EQ RESOURCES LIMITED — Interim / Quarterly Report 2014

Mar 13, 2014

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Carbine Tungsten Limited

ABN: 77 115 009 106 (ASX CODE: CNQ)

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Half Year Financial Report

31 DECEMBER 2013

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CORPORATE DIRECTORY

DIRECTORS

Russell H. Krause Andrew J. Morgan Anthony E. Gordon Roland W. Nice

Non-executive Chairman CEO & Managing Director Non-executive Director Non-executive Director

COMPANY SECRETARY

Tom Bloomfield

PRINCIPAL AND REGISTERED OFFICE

50 Scott Street, Bungalow QLD 4870 Telephone: +61 (0)7 4052 2400 Facsimile: +61 (0)7 4052 2444 E-mail: admin@carbinetungsten.com.au Website: www.carbinetungsten.com.au

SHARE REGISTRY

Computershare Investor Services Pty Limited

Yarra Falls

452 Johnston Street

Abbotsford VIC 3067

Telephone (within Australia): 1300 850 505 Telephone (internationally): +61 (0)3 9415 4000

AUDITORS

BDO Audit (NTH QLD) Pty Ltd 25 – 27 Aplin Street Cairns QLD 4870

Telephone: +61 (0)7 4046 0000 Facsimile: +61 (0)7 4051 3484

BANKERS

Commonwealth Bank of Australia

STOCK EXCHANGE LISTING

Listed on the Australian Securities Exchange (ASX) ASX Code: CNQ

ABN: 77 115 009 106

P A G E | 1

CONTENTS

CONTENTS ....................................................................................................................................................................... 1 DIRECTORS’ REPORT .................................................................................................................................................... 2 REVIEW OF OPERATIONS ............................................................................................................................................. 4 AUDITOR’S INDEPENDENCE DECLARATION .............................................................................................................. 8 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ........................... 9 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ......................................................................................... 10 CONSOLIDATED STATEMENT OF CASH FLOWS ...................................................................................................... 11 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ......................................................................................... 12 NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS ........................................................................................... 13 DIRECTORS’ DECLARATION ........................................................................................................................................ 17 INDEPENDENT AUDITOR’S REVIEW REPORT ........................................................................................................... 18

P A G E | 2

DIRECTORS’ REPORT

Your Directors submit their Report for the half year ended 31 December 2013.

DIRECTORS

A change in Directors occurred shortly before the period of this Report. The names of the Company’s Directors in office during the half-year and at the date of this Report are as follows:

Russell H. Krause Non-executive Chairman Andrew J. Morgan CEO & Managing Director Anthony E. Gordon Non-executive Director Roland W. Nice Non-executive Director

REVIEW & RESULTS OF OPERATIONS

The net result of operations after applicable income tax expense for the half year ended 31 December 2013 was a loss of $2,126,011 (2012 – loss $3,840,702).

REVIEW OF OPERATIONS

The first half of the 2013/2014 financial year has been a very productive and busy period for Carbine Tungsten Limited (“Carbine” or “the Company”) with the achievement of a number of key milestones and improvements that have positively impacted upon the Company’s future performance, value and productivity.

As announced on 3rd February 2014 Mitsubishi Corporation RtM Japan Ltd (“Mitsubishi RtMJ”) has provided a US $1M loan to Carbine secured against a 2.7 percent shareholding in Carbine’s wholly owned subsidiary company, Tungsten Resources Pty Ltd, which holds the Mt Carbine Hard Rock Project’s rights. These loan funds were received in early February 2014 (and are not included in the financial accounts below). The funds will be utilised to provide interim funding to complete priority works and maintain progress on certain engineering works for the Hard Rock Stockpile Project. It has also allowed for the critical path works to continue and detailed technical design and development tasks to be progressed as a precursor to Mitsubishi RtMJ’s stated planned intention to provide additional funding for the stockpile phase of the Mt Carbine Hard Rock Project.

Finalising both the technical and commercial details of the Hard Rock Stockpile Project with Mitsubishi RtMJ has been a focus for Carbine and their senior management. Our technical team has made two recent trips to Tokyo to work in close co-operation with Mitsubishi RtMJ’s commercial and technical project task force that has been specifically established to work on the Mt Carbine Hard Rock Stockpile Project.

