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HALF YEAR REPORT DECEMBER 2022 EQ RESOURCES LIMITED ABN 77 115 009 106

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CORPORATE DIRECTORY

Directors

Oliver Kleinhempel Non-executive Director Non-executive Chairman

Stephen Layton Non-executive Director

Richard Morrow Non-executive Director

Zhui Pei Yeo Non-executive Director

Company Secretary

Melanie Leydin

Registered Office

Level 4, 100 Albert Road South Melbourne VIC 3205

T +61 (0)7 4094 3072 W www.eqresources.com.au E [email protected]

Share Register

Automic Pty Ltd Level 5 126 Philip Street Sydney NSW 2000 T +61 (0)2 9698 5414

Auditors

Nexia Melbourne Audit Pty Ltd Level 35, 600 Bourke Street Melbourne VIC 3000

T +61 (0)3 8613 8888 F +61 (0)3 8613 8800

Stock Exchange Listing

Listed on the Australian Securities Exchange (ASX) ASX Code: EQR ACN: 115 009 106 ABN: 77 115 009 106

Principal Place of Business

6888 Mulligan Highway Mount Carbine QLD 4871

Half Year Report December 2022 – EQ Resources Limited

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OPERATING & FINANCIAL REVIEW................................................................................. 1
OPERATING AND FINANCIAL REVIEW .......................................................................................................... 2
Mt Carbine Bankable Feasibility Study Update .................................................................................................. 2
Mt Carbine Operations ........................................................................................................................................ 3
Exploration .......................................................................................................................................................... 9
Corporate ..........................................................................................................................................................18
Mt Carbine Project Development ......................................................................................................................22
FINANCIALS ..................................................................................................................... 24
DIRECTORS’ REPORT ....................................................................................................................................25
Directors............................................................................................................................................................25
Operating Results .............................................................................................................................................25
Review of Operations .......................................................................................................................................25
Auditor’s Independence Declaration .................................................................................................................25
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .........26
CONSOLIDATED STATEMENT OF FINANCIAL POSITION .........................................................................27
CONSOLIDATED STATEMENT OF CASH FLOWS ......................................................................................28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ..........................................................................29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...................................................................30
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ..........................................................30
2. REVENUE AND OTHER INCOME ..............................................................................................31
3. INVENTORY ................................................................................................................................31
4. FINANCIAL ASSETS ...................................................................................................................32
5. TRADE & OTHER RECEIVABLES ..............................................................................................32
6. RECEIVABLES – NON-CURRENT .............................................................................................32
7. EMPLOYEE BENEFITS ...............................................................................................................33
8. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE ...........................................33
9. CONTRIBUTED EQUITY .............................................................................................................34
10. CONVERTIBLE NOTES ..............................................................................................................36
11. CONTINGENT LIABILITIES .........................................................................................................36
12. SUBSEQUENT EVENTS .............................................................................................................37
13. EQUIPMENT LEASES .................................................................................................................37
14. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS .................................................37
15. OPERATING SEGMENTS ...........................................................................................................38
DIRECTORS’ DECLARATION ........................................................................................................................39
AUDITOR’S INDEPENDENCE DECLARATION .............................................................................................40
INDEPENDENT AUDITOR’S REPORT ...........................................................................................................41
FORWARD LOOKING STATEMENTS ............................................................................................................42

Half Year Report December 2022 – EQ Resources Limited

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resourcing the new economy for a better tomorrow

OPERATING & FINANCIAL REVIEW

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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Operating and Financial Review

Mt Carbine Bankable Feasibility Study Update

The Company announced positive results from the November 2022 Update of its Bankable Feasibility Study (“BFS Update”) for the Mt Carbine Expansion Project (“Project”) (see ASX announcement ‘Strong BFS Update Delivers 59% Increase in NPV’, dated 9 November 2022).

Key Highlights from the BFS Update include:

BFS Update enhanced by recently announced 29% Open Pit Ore Reserves upgrade resulting in a 15% higher tungsten concentrate output (50% WO3 content) over an expanded 14-year production schedule.
Project delivers strong Pre-Tax Economics* including:
NPV8 of $209.6 million* (59% increase compared to initial BFS, December 2021)
• IRR of 397%
Payback period of 1.5 years
Life of Mine EBITDA of $324 million
Initial low capital cost of $22.9 million has been further optimised to $21.4 million as an effect of scope changes and defined costing, out of which approximately $5 million has been expensed and installed by October 2022.
Successful implementation of the Phase 1 Scope provided invaluable data for further expansion works, with the process plant already achieving target recoveries.
Tungsten concentrate production C1 Cash Cost**** remains amongst lowest in industry with an equivalent of US$118/mtu.
Concentrate sales price basis US$340/mtu (mtu = metric tonne unit, 10kg) in 2023, with a long-term forecast average of US$369/mtu (2024-2040) calculated using the average of the Roskill Base Case and High Case price level scenarios (see Chapter 16 of 2021 BFS) ** 8% discount rate applied

*** $209.6M NPV is Project NPV; NPV attributable to EQR as 50% portion of LGS Joint Venture and 100% of Open Pit results to $172.5M **** C1 Cash Cost: Direct costs (mining and processing cost), plus local G&A and by-product credits from sale of aggregate through quarry, but excluding royalty; Exchange rate AUD/USD 0.688

The BFS Update contemplates a 14-year production schedule with the Project delivering impressive economics including a NPV8 of $210 million and an IRR of 397%. The BFS Update covers total concentrate production of approximately 31,000 tonnes (50% WO3 content), an increase of 15% over the initial BFS output.

The Project implementation was split into two phases, with the Company having successfully completed Phase 1 Scope as per the initial BFS. The BFS Update highlights that scope changes and cost updates have resulted in a positive net effect of approximately $1.5 million in total Capex savings. The revised Capex has been estimated to $21.4 million.

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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Mt Carbine Operations

Primary Crushing and Screening Plant

The crushing plant is now achieving its average throughput of +170tph during operations. The wet screening installation has shown its capacity on throughput with ongoing operational optimisations taking place, such as automation within the crushing plant; increases to the size of the process water pump and certain design improvements to increase running times and overall throughput of the plant.

Due to the La Niña climate conditions in Australia, the wet season started early in 2022 with rain beginning in November and carrying on through December on a relatively constant basis. The three processing plants, Crushing/Screening; XRT Sorters and Gravity processing plant were able to continue processing through the various rain events throughout the half year.

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Figure 1 - Crushing plant achieving throughput targets.

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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Figure 2 - Tertiary Cone Crusher for XRT Sorter Concentrate

The Company set out during the half year that a tertiary cone crusher circuit was set to be hot commissioned in October 2022. This was completed during the December quarter, allowing the operation to no longer rely on external contractors for the crushing of the high-grade XRT concentrates which are now crushed and fed directly into the gravity processing plant.

The Company continues to increase its production into a firm and steady market for tungsten concentrates and a strong, stable price for the major end product APT, currently around US$340/MTU, compared with US$320/MTU a year ago. CRONIMET continues to give strong support for the operation and have the capability to purchase and ship all concentrates produced at Mt Carbine.

