EQ RESOURCES LIMITED — Interim / Quarterly Report 2017

Apr 27, 2017

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Quarterly Activities Report

For the Quarter Ended 31 March 2017

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HIGHLIGHTS

• Carbine Tungsten Limited (“Carbine” or “the Company”) was pleased to announce on 22 March 2017 that it had successfully completed a placement to institutional and sophisticated investors of 62,000,000 fully paid ordinary shares at a price of $0.013 per share to raise $806,000 before costs.

• Exploration work about to intensify at both the Company’s 100% held gold prospects. A review of the highly encouraging sampling results can be found in the announcement released by Carbine on 18 April 2017.

• The Company is pleased to advise that the research and development (“R&D”) activities it conducted during the 2015-2016 financial year have resulted in a R&D Tax Offset amount of $572,917 being received mid-April 2017 (post the Company’s Quarterly Cash Flow Report period ending 31 March 2017).

• Carbine’s Chilean lithium concessions solidly in process, high concession processing activity is prolonging the typical award duration period.

EXECUTIVE SUMMARY

This quarter has been a very productive and busy one with Carbine successfully raising $806k in its oversubscribed placement to sophisticated investors and has subsequently augmented this funding with the receipt of $572k from R&D tax offsets during April 2017 (post the Company’s Quarterly Cash Flow Report period ending 31 March 2017). The Company wishes to reiterate its sincere thanks to the new shareholders for their support during the raising. The Company is now well positioned to conduct its near-term programs.

Carbine’s exciting applications for lithium focused concessions in Chile are progressing well via the wellregulated and robust Chilean concessions approval system, however due to the high numbers of concessions now in process in the relevant Chilean copper centric jurisdictions, processing times are experiencing some longer than expected delays. The Company is confident and highly focused on its Chilean lithium brines exploration and development program, which is underpinned by encouraging in-country prospecting activities conducted during 2016. The Company’s deliberate strategy to specifically target low production and execution cost lithium brine targets is a key differentiator in its approach to the rapidly expanding lithium supply and demand market.

The Company has also intensified its gold exploration activities driven by high-grade findings at its two gold exploration prospects in New South Wales.

Carbine’s world class tungsten mine project at Mt Carbine is retained in a shovel-ready status and on-site wet season management activities have coped well with the North Queensland wet season period which is now nearing its end. R&D activities are set to continue to advance the project and improve on the existing low OPEX and CAPEX cost profiles of the project.

The Tungsten APT price and market has remained relatively stable during the last quarter. However ongoing and rapidly increasing geopolitical and military tensions in both the China sea and the Korean peninsula amid increased military expenditures in the USA, Japan and Europe are creating a scenario where the current Western world’s dependence upon China as a de facto single source of tungsten supply (more than 80 percent) for strategic military and industrial metal will likely undergo rapid strategic re-thinking, particularly from a security of supply perspective. Tungsten’s supply security importance and price has historically benefited during past, similar times of global tensions. The Mt Carbine Tungsten Project with its historically proven production capability, low development and operational costs and near-term production capability in a stable western mining country is well positioned to respond to these developments.

Carbine looks forward to an exciting and productive upcoming quarter.

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EXPLORATION AND DEVELOPMENT ACTIVITIES

SUBSEQUENT TO QUARTER ENDED 31 MARCH 2017

CARBINE TO INTENSIFY GOLD EXPLORATION AT ITS HIGH-GRADE PROSECTS

Carbine was pleased to announce on 18 April 2017 that exploration work was about to intensify at both the Company’s 100% held gold prospects. A review of the highly encouraging sampling results is outlined below.

The Company holds two exploration licences covering old gold fields with numerous historical workings, Panama Hat EL8024 20km south east of Broken Hill in western NSW (Figure 1) and Crow King (Figure 2). Sampling of dumps associated with deeper historic workings in each tenement has revealed high grade gold values over large areas, in Panama Hat with samples ranging up to 83.2g/t, and at Crow King ranging up to 17.1g/t.

Panama Hat, EL8024

The Panama Hat EL8024 covers 80% of the historical gold workings in the Broken Hill district, about 30km south east of Broken Hill. The workings mostly date from 1931-1935, and occur along an arcuate line of quartz veining with associated iron oxides. Sericitic alteration of the host metamorphic rocks accompanies the quartz veining. The iron oxides are interpreted to result from weathering of sulphide mineralisation at depth. The quartz veining is not deformed and may represent a much younger mineralising event than that of Broken Hill to the north west.

Sampling has determined that the near surface is likely to be intensely leached of gold; however sampling of waste dumps associated with deeper historical workings has identified gold values locally of bonanza grade (Figure 3). Previous exploration has not tested the oxide gold potential along the whole line of lode at Panama Hat and a sampling and mapping program is about to commence to identify the most promising targets for shallow drilling which will be aimed at testing the oxide gold potential of this goldfield.