Carbine has also engaged additional senior technical staff to assist with and accelerate the Project’s engineering development. This detailed design and engineering work is based upon past and recent metallurgical test work and past long term recorded operational data. Work is progressing well and has confirmed the viability of the Hard Rock Stockpile Project.

Carbine is also in advanced discussions with a number of prominent investment and debt funding groups to provide funding for additional Project development activities such as exploration for the Iron Duke open-pit extensions and the Petersen’s Lode deposits and Project peripheral items associated with the overall Hard Rock Project development. These discussions have progressed to the preliminary term sheet stage and Carbine’s management are negotiating detailed terms and conditions with these debt funding groups.

Carbine has recently lodged its annual research and development (“R&D”) tax reimbursement, associated with its tailings retreatment operations. As experienced in the past three financial years, 2010 through to 2013, a successful R&D tax reimbursement of significant quantum is expected to support the Company’s cash flow position in the near future. Carbine continues its ongoing R&D activities at its tailings retreatment production facility and has recently mobilised wet high intensity magnetic separation (WHIMS) equipment to the site for a trialling campaign to improve the overall recovery of its tailings retreatment processing plant. This initiative follows on from earlier lab test work conducted in late 2013 and past successful operations of magnetic separation in the historical full scale open-pit operations during the 1980’s.

The tungsten market demand continues to be strong and the Company has noted a significant increase in enquiries for its current concentrate and longer term off-take interest from various reputable customers for supply. Tungsten remains a scarce and highly strategic industrial and military metal. Tungsten demand and pricing may well benefit from recently announced significant increases in the military budgets of a number of the Asia region countries as evidenced historically in similar increased military expenditure cycles.

P A G E | 3

DIRECTORS’ REPORT

The Company continues to make steady and solid progress on its development plans and the critical path Project deliverables on its world class, low risk, low cost, brown fields, hard rock tungsten mining project and continues to strengthen its co-operative and long term working relationship with its major funding and off-take partner Mitsubishi RtMJ.

Further information on the operations and financial position of the Group, its business strategies and prospects for future financial years is set out in the next sections of this Report, however the major highlights of the period were:-

• The awarding of Environmental Authority (“EA”) for EPML00956913 in August 2013 for the annual processing of up to 3 million tonnes of Hard Rock stockpiles. The awarding of this EA was also seen as a critical step towards securing $15 million in Project funding from Mitsubishi RtMJ as outlined in the Memorandum of Understanding (“MOU”) signed in February 2013.

• Showcasing the Mt Carbine Project to approximately 80 international tungsten investors and delegates from the International Tungsten Industry Association (“ITIA”) Conference on 26 September 2013.

• Completion of run-off water drainage diversion works for environmental and operational compliance during the September 2013 quarter.

• The discovery of potential mineralisation at the Iron Duke and Petersen’s Lode prospects during detailed surface geological mapping within a 3km radius of the existing open-pit mine.

• The completion of a successful fund raising campaign in November 2013 to enable the Company to further advance its Hard Rock stockpile and open-pit development programs.

• Final approvals received from the Department of Environment and Heritage Protection (“DEHP”) in December 2013 for the Plan of Operations associated with the stockpile processing phase of the Company’s Hard Rock Project.

FINANCIAL

The Company’s cash position as at 31 December 2013 was $301,617.

SUBSEQUENT EVENTS

No event has occurred subsequent to 31 December 2013 requiring disclosure in, or amendment to, these financial statements, apart from:

1. ASX announcement on 3 February 2014 advising that the Company had secured US$1 Million debt funding from off-take partner Mitsubishi RtMJ for its Hard Rock Project development.

AUDITOR’S INDEPENDENCE DECLARATION

The Auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is attached to this report.

Signed at Cairns this 13th day of March 2014 in accordance with a resolution of Directors.

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RH Krause

Chairman

P A G E | 4

REVIEW OF OPERATIONS

The first six months of the 2013/2014 financial year has marked another highly successful period for Carbine as it continues to make significant progress towards the development of its world class Hard Rock Tungsten Mining Project.