XRT Sorter Pilot Plant

The XRT Sorter Plant ramped up production significantly during the past 6 months with the two TOMRA XRT Sorters fully operational. The plant experienced some short intermittent interruptions due to the integration of the new TOMRA unit, the operation is now seeing the benefit in having two XRT’s available for operation. Interfacing of the double TOMRA system has allowed for the two TOMRA’s to be run in parallel or individual, proving production efficiency and flexibility. The production of XRT Sorter concentrate has increased by 45% from 7,400 tons in Q4 FY2022 to 10,780 tons in Q1 FY2023, an average of almost 120 tons per day with 150 tons per day in September alone with the biggest jump in production in August ‘22 with commissioning of the double XRT Sorter system complete. This is an incredible step forward for the Company with production increased by 4x compared to last year Q1 FY2022 as seen in Figure 5. The scaled-up treatment amounting to record head feed throughput of 42,000 tons of low-grade stockpile (LGS) material in the month of August, and 44,000 tons in September alone compared to 65,529 tons treated in the entire Q4 FY2022 quarter. The XRT Sorter concentrate production went from 2,119 tons in July 2022 to 4,471 tons in September.

The Sorter Plant received upgraded conveyors in Q2 FY2023 allowing larger stockpiles to accumulate under the conveyors for ease of operating due to the significant increase in production tonnages.

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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Figure 3 - Two XRT Sorters running in parallel achieved new daily production records in January 2023

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Q1 2023 Monthly XRT Sorter Concentrate Production (t)
5,000
4,000
3,000
2,000
1,000
-
July August September
Sorter concentrate
Tonnes (t)
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Figure 4 - Monthly XRT Sorter Concentrate Production Q1 FY2023

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Sorter Concentrate
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
October November December
Sorter Concentrate
Tonnes (t)
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Figure 5 - Monthly XRT Sorter Concentrate Production Q2 FY2023

Half Year Report December 2022 – EQ Resources Limited

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Sorter Concentrate
12,000
10,000
8,000
6,000
4,000
2,000
-
Q1 Q2 Q3 Q4 Q1 Q2
FY2022 FY2022 FY2022 FY2022 FY2023 FY2023
Sorter Concentrate
Tonnes (t)
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Figure 6 - Quarterly XRT Sorter Concentrate Production 2022-2023

Gravity Plant Processing Operations

The Company continues to grow its tungsten concentrate production output quarter on quarter as seen in Figure 8. The Gravity Plant head feed throughput continued to increase in Q2 FY2023, due to increased efficiencies in running times, through plant upgrades and implementation of new preventative maintenance schedules. However, the gravity processing plant continues to be topped up with feed materials from the historic tailings to ensure the plant is operating at maximum capacity.

The Company solidifies its place as a reliable and sustainable critical minerals producer, demonstrating that its investment in high-tech ore-sorting technology is paying off.

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Figure 7 - Concentrate production growth continues, solidifying Mt Carbine as a Reliable and Sustainable Critical Minerals Producer

Half Year Report December 2022 – EQ Resources Limited

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The Gravity Plant continued to operate consistently through the period while processing through major rain events to ensure uninterrupted production. The Gravity Plant is meeting throughput and recovery targets, the main focus for the operations team has been increasing the run time on the crushing plant for the delivery of increased -6mm fines feed material to the Gravity Plant to reach the concentrate output production targets.

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Gravity Plant Head Feed Throughput (t)
120,000
100,000
80,000
60,000
40,000
20,000
-
Q1 FY2022Q2 FY2022Q3 FY2022Q4 FY2022Q1 FY2023Q2 FY2023
Head Feed
Tonnes (t)
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Figure 8 - Quarterly Gravity Plant Head Feed Throughput 2022-2023

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Gravity Plant WO3 Concentrate Production (kg)
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
Q1 FY2022 Q2 FY2022 Q3 FY2022 Q4 FY2022Q1 FY2023 Q2 FY2023
50% WO3 Equivalent (kg)
Kilograms (kg)
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Figure 9 - Quarterly Gravity Plant Tungsten Concentrate Output 2022-2023

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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The announcement of August’s production record concentrate delivery coincided with a visit on the 7[th] of September to Mt Carbine from Queensland Resources Minister, the Hon Scott Stewart, who inspected the results of the successful two-stage capital investment at the historic mine site and witnessed firsthand the development of the expansion project and the considerable upscaling of the operations. The Minister expressed his support for the project, with the next major stage of development being reopening of open pit mining of primary tungsten ore from the existing 100% EQR owned Andy White open pit, subject to final permitting.

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Figure 10 - Hon Scott Stewart MP witnesses the benefit of having two TOMRA XRT Ore Sorters installed on-site (left);
Increased plant throughput leading to increased production of tungsten concentrate (right)
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Quarry Operations

As stated in previous reports issued by the Company, the Mt Carbine Quarry operations repurposes various materials from historic stockpiles and barren waste rock from the Company’s tungsten operations. EQR continues to develop its quarry business using a multitude of by-product materials and is tendering on regional as well as export-oriented projects.

The December quarter saw smaller local contracts focusing on the sale of road base materials and select fill for the local regional area as well as the final deliveries of armour rock for the water break projects happening within the region. The Quarry will take the time through the wet season, which is generally quieter for the associated industries, to look at value-added products, production of key aggregates for the upcoming dry season, and focus on the strategic growth plan for the quarry business.

The Quarry continues to tender on regional developments and look for new ways to value-add its products. The quarry products from Mt Carbine are produced from recycled inert mine waste allowing EQR to focus on a circular economy approach to its operations.

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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Exploration

Mt Carbine, Qld - Mining Leases

Western Pit Extensions

This area of the project is immediately west of the existing pit and is under investigation for mineralisation extensions. Currently the BFS pit is planned to commence mining in Q2 2023 (calendar year) and is designed to continue into the year 2028. The resources known immediately west of the pit require further drilling to indicated resource category before any planning can take place for mining extensions in this area. Once further drilling takes place, it will also be known whether these resources are best suited to open cut extension or for underground mining. (See ASX announcement ‘Drilling targeting New Discoveries and Potential Western Pit ’ Expansion , dated 17 November 2022). The drill program to define these parameters was started on the 28[th] November, 2022.

The program has 4 objectives:

Infill western area to fully define the extension of the mineralisation in this area.
Bring to indicated level the resources in this area, so that plans can be made of either open cut or underground extensions.
Target a western extension hole to the high-grade mineralisation located in Hole EQ026. It has been postulated that high grade mineralisation in this area plunges to depth.
Explore one of the soil anomalies found in the Northern Iron Duke Zone. Soils in this area would indicate that there continues to be tungsten veins that are parallel to the main ore body. Several highgrade surface exposures of high-grade tungsten have been located when following up the soil anomaly areas.

At the end of the December quarter, two holes were completed from the top of Mt Carbine hill. The results showed only many narrow 3-5 cm vein zones of mineralisation were present where deeper extensions showed these veins blossom to wider, well mineralised areas. It would appear the ridge top at 460-480m RL would be too high in altitude to hit the better mineralized parts of the Mt Carbine system which occur between 150-350m RL.

Illustrated in the figure below, the first two drill holes of this program. Note that above 350m RL only minor quartz veining is present and where it occurs it is less than 5cm in width. Below this level we see abundant veins with good mineralisation occurring in veins that reach 1m or more in width.

This level control to the mineralisation is one of the key exploration tools available to the Company and is being reconfirmed around different parts of the project.

Half Year Report December 2022 – EQ Resources Limited

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Figure 11 - Phase II Drilling Program 2022: First Two Holes' Locations

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Figure 12 - Phase II Drilling Program 2022: Drill Core of First Two Holes

Half Year Report December 2022 – EQ Resources Limited

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OTHER EXPLORATION ACTIVITIES

PLOTLOGIC R&D Project

The hyperspectral R&D project is continuing underway at Mt Carbine using a multi sensor scanner. Currently 90% of EQR’s drill core has been scanned on a multispectral basis. The scanning recognises various minerals including wolframite and will be utilised on a larger basis in delineation of ore zones within the open cut during mining. Understanding the mineralogy of Mt Carbine assists in interpretation of the fluid flow and temperature models.

