Debt Reduction and Supply Risks: What’s Next for EQ Resources?
EQ Resources has repaid €5 million of debt for its Spanish subsidiary Saloro, reducing its debt burden by 25% while extending remaining credit facilities. The company also reports record production and positive EBITDA forecasts at its Barruecopardo tungsten mine.
- €5 million debt repayment completed for Saloro subsidiary
- 25% reduction in Saloro’s debt facilities with Santander
- Remaining debt facilities extended to late 2025 with Santander and CaixaBank
- Record production levels and positive EBITDA expected at Barruecopardo mine
- Tungsten supply tightness amplified by China’s export restrictions
Debt Reduction and Facility Extensions
EQ Resources Limited (ASX, EQR) has taken a significant step in strengthening its financial position by repaying €5 million of debt held by its wholly owned Spanish subsidiary, Saloro S.L.U. This repayment represents a 25% reduction in Saloro’s outstanding debt facilities with Santander, one of its principal banking partners. Alongside this repayment, EQ Resources has successfully negotiated extensions for the remaining debt facilities with Santander until December 2025 and with CaixaBank until June 2025, providing the company with greater financial flexibility as it advances its operations.
Operational Momentum at Barruecopardo
The debt restructuring comes on the back of encouraging operational results at the Barruecopardo tungsten mine in Spain. EQ Resources has reported record production levels towards the end of 2024, with a positive EBITDA forecast of approximately €4.4 million (A$7.84 million) on a stand-alone basis for the fourth quarter of 2024 and first quarter of 2025. These results reflect the success of recent mine restructuring efforts and improved operational efficiencies, positioning Barruecopardo as a key contributor to the company’s growth.
Strategic Importance of Tungsten Amid Global Supply Constraints
EQ Resources’ chairman, Oliver Kleinhempel, highlighted the strategic significance of tungsten as a critical raw material, especially given the tightening global supply landscape. China’s export restrictions have amplified structural shortages in Western markets, increasing the importance of reliable tungsten sources outside of China. EQ Resources is well positioned to capitalize on this dynamic, with its assets in Spain and Australia contributing to the global supply chain for this essential metal.
Looking Ahead
While the company has made substantial progress in reducing debt and improving operational performance, final documentation for the extended credit facilities is still pending. EQ Resources continues to engage with its banking partners to secure financial arrangements beyond 2025, aiming to support ongoing growth and exploration initiatives. Investors will be watching closely for confirmation of EBITDA targets and further updates on debt negotiations as the company navigates this critical phase.
Bottom Line?
EQ Resources’ debt reduction and operational gains set the stage for growth amid tightening tungsten markets.
Questions in the middle?
- What are the final terms and conditions of the extended debt facilities with Santander and CaixaBank?
- Can EQ Resources sustain or improve its EBITDA and production levels at Barruecopardo beyond early 2025?
- How will ongoing global tungsten supply constraints influence EQ Resources’ market positioning and pricing power?