The following commentary provides an overview of the activities and milestones achieved during this period.

HARD ROCK PROJECT

FUNDING

Carbine continues to strengthen its relationship with Mitsubishi RtMJ following a visit by their President, Mr Kenji Tani, and other senior delegates to the Mt Carbine mine site in July 2013.

The purpose of this visit was to allow for further due diligence activities to be undertaken by Mitsubishi RtMJ following the signing of the MOU in late February 2013 which outlined their intention to provide up to $15 million in Project level funding.

This was followed by a further visit by Mitsubishi RtMJ’s senior commercial and technical teams in late December 2013 for the sole purpose of progressing the MOU, interim loan and stockpile project funding facility to detailed legal and commercial documentation stage.

As a direct result of these discussions Carbine was pleased to announce on 3 February 2014 that it had signed a US$1 million Loan Agreement with Mitsubishi RtMJ which was secured against 2.7% in Project level equity. These funds would be used for environmental and engineering work for the stockpile processing phase of the Hard Rock Project.

In addition to this, Carbine had also agreed to an extension of the MOU signed with Mitsubishi RtMJ in February 2013 that outlined their intention to provide further funding through debt or equity as well as Mitsubishi RtMJ retaining the rights to 80% off-take of the production from the stockpiles and 50% from the open-pit.

The Board looks forward to continuing to work closely with Mitsubishi RtMJ as it continues to progress its development plans to unlock the value within its world class tungsten Project.

During this period Carbine’s Board has also significantly advanced discussions with separate supportive debt funding groups to detailed commercial documentation stage.

ENVIRONMENTAL APPROVALS

Following the submission of its Environmental Management Plan to the DEHP on 14 March 2013, Carbine was pleased to announce that it had achieved a significant milestone in its transition from tailings retreatment to Hard Rock production, with the DEHP issuing the Environmental Authority for EPML00956913 in August 2013.

This EPML covers the existing tungsten stockpiles that form part of the Hard Rock Project which have an estimated mine life potential of ~5 years with an annual processing capacity of 3 million tonnes per annum or ~8 years if an annual processing capacity of 1.5 million tonnes per annum is adopted.

HARD ROCK STOCKPILES

Final approval was received from DEHP in December 2013 for the Plan of Operations associated with the tungsten stockpile processing phase of the Company’s Hard Rock Project.

This approval included a processing capacity of up to 3 million tonnes per annum and was the final approval required before the commencement of construction and operation of the new Hard Rock processing facility for the extraction of ore from 12 million tonnes of Hard Rock stockpiled tungsten material.

In addition to the Company’s current tailings reclamation facility, this approval will allow Carbine to significantly increase production capacity and advance its objective of becoming a major tungsten supplier.

The Board believes that given the global tungsten supply shortage and growing tensions around traditional Asian tungsten supply sources, Mt Carbine is well positioned due to it having a ready supply of tungsten concentrates from its historically proven, large scale mine. This provides Carbine with a realistic and significant global advantage of becoming a leading low cost, low risk, long term, free market tungsten supplier.

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12 Mt of Stockpiled Tungsten Material, Mt Carbine

ENVIRONMENTAL MANAGEMENT

Run-off water drainage diversion works were completed at the Mt Carbine site during the September 2013 quarter as part of the Company’s Project development and environmental compliance requirements.

P A G E | 5

REVIEW OF OPERATIONS

These works were designed to cater not only for current activities but also future developments associated with the Hard Rock Project.

TAILINGS RETREATMENT PLANT

The Company’s research and development Tailings Retreatment Project has continued to produce and supply high grade tungsten concentrate for export to Mitsubishi RtMJ and further initiatives to improve the production and economics of this Project are continuing.

ITIA SITE VISIT

Carbine was delighted to be selected by the ITIA to showcase the Mt Carbine Project as part of its annual conference held in Australia during September 2013.

Following this conference an extremely successful site tour was conducted on 26 September 2013 with ~80 attendees from major tungsten investment groups and other interested parties from 12 countries representing the metal investment, industrial, materials trading and commodity information sectors.