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Figure 13 - Plotlogic’s technology informs decision making through core sample scanning

Half Year Report December 2022 – EQ Resources Limited

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WH Bryan Mining and Research Institute

Cooperation with the University of Queensland Special Research Centre for a full microXRF program on Mt Carbine core has given insight into the nature of the mineralisation and the understanding of the high-grade versus barren vein types.

The two figures below show a high-grade vein adjacent to a barren vein in the same sheeted system. Barren veins appear earlier and are lower temperature gaseous events, whereas high grade are more saline brine events that occur later in the evolution of the deposit.

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As shown below, MicroXRF scanning can quantify the mineral species (e.g. scheelite in this case) and other alteration minerals that determine the sample’s position in a dynamic fluid system. Fluid modelling is being used in EQR’s exploration programs.

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Half Year Report December 2022 – EQ Resources Limited

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Future Programs

The recent geological work confirms there exists 4 major targets that need continued work and the listed four programs are still set to be completed by the Company:

Upgrade of the Iron Duke Inferred Resources into Indicated Resources - Iron Duke contains 5.8Mt @ 0.59% WO3.
Continue to extend the known veins along strike extents both Grid West and East.
Drill to the depth. Away from the South Wall Fault, the depth extent of the mineralisation remains open.
Evaluate and test the True Blue, Daisy, MacDonald’s and Red Cap Package Zones.

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Figure 14 - Mt Carbine Exploration Potential and Work Areas (Numbering 1-4 as per description above)

Given the extent of surface vein traces, the open depth consideration and the immediate tungsten working areas, it is conceivable that the resource could significantly increase from its current size. The Company is targeting future drilling to continue to replace any future mined ore including drilling from the existing underground decline in 2023.

On a regional scale, there are over 50 locations with historical workings within EQR’s exploration tenements, which have reported tungsten or tin mineralisation.

Half Year Report December 2022 – EQ Resources Limited

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Figure 15 - Regional Historical Tungsten & Tin Workings relative to Mt Carbine

Mt Holmes – EPM 14871

An initial survey at Mt Holmes tin project revealed over 30 massive quartz veins cross the tenement at right angles to a major feldspar porphyry dyke swarm. 82 rock chip samples of these veins did not reveal any major mineralisation but minor marginal zones of tin. The remainder of the license will be explored this field season commencing in July 2023.

NSW Gold Exploration Tenements

Please refer to the Company’s Annual Report for a detailed update on the NSW Gold Exploration activities.

EL6648 Crow Mountain tenement was renewed on 3rd February 2022 for a period until 19th October, 2026. EL8024 remains current until 29 November 2024.

Currently a private group called Sozo Resources Ltd is farming into the NSW gold tenements. The team at Sozo have a long history of exploration success. The terms require Sozo to spend $1.1M over the next 4 years to earn an 80% stake in the licenses. EQ Resources has rights to contribute back to the JV.

Half Year Report December 2022 – EQ Resources Limited

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Work undertaken by Sozo Resources Limited (“Sozo”) in the last calendar year is summarised as follows:

EL8024 Panama Hat

Land Access agreements are in place with Huonville and Sunnydale Stations.

Field trips were postponed several times due to weather events, but Sozo was able to get on the ground in June 2022. 20 x rock chip samples were taken from the main prospects and analysed for fire assay gold and a 33 element 4 acid digest. Notable assays include:

Sample PH0004: 2.03g/t Au on Southwestern extension of Williams Prospect

Sample PH0020: 4.45g/t Au from Willyong Tank Prospect

Sample PH 0014: 4.34g/t Au from Panama Hat Prospect

Sample PH0018: 22.1g/t Au from Telephone Line Prospect

The dominant strike of the broader Farmcote Gneiss host rock is in a north-easterly direction and cross cutting this semi-regional fabric are NW trending shear zones. These shear zones contain sheeted and sub vertical quartz veins and where sampled returned positive gold grades.

The Panama Hat Project appears structurally complex and the intersection of the NE and NW trending structures probably represent target areas for drilling. Telephone Line is the preferred Prospect at this stage, because high grade gold exists at surface, multiple historic pits are available, it is positioned on a small rise and there is geology to map with no evidence of historic drilling.

Next stages would see a field mapping and sampling campaign start at the Telephone Line Prospect.

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EL6648 Crow Mountain

Land Access Agreement is in place with the main station owner being Kilpara. SOZO is paying monthly rent for the shipping container which houses the ICON era drill core.
SOZO has secured the contiguous exploration ground to the Crow Mountain exploration lease through EL 9406.

Half Year Report December 2022 – EQ Resources Limited

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Preliminary field trip conducted with geologist Darcy Milburn in February 2022 and 17 x rock chip samples taken across the project and include:
Sample CMRC008: 9.71g/t Au from the Crow King Prospect and CMRC011: 5.23g/t Au from the Princess Mine area. These prospects are east of the Peel Fault and hosted in schistose sediments and quartz veins. Looks structurally controlled and more akin to an orogenic gold system. Abigano drilled in this area in the 80s and intersected gold mineralisation close to surface such as: 17m @ 0.75g/t Au from 6m incl 2m @ 1.85g/t Au from 16m . Ultimately Abigano abandoned the area due to the low gold price of circa US $300/Oz. Opportunity therefore exists to work this with prospect scale mapping, soil sampling and then shallow percussion drilling.

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Multiple rock chip samples were taken of the Listwanite (silica-carbonate altered serpentinite) outcrop in the vicinity of the historic Icon drill holes and as expected, low level gold was returned, up to a maximum of 58ppb. Note: the gold in Listwanites is related to the early Permian-Triassic batholiths which drove hydrothermal cells and led to the silicacarbonate or “Listwanite” alteration of the serpentinites. This alteration scavenges gold from magnetite and is transported large distances as an Au-S complex, typically along fault planes. The gold in this case, has most likely dropped out of solution when it encountered the carbonaceous fault gouge of the Peel Fault, as observed when Sozo inspected the drill core. More drilling is required directly targeting the Peel Fault itself.

Electromagnetics are being considered to assist in fleshing out the stronger conductive carbonaceous areas and the IP chargeability anomalies (obtained by Specialty Metals) coincident with Au-AsHg anomalism at surface remain valid drill targets.

No PGEs associated with the Listwanite alteration.

Half Year Report December 2022 – EQ Resources Limited

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Tenement Interests

In accordance with ASX Listing Rule 5.3.3, the following table is submitted with respect to tenements held by the Company and its controlled entities:

Location	Holding Entity	Beneficial Interest	Interest Acquired / Farm-in or Disposed / Farm- out	Area	Expiry Date
Queensland, Australia		31 Dec 2022	31 Dec 2022
ML 4867	Mt Carbine Quarries Pty Ltd	100%	-	358.5 ha	31/07/20221)
ML 4919	Mt Carbine Quarries Pty Ltd	100%	-	7.891 ha	31/08/2023
EPM 14871	Company	100%	-	10 sub-blocks	12/12/2025
EPM 14872	Company	100%	-	21 sub-blocks	11/12/2025
EPM 27394	Company	100%	-	4 sub-blocks	01/06/2025
New South Wales, Australia
EL 6648	Company	100%	-	4 Units	19/10/20262)
EL 8024	Company	100%	-	19 Units	29/11/20242)
ML= Mining Lease;*EPM*= Exploration Permit for Minerals (Qld);EL= Exploration Licence (NSW)
1) Renewal application submitted on 31 January 2022. 2) Sozo farm-in arrangement.

No farm-in or farm-out agreements were entered into during the period.

