktree), as short-term borrowings, 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 shareholders approved the issue of 249,585,714 shares in full satisfaction of the short-term borrowings. ▪ The funding of the Company’s growth initiatives via financing facilities such as rent to buy equipment leases, royalty obligations, customer prepayments, offtake advances and trade payables. The ability of the Company to continue to adopt the going concern assumption is based upon: ▪ Extension/refinance of the Saloro current borrowing or extension of the letter of credit from Oaktree Capital Management L.P, which currently supports the debt until 10 December 2025; ▪ Continued engagement with strategic partners to secure offtake prepayments; ▪ Continued success with grant applications for companies operating in the critical minerals sector; ▪ Continued pursuit of securing long term debt funding facilities (for example, US EXIM Bank); and ▪ Continued success issuing equity to strategic partners and or existing shareholders. (b) Basis of Preparation These general-purpose financial statements have been prepared in accordance with the requirements of the Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. These financial statements have been prepared on a historical cost basis. The financial report is presented in Australian currency. The consolidated entity operates on a for-profit basis. (c) Statement of Compliance The financial statements have been prepared and comply with Australian Accounting Standards. The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. 76 EQ Resources Limited Annual Report 2025 Notes to the Consolidated Financial Statements For the year ended 30 June 2025
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