Recent detailed surface geological mapping within a radius of 3km of the existing open-pit has provided further confirmation of potential mineralisation at the Iron Duke and Petersen’s Lode prospects. These prospects are located within the existing Mining Lease or in the adjacent EPM 14872 held by Carbine.

Background

The northern-most prospect, Iron Duke, remains largely untested except immediately adjacent to the existing openpit, where 6 drill holes returned high-grade assays over an average true width of 8m and a weighted average grade of 0.33% WO3. There is a single record of production from the southern prospect, Petersen’s Lode, of 960 tonnes of ore with a grade of 0.6% WO3 being sold. The geological mapping program is continuing with the Iron Duke prospect remaining open along strike to the north.

Mt Carbine has an Indicated Resource of 12Mt at 0.075% WO3 in stockpiles at surface, and 18Mt at 0.14% WO3 (using a cut-off of 0.05%WO3) in the planned open-pit mine. The dominant tungsten mineral in these two resources is wolframite (iron tungstate). The prospects identified from old workings, and from the recent mapping, are dominated by the tungsten mineral scheelite (calcium tungstate).

Financing is currently being negotiated for the construction of a plant to process the surface tungsten stockpiles, and this will include a component to fund the drill testing program for the potentially high grade prospects being targeted.

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ITIA Delegates Inspect Tungsten Stockpiles, Mt Carbine
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The interest Carbine received during the site tour and ITIA Conference was extremely encouraging, and highlighted to the Board that the Company’s strategy to increase production through the development of its Hard Rock Project has the potential to meet the strong demand from global tungsten users.

FUTURE PROSPECTS & EXPLORATION ACTIVITIES

MT CARBINE, QUEENSLAND

During November 2013, Carbine was pleased to report on the exploration progress made at the priority tungsten prospects proximal to the existing open-pit mine at the Mt Carbine Tungsten Project in Far North Queensland. Previously, Carbine had identified three prospective target areas proximal to its existing operations (see Figure 1) that are subject to ongoing exploration activity.

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Figure 1
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Iron Duke Prospect

The potential of the Iron Duke prospect was recognised after the scheelite-dominated mineralised zone was intersected in 6 core holes that formed part of confirmatory drilling of the wolframite-dominated resource beneath the present open-pit. The holes were drilled from east of the pit and intersected the Iron Duke zone at depths below 100m from surface.

The surface area above the Iron Duke zone is covered by mineralised waste dumps from the previous mining operation, and without removing these dumps there is no opportunity to sample any surface exposures.

| P A G E | 6

REVIEW OF OPERATIONS

However, in the recent detailed surface geological mapping exercise, the package of rocks that contains the Iron Duke mineralisation was recognised two hundred metres north of the drill intercepts and followed for 1.5km to the north. A zone with an average width exceeding 20m in surface exposures strikes north for a distance of 1.7km from the drill intercepts. Scheelite and minor wolframite have been found in an outcrop of the zone over the entire strike length.

Petersen’s Lode

Petersen’s Lode consists of a semi-continuous exposure of a mineralised zone that has a strike length of 1.2km. The zone is widest (60m) at its northern end approximately 1.7km south east of Mt Carbine and continues to the south east but narrows so that 3km south east of Mt Carbine it averages 2- 3m width in old workings that date from the 1970’s. A sample taken over 20m at the northern end of the lode assayed 0.2% WO3.

The grades indicated in sampling of the Iron Duke and Petersen’s Lode are higher than the estimated global average grade in the present open-pit resource.

Even though the Company is currently focused on planned development activities for the stockpile processing phase of the Hard Rock Project, it was encouraging to receive further confirmation of the exploration upside in very close proximity to the open-pit mine.

Carbine has a substantial existing JORC resource base, and the Company will continue to target the priority exploration prospects to better define the potential resource upside.

RESOURCE STATEMENT COMPLIANCE

The Company released detailed reports on 22 November 2013, 4 December 2013 and 13 January 2014 for the purpose of rendering its existing resource statement compliant with the 2012 JORC Code for the Reporting of Mineral Resources and Ore Reserves.