Half Year Report December 2022 – EQ Resources Limited

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Corporate

ESG PROGRAM Overview

The Company has continued to mature its ESG position in the last half year, with a proactive ESG program underway to deliver tangible outcomes against its commitments. Utilising the Turner & Townsend JukesTodd ESG Categorisation framework to manage its ESG program, the Company’s ESG program is closely aligned to its core values and purpose and incorporates the environmental and social aspects most material to its stakeholders as identified in EQR’s 2021 Stakeholder Sentiment Survey.

The EQR ESG Program includes a governance framework and a program workbook which underpins how the Company will measure, track and report on the program’s objectives

Outlined below is an overview of the Company’s ESG Foundational Commitments aligned to its values and purpose, including metrics to be used for future reporting. Followed by an infographic showcasing the Company’s ESG initiatives and achievements over the last quarter.

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Half Year Report December 2022 – EQ Resources Limited

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Safety Performance

The below graph demonstrates continued positive safety performance achieved by the Company in the last half year.

During the half year numerous contractors and employees have been working side by side with no lost time injuries recorded for this quarter. To date, we are 598 LTI Days free. An authentic ‘Safety Culture’ continues to be cultivated as employees at Mt Carbine actively look to reduce the risk to themselves and others by identifying hazards and addressing them before they conduct work activities.

Below is a graph of the rolling frequency rate over a one-year period which is determined by data averaged over a yearly period. Mt Carbine Operations has worked 143,287 hours in the last year period. All figures are better than standard industry rates.

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0 0 0 0 0 0
60
50.90 Rolling Frequency Rates 2022
50
37.1
40 42.30 40.70
28.9 28.4
30 26.8 25.8 24.4 24.4 24.4 24.4
21.2
20.40 20.4
20 20 20
10.57 15.61
10 9 9.6 9
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0
Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22
Month
LTIFR CIFR MTIFR
TRIFR Average QLD Quarries (TRIFR) Average QLD Quarries (LTIFR)
Frequency
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Figure 16 - Rolling Frequency Rates - Safety Statistics

LTIFR = Lost Time Injury Frequency Rate CIFR = Critical Injury Frequency Rate MTIFR = Medical Treatment Injury Frequency Rate TRIFR = Total Recordable Injury Frequency Rate HPIFR = High Potential Incident Frequency Rate Average QLD Quarry’s (TRIFR) Average QLD Quarry’s (LTIFR)

A total of 2,967 positive safety indicators have been recorded for the December quarter alone. Area Foreman have increased workplace inspections which will help the overall safety onsite by ensuring the areas they are responsible for are being maintained & kept to the appropriate standard required of EQR. Take 5’s being completed have increased from approximately 400 per month to around 800 per month.

Other training conducted saw 1 employee complete Drugs of Abuse Testing Officer training, 8 employees completed Confined Space Enter and Work training, 8 employees completed Gas Test Atmosphere, 10 employees completed Working at heights training, 12 employees completed First Aid & CPR training, 6 employee’s completed supervisor training, 3 employees have completed HR -B license upgrades, 96 VOCs for mobile equipment were completed.

30 employees have been signed up with the RTO Civil Safety supported by Government funding to complete a Certificate III in Surface Extraction Operations.

A supervisor at the Mt Carbine Operations, Mr Andrew Uwland, has been presented with the first ‘Safety Legend’ Award in QLD by the Hon S.Stewart, Minister of Resources, and the Department of Resources Director General, M. Cridland. Mr Uwland has been with the Company since November 2021 and is exceptionally passionate and vocal about driving real safety change for the site and the mentality on shift. He

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is a strong advocate for his crew regarding safety practices and their wellbeing (physical & psychological), placing a focus on training them appropriately and keenly surveilling them in this regard. From pre-start to safety documentation, Mr Uwland places a big emphasis on procedure, training, and safety-first mentality. Mr Uwland has implemented morale-boosting and teambuilding techniques directly leading to minimal staff turnover in a labour market where it is a very common occurrence. This emphasizes the Company’s effort to build a strong team of engaged employees that will continue to deliver strong results in a safe manner.

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Figure 17 - Mr Uwland is the first recipient of the 'Safety Legend' Award in QLD

Environmental Activities

The Company is proud to have been awarded the prestigious Association of Mining and Exploration Companies (“AMEC”) Environmental Award 2022 at a gala ceremony in Perth. The event brought together representatives of the most active resources companies in exploration, development, and production in Australia. (For details see EQR Media Release ‘EQR Wins 2022 AMEC Environment Award’, dated 14 December 2022).

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Figure 18 - EQR Receives Prestigious AMEC Environment Award

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The Company is pleased to have entered a long-term agreement with Australian Wildlife Conservancy (“AWC”) as part of its renewed mining lease with a focus on general co-operation. The formalised relationship with AWC highlights co-operation in several areas relating to Brooklyn Wildlife Sanctuary which surrounds the Mining Licence. The 20-year commercial agreement with AWC will enable execution of ecological well-being initiatives and will also support social aspects through job provision in the conservancy area. (See ASX announcement ‘EQR Responsibly Mining For The Future and Engaging in Wildlife Conservation’, dated 23 November 2022).

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Figure 19 - EQR employees actively participate in consistent ecological health monitoring initiatives in the area

During the half year the Company completed the environmental studies required for the reopening of the open pit with the final EA Amendment submitted in November 2022.

Once approved, the EA Amendment allows the recommencement of the Open Pit mining operations set to commence in Q2 2023 (calendar year). As set out in the Annual Report, several studies were completed to inform the approval process associated with the Company’s plans to recommence open cut mining and to derisk the project in line with its core values of ‘Treading Lightly’ to minimise its environmental footprint and deliver positive societal impact.

Some of the ongoing monitoring and activities undertaken through this process at site are:

Noise, Air & Vibration Studies;
Water Management Plan Update;
Waste Rock & Tailings Management;
Enhanced Conceptual Groundwater Model which involved the drilling of 18 additional investigation bores;
Flora and Fauna Studies; and
Water Engineering Works.

Mt Carbine Project Development

Complementary royalty funding for Mt Carbine development

EQR announced, that it has agreed non-binding terms with Regal Resources Royalties Fund for a first stage $10 million royalty based funding package for the advancement of the redevelopment of the historic Mt Carbine ’ tungsten mine. (See ASX announcement ‘Complementary Royalty Funding for Mt Carbine Development , dated 21 October 2022).

The parties engaged an independent technical advisory firm to perform a technical due diligence on the Project, which was successfully completed. The royalty funding was proposed to come in staged advances and was subject to finalisation of the tax and legal due diligence and other landmark conditions, the first of

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which being the signing of the definitive agreement, followed by final environmental permitting for the restated open pit mining operations.

A definitive agreement was signed following the successful completion of the technical, tax and legal due diligence conducted by independent advisors engaged by the parties. The second $5 million drawdown can be executed upon receipt of final environmental permitting for the restarting of open pit mining operations and satisfaction of stipulated Conditions Precedents in the term sheet signed between EQR and Regal Resources Royalties Fund.

As part of the executed term sheet the parties intend to negotiate in good faith the terms for an additional (second stage) $10 million royalty-based funding package.

The Company received the first drawdown based on the executed Term Sheet of $5 Million in January 2023.

’ (See ASX announcement ‘EQR Completes First Drawdown of $5M Royalty Funding For Mt Carbine Tungsten , dated 21 October 2022).

Critical minerals accelerator initiative (CMAI)

In December the Company announced it had received its first drawdown equating to 30% of the awarded $6 million grant from the Federal Government’s Critical Minerals Accelerator Initiative (see ASX announcement ‘EQR Receives First Drawdown From $6M Federal Grant’, dated 2 December 2022).