The results of the sampling are summarised in Table 1 below.

Panama Hat	table of sample	results
Sample no.	Easting	Southing	Au – AA25 g/t Notes
PH 302	554114	6441046	5.29	Dense black limonite
PH 307	554043	6441156	31.5	Quartz with limonite
PH 309	554051	6441160	45.1	Quartz with limonite
PH 310	554057	6441167	17.6	Quartz with limonite
PH 311	554054	6441152	1.46	Black limonite fragments
PH 312	554089	644156	9.62	Black limonite fragments
PH 314	554175	6441164	83.2	Black limonite fragments
PH 316	554164	6441165	31.6	Quartz with limonite
PH 321	554421	6443416	1.67	Quartz with limonite
PH322	554432	6443424	2.14	Quartz with limonite
PH323	554418	6443422	2.19	Quartz with limonite
PH324	554420	6443429	4.61	Quartz with limonite
PH325	554412	6443434	5.43	Quartz with limonite
PH326	554397	6443465	3.79	Quartz with limonite
PH327	554401	6443472	1.24	Quartz with limonite
PH328	554401	6443472	1.29	Massive limonite
PH329	554417	6443478	3.35	Massive limonite
PH330	554414	6443465	1.54	Quartz with limonite
PH338	554475	6443739	2.28	Quartz with limonite
PH347	555877	6445784	1.67	Quartz with limonite
PH349	555738	6445720	3.31	Quartz with limonite
PH351	555630	6445679	63.4	Quartz with limonite
PH351a	556530	6445499	11.75	Quartz with limonite
PH357	559808	6448351	15.8	Quartz with limonite

Table 1. Summary of significant gold assays from sampling waste dumps associated with deeper historical workings, Panama Hat EL8024

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Crow King EL6648

The Crow King licence comprises 9 sub-blocks that cover a historic gold field discovered in 1868, and worked up till about 1906. The deepest working at Crow King is reported to be 67m. In modern times several exploration groups including Carbine explored for gold in the area and the Crow King tenement formerly held by Carbine, was re-acquired in 2016 as part of the Company's strategy to diversify its activities from a single mine, single metal focus at the Mt Carbine tungsten deposit in Far North Queensland.

EL6648 straddles the Peel Fault, a major geosuture that separates early Palaeozoic metasediments on the eastern side from Mid Devonian volcanic-derived sedimentary rocks on the west. The Peel Fault itself is famously characterised by a more or less continuous belt of serpentinised ultramafic rocks. Early Triassic quartz monzonite dykes and plugs locally intrude the Peel Fault and older rocks. The Company's recent exploration has shown that the majority of the historical workings are hosted by quartz veining in metasiltstone between the serpentinite and a prominent chert horizon east of the Fault. However, gold mineralisation has also been detected by drilling in the Fault itself and in brecciated, carbonate rich Devonian sedimentary rocks west of the Fault.

Fresh mapping and sampling by the Company and a review of previous exploration results provide the following exciting new insights into gold mineralisation in the licence:

• Gold has been leached from the surface meter or two by intense weathering in the past and surface sampling does not provide an adequate measure of gold distribution. Surface sampling showed anomalous gold but with values less than 0.05g/t gold.

• Sampling of mineralised rocks from dumps associated with a number of deeper (>2m) historical workings gave potentially economic gold assays over a wide area (Figure 4), ranging from 1.46 g/t to 17.1g/t gold (Table 2).

• There are indications that significant hydrothermal breccias occur untested in the EL concealed beneath Tertiary ironstone and gravel that may be related to brecciated, hydrothermally altered, gold-bearing quartz monzonite dykes intercepted in cored holes drilled through the main fault.

• The historic workings exploited gold in quartz veins of limited extent (1-4m laterally and up to 10m down plunge according to historical records) but often of bonanza grade. The quartz veins are interpreted as filling voids formed by shearing. Whereas in the past, individual high grade veins were mined on a small scale, the possibility of there being a large mineralised volume of quartz vein-bearing rock, of sufficient global average grade for a bulk mining operation, has not been tested.

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Figure 1. Location of Panama Hat EL8024, showing historical gold occurrences (Minview Map).

