EQ RESOURCES LIMITED — Capital/Financing Update 2012

Aug 27, 2012

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Carbine Tungsten Limited announces outstanding project economics from its feasibility study of hard rock mining and stockpile processing at the Mt Carbine Tungsten Mine in North Queensland

The Board of Directors of Carbine Tungsten Limited (ASX Code: CNQ) is pleased to announce that the Company has recently completed the Feasibility Study to evaluate the viability of re-establishing the Mt Carbine tungsten mine as an open-pit mining and processing operation. The study, which is solely limited to the existing in-pit and stockpiled resources, displays highly-favourable project economics.

The Board considers that this study represents only part of a significant tungsten resource potential that exists at Mt Carbine, and serves to underpin the viability of re-establishing the openpit mine operation based on existing drill and exploration data. The study considered the lowgrade stockpiles (Figure 1) and ore available for open-pit mining at a cut-off of 0.05% WO3. Together these provide a project life of more than 15 years. The ore body is open at depth below and adjacent to the planned open-pit, and the further development of this mineralisation will be the subject of ongoing studies as production from the stockpiles and open-pit commences.

The key findings of the study are that the project is economically and practically viable. Capital expenditure, including working capital, is estimated to be A$53.8 million, returning a pre-tax Internal Rate of Return (IRR) of 60% and Net Present Value (NPV) of A$161 million at a discount rate of 8% . This is based on a product concentrate sales price averaging US$290 per metric tonne unit (mtu) over the ten-year period under consideration in the study. The production of 260,000 mtu per annum will commence in 2014. An environmental assessment and permitting scoping study has been incorporated in the study. The project has a payback period of 1.5 years. These project parameters are considered economically conservative and very robust.

The feasibility study has clearly demonstrated the viability of the project based on the currently inferred resources that are shown to exist at the mine within the existing mine lease area. This study also includes the previously stockpiled material that is readily available at the surface without requiring any additional mining activity before being processed. The stockpiled resource offers a four-to-five-year operational capability that is immediately accessible for processing and sale of concentrate product to market. The open-pit resource has been evaluated over a ten-year operational period. It is envisaged that further exploration is likely to increase that resource and operational duration since the currently defined resource is open at depth in three directions (Figure 2).

As the open-pit and processing operation was previously a successful large-scale operation for a period of over 13 years (Figure 3) prior to its closure in 1987, the Feasibility Study has the advantage of a known proven similar operation as a reference point. A wealth of practical historical data exists for much of the evaluations and conclusions in the study. The Feasibility Study has therefore been specifically tailored to concentrate on the key areas of difference or unknowns between the past and future operations and processing options in order to focus on evaluating and mitigating the areas of critical risk in assessing the viability of the hard rock project. The study has been founded on a number of composite study components conducted by recognised, independent, specialist consulting groups in order to provide professional and objective opinions in the most critical areas of the study.

Carbine Tungsten Limited ACN 115 009 106

Cairns Office : 50 Scott Street, Bungalow, Cairns QLD 4870, Tel: +61 7 4052 2400, Fax: +61 7 4052 2444

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The conclusion to the study is that the project is viable, offering a low capital cost and short payback period. The project provides a realistically short lead-time to product supply in an undersupplied tungsten concentrate market and compares very favourably with the limited tungsten mine supply alternatives announced globally to-date.

The previous mining operation was focused on production from the wolframite-dominated zone of the ore body. Recent drilling indicates that the mineralisation is zoned and wolframite-scheelite and scheelite-dominated mineralised zones (Figure 4) not previously considered for mining are potential sources of ore. The tailings project now in production has a very important additional benefit in that it confirms the planned process will recover scheelite efficiently and overall mill recovery is anticipated to be over 80%, with the inclusion of the present tailings plant in the overall mill design.

The Company has been holding promising discussions and conducting detailed reviews of the feasibility study with a number of international tungsten concentrate customers and sophisticated investment partners, and expects to announce successful off-take and project financing outcomes for the project in the near future.

The low-grade stockpile (~12 million tonnes at 0.075% WO3) will be processed for a project life of four-to-five years. At the same time the open-pit will be de-watered and pushed back to provide ore for the proposed mill taking the total life of the second stage of development to over 15 years.

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Figure 1. Google image showing the Mt Carbine tungsten mine layout.

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Figure 2. Cross section of the ore body at Mt Carbine looking west, showing mineralisation >0.22% tungsten and areas where the ore body is open to further exploration.

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Figure 3. The open-pit at Mt Carbine in 1986. The pit will be pushed back to provide ore for the proposed second stage of development at Mt Carbine.

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Figure 4. A 3-D representation of mineralisation >0.22% tungsten indicating zonation of wolframitedominated, mixed wolframite/scheelite and scheelite-dominated mineralisation in relation to the present open-pit outline.

Carbine Tungsten Limited

A James Morgan Managing Director

28 August 2012

General Enquiries Contact Jim Morgan 0487 144 834.

The information in this announcement that relates to Exploration Results and Mineral Resources is based on information compiled by Dr Andrew White, who is a Fellow of the Australian Institute of Geoscientists and a Director of Carbine Tungsten Limited. Dr White has sufficient experience relevant to the styles of mineralisation and types of deposits under consideration to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dr White consents to the inclusion in this announcement of the matters based on his information in the form and context in which they appear.

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