Under the leadership of Hon Minister Madeleine King, Minister for Resources and Northern Australia, the new Federal Government announced reconfirmation of the grant award to the Company as one of six companies to receive Australian government support for accelerated critical minerals sector expansion that will in turn drive regional economic growth, job creation and development across North Australia. (See Media Release of the Hon Minister Madeleine King ‘Government Support for Critical Minerals’, dated 16th September 2022).

The CMAI co-investment will be utilised to implement the scope defined in the Company’s Bankable Feasibility Study, for a large-scale, sustainable source of tungsten in which the operation utilises historic mine waste and high-grade resources as identified in the accessible and recently upgraded Andrew White Open Pit. (See ASX Announcement ‘Material Increase In Mount Carbine Ore Reserve’ dated 16 September 2022).

Specifically, it will be used to fund plant and equipment, drilling and additional studies, as well as expand on innovative technologies to efficiently produce tungsten concentrate from relatively low-grade ore currently stockpiled above ground and from high-grade resources identified in the Andrew White Open Pit set to recommence in 2023.

With this expansion and commencement of open-cut mining activities, The Company will also become a significant employer within the local economy with employee numbers expected to exceed 100.

For previous related ASX announcements, See: Government Funding for Mt Carbine Critical Minerals Program dated 28 April 2022 Federal Government Funding for Mt Carbine Reconfirmed dated 19 September 2022.

Contract negotiations with Golding for restart of open pit mining

The Company has executed an Early Engagement Contract with Golding Contractors Pty Ltd (Golding) for the restart of the open pit mining operations. The Company selected Golding as its preferred partner after working through a high-quality engagement and approval process. Over the coming months, key areas of engagement and focus to finalise the mining contract and ensure smooth transition to mining operations will include stakeholder engagement, equipment selection, final pit design and price finalisation.

For further details refer to ASX announcement EQR executes early engagement contract with Golding for

restart of open pit mining, 4[th] July 2022.

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FINANCIALS

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Directors’ Report

The Directors of EQ Resources present the financial report of EQ Resources Limited (the Company ) and its subsidiaries (the Group ), for the half year ended 31 December 2022 (the Period ).

Directors

The names of the Directors of the Company during the whole of the period and up to the date of this report, unless otherwise stated, are:

Oliver Kleinhempel
Stephen Layton
Richard Morrow
Zhui Pei Yeo

Operating Results

The net result of operations after applicable income tax expense for the half year ended 31 December 2022 was a loss of $3,616,030 (2021 Half Year Loss $2,300,097).

Review of Operations

Information on the operations and financial position of the group, its business strategies and prospects for future financial years is detailed in the Review of Operations section of this Report.

Subsequent Events

There have been no matters or circumstances that have arisen since 31 December 2022 requiring disclosure, or amendment to these financial statements apart from those disclosed in Note 12.

Auditor’s Independence Declaration

A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out and located after the Director’s Declaration and forms part of this report.

Signed in accordance with a resolution of Directors made pursuant to s.306(3) of the Corporations Act 2001 .

On behalf of the Directors

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Oliver Kleinhempel

Non-executive Chairman

14 March 2023

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Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the half year ended 31 December 2022

Consolidated Statement of Profit or Loss Comprehensive Income For the half year ended 31 December 2022	and Other
Note	31/12/2022 $ 31/12/2021 $
Revenue 2 Other income 2	2,613,109 2,233,646 2,307,311 150,619
Total revenue & other income Administration expenses Consultancy expenses Depreciation Amortisation (deferred exploration and evaluation assets) Development and testwork costs Exploration expenses written-off Finance costs Foreign exchange gains (losses) Occupancy expenses Other expenses Production expenses Salaries and employee benefits expense Share based payments 9 Superannuation Travel and accommodation	4,920,420 2,384,265 (414,765) (294,174) (186,573) (34,145) (759,385) (164,769) (76,812) (21,784) (278,699) (150,438) (104,220) (3,868) (796,459) (209,273) (54,760) (119,722) (76,580) (62,132) (36,540) - (2,769,606) (1,418,890) (2,576,539) (1,852,514) (137,110) (195,657) (192,325) (125,683) (76,077) (32,860)
Total Expenses	(8,536,450) (4,685,909)
Profit (Loss) Before Income Tax Expense Income Tax Expense	(3,616,030) (2,301,644) - -
Profit (Loss) After Income Tax Expense	(3,616,030) (2,301,644)
Other comprehensive income/(loss) Gain/(loss) on revaluation of financial assets	- 1,547
Total Comprehensive Profit / (Loss) Attributable to Owners of EQ Resources Limited	(3,616,030) (2,300,097)
Basic profit (loss) per share Diluted profit (loss) per share	Cents Cents (0.26) (0.17) (0.24) (0.16)

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Consolidated Statement of Financial Position

For the half year ended 31 December 2022

For the half year ended 31 December 2022
Note	31/12/2022 $ 30/06/2022 $
Current Assets Cash and cash equivalents Trade and other receivables 5 Prepayments 5 Inventory 3	2,707,491 1,723,426 2,611,646 2,323,599 352,131 632,292 1,844,478 876,438
Total current assets	7,515,746 5,555,755
Non-Current Assets Tenement security deposits 6, 11 Plant and equipment Right of use assets 13 Inventory 3 Deferred exploration and evaluation 8 Financial assets 4	1,087,396 1,081,292 9,988,074 7,015,995 1,805,891 - 6,086,592 6,812,875 12,270,336 10,803,974 5,543 5,543
Total Non-Current Assets	31,243,832 25,719,679
Total Assets	38,759,578 31,275,434
Current Liabilities Trade payables Employee benefits 7 Lease liability 13 Contract liability – sublease Contract liability – offtake Convertible notes Other payables 10	6,300,652 5,026,531 341,027 282,397 750,370 665,754 406,190 405,851 4,584,813 3,266,190 3,097,200 3,924,450 -
Total Current Liabilities	19,404,702 9,646,723
Non-Current Liabilities Employee benefits 7 Lease liability 13 Convertible notes Contract liability – sublease Other borrowings	13,893 15,418 1,191,227 1,335,829 - 3,004,651 1,409,811 1,432,259 1,585,340 1,523,336
Total Non-Current Liabilities	4,200,271 7,311,493
Total Liabilities	23,604,973 16,958,216
Net Assets	15,154,605 14,317,218
Equity Issued capital 9 Reserves Accumulated profit / (loss)	26,509,012 22,192,705 2,985,686 2,848,576 (14,340,093) (10,724,063)
Total Equity	15,154,605 14,317,218

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Consolidated Statement of Cash Flows

For the half year ended 31 December 2022

Consolidated Statement of Cash Flows For the half year ended 31 December 2022
Note	31/12/2022 $ 31/12/2021 $
Cash Flows from Operating Activities Proceeds from sales to customers Proceeds from deferred revenue Proceeds from diesel fuel rebate Proceeds from Government COVID-19 relief packages Payment to suppliers and employees Interest paid Interest paid for lease liabilities Interest received Others -Grants received -Wage Subsidies received -Other receipts	3,706,352 3,011,074 - - 81,172 115,445 - 23,349 (7,810,182) (5,222,938) (22,000) (2,122) - (8,836) 1,479 2,009,000 200,761 14,000 545 - - -
Net Cash Flows Used in Operating Activities	(1,819,418) (2,083,483)
Cash Flows from Investing Activities Payments for the purchase of plant and equipment Payments for capitalised exploration and evaluation expenditure Payments of loans made to other parties Payments for tenement security deposits Proceeds from the sale or disposal of plant and equipment	(1,149,785) (828,145) (1,304,431) (1,801,097) (200,000) (117,500) - - 13,499 -
Net Cash Flows Used in Investing Activities	(2,640,717) (2,746,742)
Cash Flows from Financing Activities Net proceeds from the issue of shares Payments for lease liabilities Payments of short-term loan Proceeds from offtake and working capital loan (unincorporated joint venture)	4,316,307 5,697,577 (104,160) (200,000) (30,149) - 1,483,000 172,500
Net Cash Flows from Financing Activities	5,495,147 5,839,928
`Net (decrease)/increase in cash held Add opening cash brought forward Effect of movement in exchange rates on cash held	1,035,012 1,009,703 1,723,473 3,504,721 (50,994) (6,719)
Closing Cash Carried Forward	2,707,491 4,507,705