These reports can be viewed by following the below link:-

EXPIRY OF UNLISTED OPTIONS

1,500,000 unlisted options exercisable at $0.34 expired without exercise on 30 November 2013.

TUNGSTEN MARKET OUTLOOK

The general consensus at the ITIA Conference was that tungsten supply levels had reached a critical point whereby tungsten production would need to increase by 4% to 6% per annum to meet future demand. This was akin to an operation the full production scale of Mt Carbine coming on-line each year.

The increasing market demand and resultant shortage of tungsten supply is a strong predictor that tungsten pricing will likely remain strong and grow stronger going forward.

The Board of Carbine believes that as the number of globally available alternative tungsten mining projects continues to diminish, due to either delayed regulatory approvals, economic or technical viability difficulties, the Mt Carbine Project will continue to stand out as a compelling world class tungsten supply source with realistic near and long term production capabilities.

COMPETENTPERSONS’STATEMENT

The information in this Report that relates to Exploration Results and Mineral Resources and Ore Reserves is based on information compiled by Dr Andrew White, who is a Fellow of the Australian Institute of Geoscientists and a consultant to Carbine. Dr White has sufficient experience relevant to the style of mineralisation, mining and processing the type of deposit under consideration to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dr White consents to the inclusion of the matters based on his information in the form and context in which it appears.

http://www.carbinetungsten.cm.au/ctasx

CORPORATE

CAPITAL RAISING ACTIVITIES

A successful capital raising campaign was undertaken in November 2013 whereby 12,904,546 ordinary shares at 0.055 cents per share were placed with sophisticated investors. The placement also carried one unlisted option for every two shares taken up with a term of 12 months and a strike price of 10 cents.

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This funding has been used primarily to progress those activities associated with the permitting and approvals for the recommencement of mining activities at the former open-pit tungsten mine, as well as general working capital.

| P A G E | 7

REVIEW OF OPERATIONS

“HARD ROCK” PROJECT PIPELINE

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2015 (Qtr 4)
Open-Cut Mine PETERSEN’S LODE
Q3 2015 (Qtr 1 – Qtr 3) In Operation~10 year mine & IRON DUKE
2014 (Qtr 4) 2013 Open-Cut Mine 3 MTPA
Stockpile Processing +/- 10 years
Commences
~ 8 years mine life
OPEN PIT
3 MTPA
+/- 10 years
STOCKPILE
1.5 - 3 MTPA
+/- 8 years
2013 (Qtr 4)-2015 (Qtr 1)
Exploration Activities
Petersen’s Lode & Potential
Iron Duke
Mergers &
Acquisitions Mt Holmes
Tin
2013 (Qtr 4) - 2014 (Qtr 3)
Hard Rock Stockpile
2012 (Qtr 3) Onwards
Plant Procurement,
Tailings Retreatment Plant 2012 (Qtr 3)
Construction &
Optimisation Program Tailings Retreatment Plant
Commissioning commenced production TAILINGS
RETREATMENT
PLANT
500K TPA
2-3 years
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AUDITORS’ INDEPENDENCE DECLARATION

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| P A G E | 8

Consolidated Statement of Profit or Loss and Other Comprehensive Income Half-year ended 31 December 2013

Comprehensive Income Half-year ended 31 December 2013
		**P A G E
Note REVENUE 2 Administration expenses Consultant expenses Depreciation expense Employee benefits expense Exploration expenditure written-off 5 Loan impairment expense Loss on revaluation of investments Mt Carbine Operations 9 Other expenses LOSS BEFORE INCOME TAX EXPENSE Income tax expense NET LOSS FOR THE HALF-YEAR ATTRIBUTABLE TO MEMBERS OF THE PARENT ENTITY Other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE HALF-YEAR ATTRIBUTABLE TO MEMBERS OF THE PARENT ENTITY Basic loss per share Diluted loss per share	31 Dec 2013 $ 679,030 (288,712) (236,569) (7,903) (66,394) (9,660) - - (2,137,657) (58,146) (2,126,011) - (2,126,011) - (2,126,011) (0.007) (0.007)
		(3,840,702) -
		(3,840,702)
		-
		(3,840,702)
		(0.014) (0.014)

