EQ Resources has locked in a US$7.5 million royalty funding agreement with Oaktree Management, aimed at expanding and enhancing its Barruecopardo tungsten project in Spain. This deal strengthens the company’s balance sheet and supports critical capital projects to increase production capacity.
- US$7.5 million royalty funding secured from Oaktree Management
- 2.5% royalty on gross proceeds from Barruecopardo tungsten concentrate sales
- Funds to support capital projects and working capital at Saloro subsidiary
- Expansion of tungsten concentrate output through new sorting technology
- Royalty buy-back option available after five years
Royalty Funding Agreement Details
EQ Resources Limited (ASX, EQR), a global tungsten producer with operations in Australia and Spain, has announced a significant royalty funding agreement with Oaktree Management, L.P. The deal involves a US$7.5 million upfront payment in exchange for a 2.5% royalty on gross proceeds from the sale of tungsten concentrate produced at the Barruecopardo Project in Salamanca Province, Spain.
This funding arrangement is structured through EQ’s wholly owned subsidiary Saloro S.L.U., which manages the Barruecopardo mine. The royalty will be calculated on gross proceeds received by Saloro from tungsten concentrate sales, providing Oaktree with a direct stake in the project’s revenue stream.
Strategic Use of Funds
The proceeds from this royalty funding will be allocated to ongoing and essential capital projects at Barruecopardo, as well as to bolster the group’s working capital and overall balance sheet. Among the key initiatives is the installation of a third X-ray transmission (XRT) sorter, which is expected to improve tungsten recovery rates and expand concentrate output capacity.
Executive Chairman Oliver Kleinhempel highlighted the importance of this funding in supporting operational improvements that have already delivered significant gains in tungsten recovery during the first half of 2025. The new sorting equipment is anticipated to further enhance processing efficiency and output, positioning Barruecopardo as a leading tungsten supplier.
Financial and Market Implications
The royalty agreement includes a buy-back option exercisable by Saloro after five years, allowing the company to repurchase a minimum of 25% of the future royalty obligations at a multiple of the original upfront payment. This flexibility provides EQ Resources with a potential pathway to reduce ongoing royalty costs as the project matures.
Market conditions remain dynamic, with tungsten prices benefiting from tightened supply due to export restrictions in China. This backdrop enhances the strategic value of Barruecopardo’s expanded production capabilities and the secured funding to capitalize on favorable pricing.
Looking Ahead
EQ Resources continues to leverage its global footprint and advanced processing technologies to unlock value from its tungsten assets. The partnership with Oaktree not only injects much-needed capital but also aligns with the company’s goal of sustainable growth within the critical minerals sector. Investors will be watching closely as the capital projects progress and the impact on production and financial performance becomes clearer.
Bottom Line?
This royalty funding deal marks a pivotal step for EQ Resources, setting the stage for enhanced production and financial resilience amid evolving market dynamics.
Questions in the middle?
- How soon will the new XRT sorter be fully operational and impact production volumes?
- What are the detailed terms and potential financial impact of the royalty buy-back option?
- How might ongoing Chinese export restrictions influence tungsten prices and project economics?