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Consolidated Statement of Changes in Equity

For the half year ended 31 December 2022

	Attributable to the Shareholders of EQ Resources Limited	Attributable to the Shareholders of EQ Resources Limited	Attributable to the Shareholders of EQ Resources Limited	Attributable to the Shareholders of EQ Resources Limited	Attributable to the Shareholders of EQ Resources Limited
	Issued	Accumulated	Convertible
	Capital	Losses	Note Reserve	Reserves	Total Equity
Consolidated	$	$	$	$	$
At 1 July 2021	20,603,915	(4,661,012)	-	782,831	16,725,734
Profit / (loss) for the period	-	(2,301,644)	-	-	(2,301,644)
Prior year adjustment	-	-	-	-	-
Other comprehensive income for the period	-	1,547	-	-	1,547
Total comprehensive loss for the period	-	(2,300,097)	-	-	(2,300,097)
Issue of share capital	2,004,100	-	-	-	2,004,100
Share issue costs	(415,310)	-	-	-	(415,310)
Equity component of convertible note	-	-	1,147,333	-	1,147,333
Share based payments	-	-	-	702,421	702,421
Total transactions with owners in their capacity as owners	1,588,790	-	-	702,421	3,438,544
Balance at 31 December 2021	22,192,705	(6,961,109)	1,147,333	1,485,252	17,864,181
At 1 July 2022	22,192,705	(10,724,063)	1,147,333	1,701,243	14,317,218
Profit / (loss) for the period	-	(3,616,030)	-	-	(3,616,030)
Other comprehensive income for the period	-	-	-	-	-
Total comprehensive loss for the period	-	(3,616,030)	-	-	(3,616,030)
Issue of share capital	4,612,000	-	-	-	4,612,000
Share issue costs	(295,693)	-	-	-	(295,693)
Equity component of convertible note	-	-	-	-	-
Share based payments	-	-	-	137,110	137,110
Total transactions with owners in their capacity as owners	4,316,307	-	-	137,110	4,453,417
Balance at 31 December 2022	26,509,012	(14,340,093)	1,147,333	1,838,353	15,154,605

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Notes to the Consolidated Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(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.

For the half year ended 31 December 2022, the consolidated entity incurred a total comprehensive loss of $3,616,030 (Dec 2021: $2,300,097), incurred cash outflows from operations of $1,819,417 (Dec 2021: $2,083,483) and had a net working capital deficit of $11,877,946 (June 2022: $4,090,968 deficit). The main drivers for the increased deficit were due to recognition of a contract payment for screening plants as current liability, along with increased offtake advance payment received and classification of convertible notes as current liability.

Throughout the reporting period, the Company continued development of its key assets at Mt Carbine. Main development cost driver were the costs associated with the Mt Carbine Open Cut Project and Environmental Authority amendments.

The ability of the Company to continue to adopt the going concern assumption is based upon it entering into arrangements to fund the expansion of the Mt Carbine Tungsten Project as detailed in the BFS. The Company, together with its joint venture partner Cronimet, started engaging with selected equipment OEMs offering equipment finance facilities, as well as Offtake partners of Cronimet to provide funding support through advance payments, and institutional fund houses providing project debt. As of the date of this report, binding term sheets have been received for sizeable facilities.

The Company also has a source income from the Mt Carbine Quarry and from the Company’s unincorporated joint venture with CRONIMET Australia Pty Ltd for the mineral processing activities associated with the Mt Carbine Retreatment Project.

Should additional funds be necessary the Directors are confident of securing these 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) Basis of Preparation

The half year financial report does not include all the 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 investment 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 EQ Resources Limited as at 30 June 2022.

It is also recommended that the half-year financial report be considered together with any public announcements made by EQ Resources Limited during the half-year ended 31 December 2022 in accordance with its continuous disclosure obligations arising under the Corporations Act 2001.

(c) Statement of Compliance

The half year financial report is a general-purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting.

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

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

(d) Significant Accounting Policies

The accounting policies and methods of computation adopted in the preparation of the half year financial report are consistent with those adopted and disclosed in the Company’s 2022 annual financial report for the financial year ended 30 December 2022. The accounting policies are consistent with the Australian Accounting Standards and the International Financial Reporting Standards.

(e) Inventory

Inventories are valued at the lower of cost and net realisable value as per AASB 102, except for the 7 million tonnes of stockpiled inventory which was recognised at fair value as part of the business combination upon the acquisition of Mt Carbine Quarries Pty Ltd on 28 June 2019. This inventory will be consumed on a units of operation basis.

Work in progress and finished goods are stated at the lower of average cost of production and net realisable value.

Cost of production comprises direct materials and delivery costs, direct labour, taxes, and an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

2. REVENUE AND OTHER INCOME

REVENUE AND OTHER INCOME
Revenue	31/12/2022 $ 31/12/2021 $
Sales Sub-lease rent (unincorporated joint venture) Interest received – other persons/corporation	2,558,868 2,208,261 46,623 24,500 7,618 885
Other income Employment incentives and COVID-19 relief (various) Grants Diesel fuel rebates	2,613,109 2,233,646 215,800 1,990,000 36,336 101,511 114,283
	2,307,311 150,619
Total revenue and other income	4,920,420 2,384,265

3. INVENTORY

INVENTORY
	31/12/2022 $ 30/06/2022 $
Current Finished goods Work-in-progress Raw materials Workshop inventory	510,047 353,889 364,552 364,552 690,831 72,547 279,048 85,450
Non-current Raw materials	1,844,478 876,438 6,086,592 6,812,875
	6,086,592 6,812,875

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	31/12/2022 $ 30/06/2022 $
	7,931,070 7,689,313

The above amount for raw materials incorporates the fair value of the estimated 7 million tonnes of stockpiled inventory acquired as part of the acquisition of Mt Carbine Quarries Pty Ltd on 28 June 2019 along with work-in-progress and finished goods inventory which have been created from this stockpiled material. This inventory will be consumed on a units of operation basis and in accordance with AASB102. All inventory, regardless of type and stage in the production process has been valued at the lower of cost and net realisable value. Inventories expected to be processed or sold within twelve months after the balance sheet date are classified as current assets. All other inventories are classified as non-current assets.

4. FINANCIAL ASSETS

	31/12/2022 $ 30/06/2022 $
Shares in listed companies: Critical Resources Limited (ASX: CRR) (formerly Force Commodities Ltd	ASX: 4CE)

Equity instruments are measured at fair value as at reporting date with all changes recognised as other comprehensive income / (loss) in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

5. TRADE & OTHER RECEIVABLES

TRADE & OTHER RECEIVABLES
	31/12/2022 $ 30/06/2022 $
Trade Receivables Less: Allowance	1,934,499 1,645,546 (549) -
Taxation receivables Other Receivables	1,933,950 1,645,546 591,800 484,950 85,896 193,103
Total Trade & Other Receivables	2,611,646 2,323,599
Prepayments	352,131 632,292

Trade Receivables

The average credit period on sales of product is 30 days. No interest is charged on outstanding trade receivables.