The above statement should be read in conjunction with the accompanying notes

CARBINE TUNGSTEN LIMITED

Consolidated Statement of Financial Position as at 31 December 2013

|||P A G E | 10
30 June 13
$ 1,464,162
167,015
134,011
43,700|
|---|---|---|
|Note
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
3
Stock on hand
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Tenement and other security deposits
Plant and equipment
Other financial assets
4
Deferred exploration and evaluation expenditure
5
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
6
Reserves
Accumulated losses
Non-controlling interest
TOTAL EQUITY|31 Dec 2013
$
301,617
96,656
145,730
43,785
587,788
273,301
5,374,122
156,737
7,405,966
13,210,126
13,797,914
1,048,591
1,048,591
1,048,591
12,749,323
27,733,583
554,049
(15,538,314)
5
12,749,323||
|||1,808,888|
|||282,081
5,726,725
166,987
7,405,966|
|||13,581,759|
|||15,390,647|
|||1,277,146|
|||1,277,146|
|||1,277,146|
|||14,113,501|
|||26,965,917
559,882
(13,412,303)
5|
|||14,113,501|

The above statement should be read in conjunction with the accompanying notes

CARBINE TUNGSTEN LIMITED

Consolidated Statement of Cash Flows Half-year ended 31 December 2013

|||P A G E | 11
31 Dec 2012
$ (2,100,109)
828,530
16,658|
|---|---|---|
|CASH FLOWS FROM OPERATING ACTIVITIES
Payment to suppliers and employees
Receipts from Customers
Interest received
NET CASH FLOWS USED IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of plant and equipment
Proceeds on sale of plant and equipment
Proceeds on sale of investments
Loans provided/repaid
Expenditure on mining interests (exploration, mining)
Tenement and other security deposits
NET CASH FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Equity raising expenses
NET CASH FLOWS FROM FINANCING ACTIVITIES
NET INCREASE (DECREASE) IN CASH HELD
Add opening cash brought forward
CLOSING CASH CARRIED FORWARD|31 Dec 2013
$
(2,488,856)
607,720
2,757
(1,878,379)
-
74,841
9,428
-
(40,601)
5,000
48,668
709,750
(42,584)
667,166
(1,162,545)
1,464,162
301,617||
|||(1,254,921)|
|||(309,245)
-
-
(322,293)
(115,321)
(81,400)|
|||(828,259)
2,135,000
-|
|||2,135,000|
|||51,820
975,085|
|||1,026,905|

The above statement should be read in conjunction with the accompanying notes

CARBINE TUNGSTEN LIMITED

Consolidated Statement of Changes in Equity Half-year ended 31 December 2013

P A G E | 12

CONSOLIDATED AT 1 JULY 2012 Prior period adjustment Loss for the period Other comprehensive income Total comprehensive income Transactions with owners in their capacity as owners: Cost of share based payments Issue of share capital AT 31 DECEMBER 2012 AT 1 JULY 2013 Loss for the period Other comprehensive income Total comprehensive income Transactions with owners in their capacity as owners: Issue of share capital Share issue costs AT 31 DECEMBER 2013	Attributable to the shareholders of Carbine Tungsten Limited	Attributable to the shareholders of Carbine Tungsten Limited
	Issued Capital $ Accumulated Losses $ Reserves $ Non- controlling interest $ 24,239,992 (8,465,704) 554,049 5 - (82) - - - (3,840,702) - - - - - -	Total Equity $ 16,328,342 (82) (3,840,702) -
	- (3,840,702) - -	(3,840,702)
	- - 90,000 - 2,260,000 - - -	90,000 2,260,000
	26,499,992 (12,306,488) 644,049 5	14,837,558
	26,965,917 (13,412,303) 559,882 5 - (2,126,011) - - - - - -	14,113,501 (2,126,011) -
	- (2,126,011) - -	(2,126,011)
	810,250 - (5,833) - (42,584) - - -	804,417 (42,584)
	27,733,583 (15,538,314) 554,049 5	12,749,323

The above statement should be read in conjunction with the accompanying notes

CARBINE TUNGSTEN LIMITED

NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS

P A G E | 13

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Company as the full financial report.

