EQ Resources : Mt. Carbine BFS Delivers Strong Early Cash Flow

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13th December 2021

MT CARBINE BFS DELIVERS LOW CAPEX, STRONG EARLY CASH FLOW

OPERATION WITH SIGNIFICANT DEVELOPMENT POTENTIAL

EQ Resources Limited is the 100% owner of the Mt Carbine Tungsten Mine near Cairns, Australia's only primary tungsten producer.

EQ Resources Limited ("EQR" or "the Company") is pleased to announce positive results from its Bankable Feasibility Study ("BFS") for the Mt Carbine Expansion Project ("Project"), which focused on the Open Pit development with high-grade ore from the Company's 100%-owned Andy White Open Pit and supplemented with processing of the 12 million tonne Low-Grade Stockpile ("LGS") which is a 50:50 joint venture with global metals group Cronimet.

The BFS contemplates a 12-year operation with the focus on production from its high-grade open pit ore being processed in years 3 and 4 where it is expected to produce operational pre-tax cash flow of $38 million and $95 million respectively. The Project delivers impressive economics including an NPV8 of $131.5 million and an IRR of 154%.

The Open Pit BFS only utilises approximately 15.5% of the Mt Carbine In-Situ Mineral Resource covered in the production forecast and provides significant underground potential. The BFS outlines a phased investment approach, with Phase 1 and Phase 2 allowing the Company to restart the Open Pit and to generate positive cash flow without over-capitalising the Project, in advance of Phase 3 which plans to expand the pit and rehabilitate underground workings.

The Project comprises the low-cost expansion of existing crushing, screening and XRT sorting operations, as well as further expanding the existing processing plant.

A potential expanded Ore Reserve from the Open Pit, as well as conceptual design and costing for an underground mining operation (Phase 3) will be developed in a separate scoping study that the Company will be preparing throughout Q1 2022.

The Company has set out a clear pathway for a work program aiming to convert more of its resource into the reserve category as well as expanding the overall Mineral Resource through additional drilling starting in early 2022.

The BFS had been prepared by independent lead study manager JukesTodd Pty Ltd. Highlights and an executive summary of the BFS follows. The full BFS report is available on the Company's webpage (link).

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Highlights:

• BFS concludes a low-capex and low-risk nature of the LGS and high-grade open pit mining and processing operation, given the proven flowsheet and continued process optimisation over the last 12 months.
• 2021 drill program enabled the Company to issue an In-Situ Mineral Resource covering a high- grade and therefore low-cost resource, where only 15.5% of the In-Situ Mineral Resource converted into In-Situ Ore Reserve as part of the BFS. Significant geological upside and conversion of resources into reserves being part of an aggressive development program in 2022.
• The Project (Phase 1 & Phase 2 only) delivers strong Pre-Tax Economics* including:

• 1. Pre-TaxNPV8 of $131.5M;
  1. IRR of 154%;
  1. Payback period of 2.25 years;
  1. Life of Mine EBITDA of $206.9M; and
  1. Project life of 12 years.
• The Project can be realised for $19M of capital expenditure (excluding pre-production mining, Early Works** expenses and contingency) comprising:
• 1. Crushing, Screening & Processing Plant - $14.53M;

• • 1. On-siteInfrastructure - $1.24M; o Project Indirects - $1.44M; and o Owner's Cost - $1.80M.
  • Tungsten concentrate production has an estimated C1 Cash Cost*** of $155/mtu (US$113/mtu).
  • The Project develops the required infrastructure and processing capacity to support the Company's In-SituHard-Rock Resource of 9.21 million tonnes at 0.63 WO3****. Upcoming drilling around the Open Pit shell may allow an expanded Life of Mine for Open Pit operations.
  • Early Works and other capital commitments of approximately $3M has been expended in recent months, as preparatory work for upcoming constructions works.
  • The Company will advance the already commenced financing discussions in parallel with the technical and approvals workstreams.
• Concentrate sales price basis US$315/mtu (mtu = metric tonne unit, 10kg)
• See ASX announcement 'Early Works Expansion Funding Ahead of BFS' dated 13 September 2021
• 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 0.73
• See ASX announcement 'Mineral Resource Update Drives Mt Carbine BFS Optimisation' dated 23 September 2021

EQR Chief Executive Officer, Kevin MacNeill commented: "The study is the culmination of more than 12 months' work from EQR's people and our consultants, aimed at de-risking the mining and processing of the on-groundlow-grade stockpile and the Andy White Open Pit higher-grade ore."

"We have quickly demonstrated the significant value in the Company's high grade open pit resource which delivers strong cash flow in years 3 and 4 where the open pit ore will be processed for a relatively small level of capex investment. Our significant underground resource, which equates to approximately 80% of the Company's total in-situ resource of 9.21 million tonnes, has not been included in the BFS and will form part of the scoping study."

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"The Company has made a substantial investment in exploration and early works which is already included in the projected capital cost of Phase 1 and Phase 2 development. Concentrate production has been rising as this capital equipment has come online, giving the team enormous confidence in the assumptions contained in the study."