The collectability of trade receivables is assessed continuously, and individual receivables are written off when management deems them unrecoverable. No provision has been made for doubtful debts as all trade receivables were deemed to be collectable at reporting date.

6. RECEIVABLES – NON-CURRENT

	31/12/2022 $ 30/06/2022 $
Tenement security deposits Other security deposits	1,080,130 1,075,130 7,266 6,162
	1,087,396 1,081,292

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The tenement deposits are restricted so that they are available for any rehabilitation that may be required on the mining leases and/or exploration tenements (refer to Note 11).

7. EMPLOYEE BENEFITS

EMPLOYEE BENEFITS
	31/12/2022 $ 30/06/2022 $
Current Annual leave provision	316,476 263,737
Long service leave provision	24,551 18,660
	341,027 282,397
Non-current Long service leave provision	13,893 15,418
	354,920 297,815

8. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE

	31/12/2022 $ 30/06/2022 $
Costs brought forward Costs incurred during the period Exploration and evaluation expenditure written down Capitalised portion of R&D tax offset	10,803,974 8,280,353 1,543,174 2,616,884 - - - (20,518)
Total deferred exploration and evaluation Amortisation deferred exploration and evaluation	1,2347,148 10,876,719 (76,812) (72,745)
Costs carried forward	12,270,336 10,803,974
Exploration expenditure costs carried forward are made up of: Expenditure on joint venture areas Expenditure on non-joint venture areas	- - 12,270,336 10,803,974
Costs carried forward	12,270,336 10,803,974

The above amounts represent costs of areas of interest carried forward as an asset. The ultimate recoupment of deferred exploration and evaluation expenditure in respect of an area of interest carried forward is dependent upon the discovery of commercially viable reserves and the successful development and exploitation of the respective areas or alternatively sale of the underlying areas of interest for at least their carrying value. Amortisation, in respect of the relevant area of interest, is not charged in the development phase until production commences.

The Directors reassess the carrying value of the Group’s tenements at each half year, or at a period other than that, should there be any indication of impairment.

Farm-In and Joint Venture Agreement – NSW Projects

EQ Resources Limited entered into a binding Farm-In and Joint Venture Agreement with Sozo Resources Pty Ltd (“Sozo”) in November 2021 whereby Sozo can earn up to an 80% interest in EQR’s 100% owned NSW projects, Crow Mountain (EL6648) and Panama Hat (EL8024), by completing expenditure of $1.6 million over 4 years. For further details refer to ASX announcement “EQR Farms-Out NSW Projects to Focus on Mt Carbine Tungsten Mine” dated 26 November 2021.

Half Year Report December 2022 – EQ Resources Limited

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9. CONTRIBUTED EQUITY

CONTRIBUTED EQUITY
Shares	31/12/2022 $ 30/06/2022 $
Share Capital 1,459,486,938 (30 June 2022: 1,344,186,938) ordinary shares fully paid	26,509,012 22,192,705
	26,509,012 22,192,705

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Movements in Ordinary Share Capital

		Number of
1 July 2022 to 31 December 2022	Date	Shares	Issue Price	$
Balance b/fwd		1,344,186,938		22,192,705
Issue of 109,000,000 shares @ $0.04 per share (refer ASX	31/10/2022	109,000,000	$0.04	4,360,000
announcement dated 31 October 2022)
Issue of 6,300,000 shares @ $0.04 per share (refer ASX	21/11/2022	6,300,000	$0.04	252,000
announcement dated 21 November 2022)
Shares issue costs				(295,693)
Balance as at 31 December 2022		1,459,486,938		26,509,012

Options

The following table illustrates the share-based payments expense, number and weighted average exercise prices (WAEP) of, and movements in, share options during the year:

	Number	WAEP	$
Balance at 1 July 2022	111,000,000	0.056	1,701,243
Options recognised as share issue costs	27,250,000	0.065	-
Options recognised as capitalised borrowing costs	1,575,000	0.065	-
Amortisation share based payments	-	-	137,110
Forfeited / cancelled	-	-	-
Exercised	-	-	-
Expired	-	-	-
Balance at 31 December 2022	139,825,000	0.059	1,838,353

The following table illustrates outstanding options that have vested and are exercisable at year end:

					Remaining
	Number	Number vested			Contractual
	outstanding	and exercisable	Exercise price	Expiry Date	Life (Years)
Options
Issue EQRAB	2,000,000	2,000,000	0.0400	05/05/2023	0.35
Issue EQRAC	3,000,000	3,000,000	0.0600	05/05/2023	0.35
Issue EQRAD	2,000,000	2,000,000	0.0400	01/07/2023	0.50
Issue EQRAE	3,000,000	3,000,000	0.0600	01/07/2023	0.50
Issue EQRAF	2,000,000	2,000,000	0.0400	01/02/2024	1.08
Issue EQRAK	25,000,000	25,000,000	0.0650	17/09/2023	0.75
Issue EQRAG	30,000,000	30,000,000	0.0432	19/03/2024	1.25
Issue EQRAH	22,000,000	22,000,000	0.0600	25/05/2024	1.42
Issue EQRAI	12,000,000	12,000,000	0.0600	23/06/2024	1.50
Issue EARAJ	10,000,000	10,000,000	0.0600	23/06/2024	1.50
Issue EQRAL	28,825,000	28,825,000	0.0650	07/11/2025	2.83
Outstanding at 31 December 2022	139,825,000	139,825,000

Performance Rights

No performance rights were outstanding at the end of the reporting period.

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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10. CONVERTIBLE NOTES

On 17 September 2021 the Company issued 6,000,000 convertible notes with an aggregate principal value of $6,000,000.

The notes are convertible at the option of the noteholders into ordinary shares at a conversion price of $0.065 per share at any time after issuance and up to the close of business on the maturity date.

Noteholders have an option to redeem the notes at the end of 2 years at face value plus any accrued interest. Any convertible notes not converted will be redeemed on 17 September 2023 at the principal amount together with accrued but unpaid interest thereon. The notes carry interest at a coupon rate of 7.00% per annum (effective interest rate of 1.4% per month based on a 2-year amortisation period on estimated cashflow timing in line with the 2-year redemption option) which is payable annually in arrears in September.

The fair value of the liability component was estimated at issuance date using an “Interest Rate Differential” methodology which discounts the convertible notes’ cash flows at a commercial discount (interest) rate to a present value. The residual amount is assigned as the equity component and is included in reserves.

Subsequent to issue, 2,000,000 notes plus accrued interest were converted into 30,832,307 ordinary shares on 29 and 30 September 2021.

The convertible notes issued and redeemed during the period have been split into liability and equity components as follows:

components as follows:
	$
Opening balance at 1 July 2022 Accrued Interest at effective interest rate Accrued Interest settled with share and options issue 7 November 2022	3,004,651

	281,248
	(280,000)
Capitalised borrowing costs	1,248
	91,301
Liability component at 31 December 2022	3,097,200

Accounting Policy

The component of convertible notes that exhibits characteristics of a liability is recognised as a liability in the balance sheet, net of transaction costs. The increase in liability due to passage of time is recognised as a finance cost. The remainder of the proceeds are included in shareholders’ equity, net of transaction costs. The carrying amount of the conversion option is not remeasured in subsequent years. Transaction costs are apportioned between the liability and equity components of the convertible notes based on the allocation of proceeds to the liability and equity components when the instruments are first recognised. The liability component of the convertible notes has been classified as a current liability in accordance with AASB 101 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current due to the Company not having a right to defer settlement for at least twelve months after the reporting period

11. CONTINGENT LIABILITIES

The Group has provided guarantees totalling $1,080,130 in respect of mining exploration tenements and environmental bonds. These guarantees, in respect of mining and exploration 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.