The half-year financial report should be read in conjunction with the annual financial report of Carbine Tungsten Limited as at 30 June 2013.

It is also recommended that the half-year financial report be considered together with any public announcements made by Carbine Tungsten Limited during the half-year ended 31 December 2013 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(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 discharge of liabilities in the normal course of business. The ability of the Company to continue to adopt the going concern assumption will depend on future successful capital raisings, the successful development and subsequent exploitation of the Company’s tenements and/or sale of non-core assets. Should the Company not be successful in raising additional funding by capital raisings or other alternative funding arrangements fail to eventuate, there is a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. If the Company is unable to continue as a going concern, it will be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts that may be different to those stated in the financial statements.

The directors are cognisant of the fact that future development and administration activities are constrained by available cash assets, and believe future identified cashflows are sufficient to fund the short term working capital and forecasted exploration requirements of the Company.

The Directors are confident of securing funds if and when necessary to meet the Company’s obligations as and when they fall due, and consider the adoption of the going concern basis to be appropriate in the preparation of these financial statements.

(b) Statement of Compliance

The half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 134 “Interim Financial Reporting” and other mandatory professional reporting requirements.

The half-year financial report has been prepared on a historical cost basis and held for trading financial assets have been measured at fair value through profit or loss.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

(c) Basis of consolidation

The consolidated financial statements comprise the financial statements of Carbine Tungsten Limited (Carbine Tungsten or the Company) and its subsidiaries (the Group) as at 31 December each year.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

Adjustments are made to bring into line any dissimilar accounting policies that may exist.

All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

(d) Significant Accounting Policies

The half-year financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2013.

CARBINE TUNGSTEN LIMITED

P A G E | 14

NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS

2. REVENUE FROM ORDINARY ACTIVITIES Interest received – other persons/corporations Sale of Tungsten Concentrate Fuel tax rebate Other income Gain on sale of non-current assets 3. RECEIVABLES - CURRENT Interest receivable Refund for GST paid Trade Receivables Other 4. OTHER FINANCIAL ASSETS Spencer Resources Limited – shares Sovereign Gold Company Limited – shares		31 December 2012 $ 16,658 715,811 74,719 3,000 35,000
	31 December 2013 $ 2,095 523,462 71,044 9,515 72,914 679,030
		845,188
		30 June 2013 $ 867 66,698 27,231 72,219
	31 December 2013 $ - 77,936 2,604 16,116 96,656
		167,015
		12,300 154,687
	2,050 154,687 156,737
		166,987

Other financial assets noted above are securities of Companies listed on the Australian Securities Exchange (ASX) and are measured at market value at balance date.