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Sample	Easting	Northing	Description	Au – AA25,gm/t
			Silicified, quartz veined with breccia
214	286738	6624693	texture rock – minor limonite	2.43
215	286738	6624693	ditto	1.46
			altered/bleached silicified rock with some
308	285230	6627872	limonite	6.03
310	285226	6627868	ditto, high limonite content	17.1
312a	285200	6627852	ditto, moderat black limonite	4.08
312	285450	6627531	Ditto	5.75
313	285450	6627531	ditto	2.32
314	285456	6627541	ditto some thick quartz veins	1.57
			pale cream altered rock with quartz vein
413	285037	6627833	and minor black oxide	1.9
			pale altered rock with large quartz
414	285061	6627823	fragments and red-brown oxide	3.78
416	285127	6627792		6.78

Table 2. Gold assays from samples of dumps associated with deeper historical workings in EL 6648

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CORPORATE ACTIVITIES

QUARTER ENDED 31 MARCH 2017

CARBINE COMPLETES PLACEMENT TO ADVANCE LITHIUM AND GOLD PROJECTS

Carbine was pleased to announce on 22 March 2017 that it has successfully completed a placement to institutional and sophisticated investors of 62,000,000 fully paid ordinary shares at a price of $0.013 per share to raise $806,000 before costs (“Placement").

The Placement attracted significant and oversubscribed support and allowed Carbine to introduce a number of new investors as shareholders of the Company.

Proceeds from the Placement will be primarily used to accelerate the exploration and development program for the lithium project in Chile. Proceeds will also be used to advance the Company’s gold projects in New South Wales through the confirmation of new geological interpretations and contribute to maintaining the Company’s world class Tungsten asset at Mt Carbine in a project ready status.

The Placement was completed under ASX Listing Rule 7.1.

TENEMENT INFORMATION REQUIRED UNDER LISTING RULE 5.3.3

In accordance with Listing Rule 5.3.3 the following information is submitted with respect to the tenements held by Carbine and its wholly owned subsidiaries:-

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Tenement Number Tenement Location
Queensland
EPM 14871 Mt Carbine
EPM 14872 Mt Carbine
ML 4867 Mt Carbine (Sub-lease)
ML 4919 Mt Carbine (Sub-lease)
New South Wales
EL 6648 Crow Mountain
EL 8024 Broken Hill
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During the period no farm-in or farm-out agreements were entered into nor were any mining tenements acquired.

JIM MORGAN CEO & MANAGING DIRECTOR

COMPETENT PERSON’S 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.

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CARBINE TUNGSTEN LIMITED AT A GLANCE

Directors

Mr R.H. (Russell) Krause, Non-Executive Chairman Mr A.J. (Jim) Morgan, Managing Director Mr R.W. (Rolly) Nice, Non-Executive Director

Company Secretary

Mr David Clark

Registered Office Level 2, 420 Collins Street, Melbourne VIC 3000 Telephone: +61 3 8687 2176

Principal Place of Business 6888 Mulligan Highway, Mt Carbine QLD 4871 Telephone: +61 7 4094 3072 | Fax: +61 7 4094 3036

Website and Emails

Please visit Carbine’s website for the latest announcements and news: www.carbinetungsten.com.au. To receive Carbine’s announcements by email, email to: info@carbinetungsten.com.au

General Enquiries

Contact Mr Jim Morgan on (03) 8687 2176

Issued Capital and Market Capitalisation

At 20 January 2017 Carbine’s issued capital was 482,876,418 ordinary shares and 8,000,000 unlisted options exercisable at 20 cents. At a share price of $0.011 on 20 January 2017 the market capitalisation was $5.31 million.

Number of Shareholders and Major Shareholders

At 20 January 2017 Carbine had 1,174 shareholders. The share register records the following as major shareholders at 20 January 2017 accounting for 43.54% of the issued shares:

Shareholder	%
BNP Paribas Nominees Pty Ltd	15.60
Dr Leon Eugene Pretorius	7.46
Mota Engil Minerals & Mining Investments BV	3.31
Baglora Pty Ltd	3.28
TBB NSW Pty Ltd	2.84
Equity Trustees Limited	1.66
Andrew Hewlett White and Associates	1.15
Alan Scott Nominees Pty Ltd	1.14
Mr Raymond Thomas Page	1.14
Max Mobile Auto Clinic Pty Ltd	1.08
Silva Pty Ltd	1.06
WGS Pty Ltd	1.04
JA Johnstone Pty Ltd	1.02
Mr Paul Machetti	0.89
Andrew James Morgan	0.87

Cash Balance

At 31 March 2017 Carbine’s cash balance was approximately $843,000.

Shareholder Enquiries

Matters relating to shares held and changes of address should be directed to the share registry:

Computershare Investor Services Pty Limited Yarra Falls, 452 Johnston Street, Abbotsford VIC 3067 Telephone (within Australia): 1300 850 505 Telephone (international): +61 3 9415 4000

ASX Listing Code

The Company’s ASX listing code is CNQ (Carbine North Queensland)

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