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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12. SUBSEQUENT EVENTS

There have been no material events subsequent to 31 December 2022 that have not previously been reported other than:

The company announced that it has completed the first $5 million drawdown from Regal Resources Royalties Fund under the terms of a $10 million royalty-based funding package for the redevelopment of the historic Mt Carbine tungsten mine (“the Project”). (Refer ASX Announcement “EQR Completes First Drawdown Of $5M Royalty Funding For Mt Carbine Tungsten’ dated 06 January 2023).

13. EQUIPMENT LEASES

EQUIPMENT LEASES
Right-of-use assets	31/12/2022 $ 30/06/2022 $
Opening balance Additions: - Plant & equipment - Motor vehicle - Heavy machinery Disposals Depreciation charge for the year	2,019,963 1,118,930 157,337 1,269,864 - 129,047 - - - (11,749) (371,409) (486,129)
Closing balance	1,805,891 2,019,963
Lease Liability - Maturity Analysis Less than 1 year 1 to 5 years 5+ years	750,370 665,754 1,191,227 1,335,829 - -
	1,941,597 2,001,583
Amounts Recognised in profit or loss Interest on lease liabilities Expenses relating to short-term leases	- 93,238 - -
	- 93,238
Amounts recognised in statement of cash flows
Total cash outflow for leases	- 119,007

14. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

Adoption of New Standards and Interpretations

Changes in accounting policies on initial application of Accounting Standards

From 1 July 2022, the Group has adopted all the standards and interpretations mandatory for annual periods beginning on or after 1 July 2022. Adoption of these standards and interpretations did not have any effect on the statements of financial position or performance of the Group. The Group has not elected to early adopt any new standards or amendments.

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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15. OPERATING SEGMENTS

Segment Information

Identification of Reportable Segments

During the half year to 31 December 2022, the Company operated principally in two business segments being mineral exploration in Queensland and New South Wales, Australia and production from its Mt Carbine assets in Queensland, Australia.

The Company’s revenues and assets and liabilities according to its business segments are shown below.

	31/12/2022 30/06/2022 Total $ Queensland $ NSW $ Total $ Queensland $ NSW $
REVENUE Revenue & Other Income	4,920,420 4,920,420 - 6,231,263 6,231,263 -
Total segment revenue	4,920,420 4,920,420 - 6,231,263 6,231,263 -
RESULTS Net profit / (loss) before income tax Income tax	(3,616,030) (3,616,030) - (6,063,051) (6,063,051) - - - - - - -
Net profit / (loss)	(3,616,030) (3,616,030) - (6,063,051) (6,063,051) -
ASSETS AND LIABILITIES Assets Liabilities	38,759,579 38,392,254 367,325 31,275,434 30,914,939 360,495 23,604,972 23,604,972 - (16,958,216) (16,958,216) -

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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Directors’ Declaration

In the opinion of the Directors:

The financial statements and notes of the Company:
(a) give a true and fair view of the Company’s financial position as at 31 December 2022 and the performance for the half-year ended on that date; and
(b) comply with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with the resolution of the Board of Directors.

On behalf of the Board

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Oliver Kleinhempel Non-executive Chairman 14 March 2023

Half Year Report December 2022 – EQ Resources Limited

Nexia Melbourne Audit Pty Ltd Registered Audit Company 291969 Level 35, 600 Bourke Street Melbourne Victoria 3000 T: +61 3 8613 8888 F: +61 3 8613 8800

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resourcing the new economy for a better tomorrow

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Forward Looking Statements

Some statements contained within this report relate to the future and are forward looking statements. Such statements may include, but are not limited to, statements with regard to intention, capacity, future production and grades, projections for sales growth, estimated revenues and reserves, targets for cost savings, the construction cost of new projects, projected capital expenditures, the timing of new projects, future cash flow and debt levels, the outlook for minerals and metals prices, the outlook for economic recovery and trends in the trading environment and may be (but are not necessarily) identified by the use of phrases such as “will”, “expect”, “anticipate”, “believe” and “envisage”. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may be outside EQ Resources Limited’s control. Actual results and developments may differ materially from those expressed or implied in such statements because of a number of factors, including levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation.

Given these risks and uncertainties, undue reliance should not be placed on forward-looking statements and intentions which speak only as at the date of the report. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, EQ Resources does not undertake any obligation to publicly release any updates or revisions to any forward looking statements contained in this report, whether as a result of any change in EQ Resources’ expectations in relation to them, or any change in events, conditions or circumstances on which any such statement is based.

Certain statistical and other information included in this report is sourced from publicly available third-party sources and has not been independently verified.

Half Year Report December 2022 – EQ Resources Limited

resourcing the new economy for a better tomorrow

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Half Year Report December 2022 – EQ Resources Limited

AI assistant

EQ RESOURCES LIMITED — Interim / Quarterly Report 2023

64867_rns_2023-03-14_59fbd997-0c98-4a3f-8ed4-f3e18d0e8c6d.pdf

HALF YEAR REPORT DECEMBER 2022 EQ RESOURCES LIMITED ABN 77 115 009 106

CORPORATE DIRECTORY

Directors

Company Secretary

Registered Office

Share Register

Auditors

Stock Exchange Listing

Principal Place of Business

CONTENTS

OPERATING & FINANCIAL REVIEW

Operating and Financial Review

Mt Carbine Bankable Feasibility Study Update

Mt Carbine Operations

Primary Crushing and Screening Plant

XRT Sorter Pilot Plant

Gravity Plant Processing Operations

Quarry Operations

Exploration

Mt Carbine, Qld - Mining Leases

Western Pit Extensions

OTHER EXPLORATION ACTIVITIES

PLOTLOGIC R&D Project

WH Bryan Mining and Research Institute

Future Programs

Mt Holmes – EPM 14871

NSW Gold Exploration Tenements

EL8024 Panama Hat

EL6648 Crow Mountain

Tenement Interests

Corporate

ESG PROGRAM Overview

Safety Performance

Environmental Activities

Mt Carbine Project Development

Complementary royalty funding for Mt Carbine development

Critical minerals accelerator initiative (CMAI)

Contract negotiations with Golding for restart of open pit mining

FINANCIALS

Directors’ Report

Directors

Operating Results

Review of Operations

Subsequent Events

Auditor’s Independence Declaration

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the half year ended 31 December 2022

Consolidated Statement of Financial Position

For the half year ended 31 December 2022

Consolidated Statement of Cash Flows

For the half year ended 31 December 2022

Consolidated Statement of Changes in Equity

For the half year ended 31 December 2022

Notes to the Consolidated Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Going Concern Basis for Preparation of Financial Statements

(b) Basis of Preparation

(c) Statement of Compliance

(d) Significant Accounting Policies

(e) Inventory

2. REVENUE AND OTHER INCOME

3. INVENTORY

4. FINANCIAL ASSETS

5. TRADE & OTHER RECEIVABLES

Trade Receivables

6. RECEIVABLES – NON-CURRENT

7. EMPLOYEE BENEFITS

8. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE

Farm-In and Joint Venture Agreement – NSW Projects

9. CONTRIBUTED EQUITY

Movements in Ordinary Share Capital

Options

Performance Rights

10. CONVERTIBLE NOTES

Accounting Policy

11. CONTINGENT LIABILITIES

12. SUBSEQUENT EVENTS

EQ RESOURCES LIMITED Interim / Quarterly Report 2023

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