CARBINE TUNGSTEN LIMITED

NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS

P A G E | 1 5

5. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE $ Costs brought forward 7,405,966 Costs incurred during the period 9,660 Expenditure written off during the period (9,660) Costs carried forward 7,405,966 6. ISSUED CAPITAL (a) Movements in ordinary share capital Date Number of shares Issue price 1 July 2013 brought forward 281,936,594 Shares issued under a placement for consulting services 31-10-2013 539,859 $0.083 Shares issued under a placement 15-11-2013 12,904,546 $0.055 Shares issued under a placement for consulting services 30-12-2013 453,356 $0.055 Shares issued to satisfy bonus conditions of historical employee contracts 30-12-2013 510,824 Share issue costs - Balance as at 31 December 2013 296,345,179 various issue prices (b) Options and Performance Rights Issue Date Number of Options Exercise price Unlisted Options and Performance Rights Options issued free under Company’s ESOP 16-12-2009 450,000 $0.15 Options issued free under Company’s ESOP 16-12-2009 950,000 $0.20 Options issued free attaching under a placement 15-11-2013 6,452,273 $0.10 Performance Rights issued 07-12-2012 2,400,000 Performance Rights exercised 13-05-2013 (1,000,000) Balance as at 31 December 2013 9,252,273	5. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE $ Costs brought forward 7,405,966 Costs incurred during the period 9,660 Expenditure written off during the period (9,660) Costs carried forward 7,405,966 6. ISSUED CAPITAL (a) Movements in ordinary share capital Date Number of shares Issue price 1 July 2013 brought forward 281,936,594 Shares issued under a placement for consulting services 31-10-2013 539,859 $0.083 Shares issued under a placement 15-11-2013 12,904,546 $0.055 Shares issued under a placement for consulting services 30-12-2013 453,356 $0.055 Shares issued to satisfy bonus conditions of historical employee contracts 30-12-2013 510,824 Share issue costs - Balance as at 31 December 2013 296,345,179 various issue prices (b) Options and Performance Rights Issue Date Number of Options Exercise price Unlisted Options and Performance Rights Options issued free under Company’s ESOP 16-12-2009 450,000 $0.15 Options issued free under Company’s ESOP 16-12-2009 950,000 $0.20 Options issued free attaching under a placement 15-11-2013 6,452,273 $0.10 Performance Rights issued 07-12-2012 2,400,000 Performance Rights exercised 13-05-2013 (1,000,000) Balance as at 31 December 2013 9,252,273		$ 7,293,945 123,335 (11,314)
	$ 7,405,966 9,660 (9,660) 7,405,966
			7,405,966
			$ 26,965,917 45,000 709,750 26,200 29,300 (42,584) 27,733,583 Maturity 17-11-2014 17-11-2014 15-11-2014
	Number of shares Issue price 281,936,594 539,859 $0.083 12,904,546 $0.055 453,356 $0.055 510,824 - 296,345,179 Number of Options Exercise price 450,000 $0.15 950,000 $0.20 6,452,273 $0.10 2,400,000 (1,000,000) 9,252,273**

7. CONTINGENT ASSETS AND LIABILITIES

The Group has provided guarantees totaling $133,000 in respect of mining tenements and environmental bonds. These guarantees in respect of mining tenements are secured against deposits with the relative State Department of Mines. The Company does not expect to incur any material liability in respect of the guarantees.

CARBINE TUNGSTEN LIMITED

NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS

P A G E | 1 6

8. SEGMENT INFORMATION

The Group operates predominantly in one business and one geographical area, namely Australian mineral exploration, mining evaluation and development. The Group has started to export tungsten concentrate obtained from its Tailings Retreatment Plant to a Japanese buyer, Mitsubishi Corporation RtM Japan (Mitsubishi RtMJ) and they have an agreement to take all the production for the immediate future.

9. MT CARBINE OPERATIONS Mt Carbine operations		2,494,978
	2,137,657 2,137,657
		2,494,978

Direct costs in the operations of the Mt Carbine tailings re-treatment plant during the period. The prefeasibility study was completed during the prior period so costs are no longer able to be capitalised under AASB6 Exploration for and Evaluation of Mineral Resources.

10. SUBSEQUENT EVENTS

No event has occurred subsequent to 31 December 2013 requiring disclosure in, or amendment to, these financial statements, apart from:

1. ASX announcement on 3 February 2014 advising that the Company secured US$1 Million debt funding from off-take partner Mitsubishi RtMJ for Hard Rock Project Development.

CARBINE TUNGSTEN LIMITED

DIRECTORS’ DECLARATION

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In accordance with a resolution of the Directors of Carbine Tungsten Limited, I state that: In the opinion of the Directors:

• a) the financial statements and notes of the Company:

• i) give a true and fair view of the Company’s financial position as at 31 December 2013 and the performance for the half-year ended on that date; and

• ii) comply with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and

• b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

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A J MORGAN

CEO and Managing Director Cairns, 13[th] March 2014

CARBINE TUNGSTEN LIMITED

INDEPENDENT AUDITOR’S REVIEW REPORT

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CARBINE TUNGSTEN LIMITED

INDEPENDENT AUDITOR’S REVIEW REPORT

P A G E | 1 9

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CARBINE TUNGSTEN LIMITED

CARBINE TUNGSTEN LIMITED

ABN 77 115 009 106

ASX CODE: CNQ

50 Scott Street, Bungalow QLD 4870, Australia Telephone: +61 7 4052 2400 Facsimile: +61 7 4052 2444 Email: admin@carbinetungsten.com.au Website: www.carbinetungsten.com.au