"As the BFS has now been finalised and is supporting further discussions with various financial institutions, we are confident in being able to execute our plan and to build a sustainable mine with a circular outcome as we produce tungsten concentrate with a low carbon footprint and utilise waste rock in our growing Mt Carbine Quarry business. Phase 3 is already firmly in our planning as we seek to return Mt Carbine to its former glory using high-techore-sorting and low-impact processing techniques to produce a very saleable product."

About the Company

EQ Resources Limited is an ASX-listed company transforming its world-class tungsten assets at Mt Carbine in North Queensland; leveraging advanced technology, historical stockpiles and unexploited resource with the aim of being the preeminent tungsten producer in Australia. The Company also holds gold exploration licences in New South Wales. The Company aims to create shareholder value through the exploration and development of its current portfolio whilst continuing to evaluate corporate and exploration opportunities within the new economy and critical minerals sector.

Competent Person's Statements

The Ore Reserves Estimate for the Mt Carbine Project has been prepared by a team of consultants under the guidance of Mr Tony O'Connell.

The estimates of Open Cut Ore Reserves for the Mt Carbine Project as at 31st December 2021 presented in the Ore Reserves Estimate have been prepared in accordance with the requirements of the 2012 edition of the Australasian Code for Reporting of Mineral Resources and Ore Reserves (2012 JORC Code).

Mr O'Connell is a qualified Mining Engineer, (BE (Mining), University of Queensland), has over 22 years of experience in the global mining industry and is a member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr O'Connell has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and the activity being undertaken to qualify as a Competent Person as defined in the JORC Code.

Mr O'Connell consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Neither Mr O'Connell, Measured Group Pty Ltd or Optimal Mining Solutions Pty Ltd has any material interest or entitlement, direct or indirect, in the securities of EQ Resources Limited or any associated companies. Fees for the preparation of this report are on a time and materials basis only.

EQ Resources' exploration and resource work is being managed by Mr Tony Bainbridge, AusIMM. Mr Bainbridge is engaged as a contractor by the Company and is not "independent" within the meaning of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Mr Bainbridge has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in JORC Code 2012.

The technical information contained in this announcement relating bankable feasibility study results are based on, and fairly represents, information compiled and/or assessed by Mr Bainbridge. Mr Bainbridge has verified and approved the data disclosed in this release, including the analytical and test data underlying the information. Mr. Bainbridge has consented to the inclusion in this release of the matters based on his compiled information in the form and context in which it appears in this announcement.

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Forward-looking Statements

This announcement may contain forward-looking statements. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. Particular risks applicable to this announcement include risks associated with planned production, including the ability of the Company to achieve its targeted production outline due to regulatory, technical or economic factors. In addition, there are risks associated with estimates of resources, and there is no guarantee that a resource will have demonstrated economic viability as necessary to be classified as a reserve. There is no guarantee that additional exploration work will result in significant increases to resource estimates. Neither the Australian Securities Exchange nor its Regulation Services Provider (as that term is defined in policies of the Australian Securities Exchange) accepts responsibility for the adequacy or accuracy of this announcement.

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Cautionary Statements

The Bankable Feasibility Study ("BFS") discussed herein has been undertaken to explore the technical and economic feasibility of expanding the Mt Carbine Tungsten operation, on the basis of an expanded processing plant to process the historic 12 million tonnes of Low Grade Stockpile ("LGS") and high-grade ore to be mined from the Company's 100% owned Open Pit ("Project").

The production target and financial forecasts presented in the BFS are shown on a 100% Project basis. It has to be noted that the Company has entered into a 50:50 joint venture arrangement with Cronimet Australia Pty Ltd which covers the retreatment of the historic tailings and LGS only. Details on the joint venture structure are provided in the BFS documentation.

The production target covers feedstock from the LGS and defined Ore Reserves as independently validated. The Ore Reserve Estimate underpinning the BFS has been prepared by a Competent Person in accordance with the requirements in the JORC Code 2012.

There is a lower level of geological and grade continuity confidence associated with the Inferred Resources and there is no certainty that further exploration work will result in the conversion of Inferred Resource estimates to Indicated Resource estimates or return the same grade and tonnage distribution.

The stated production targets are based on the Company's current expectations of future results or events and should not be solely relied upon by investors when making investing decisions.

The economic outcomes associated with the BFS are based on certain assumptions made for commodity prices, concentrate payables, exchange rate and other economic variables, which are not within the Company's control and subject to change from time to time. Changes in such assumptions may have a material impact on economic outcomes.

To achieve the range of outcomes indicated in the BFS, additional funding will be required. Investors should note that there is no certainty that the Company will be able to raise that amount of funding when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of the Company's existing shares.

It is also possible that the Company could pursue other 'value realisation' strategies such as a sale or partial sale of the Company's share of the Project.

This BFS announcement contains forward‐ ‐looking statements. The Company has concluded it has a reasonable basis for providing the forward looking statements included in this announcement and believes it has a reasonable basis to expect it will be able to fund the development of the Project.

However, several factors could cause actual results, or future expectations to differ materially from the results expressed or implied in the forward-looking statements. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the BFS.