EQ Resources has finalized a US$7.5 million royalty funding agreement with Oaktree Capital Management to support its Barruecopardo tungsten project, while major shareholder Cronimet Asia converts a US$3 million offtake prepayment into equity, strengthening the company’s capital position.
- US$7.5 million royalty funding secured with Oaktree Capital Management
- 2.5% royalty on gross proceeds from Barruecopardo tungsten sales
- Cronimet Asia converts US$3 million offtake prepayment into equity at A$0.035 per share
- Funds to support capital projects at Barruecopardo and working capital at Mt Carbine
- Royalty buy-back option available within five years
Royalty Funding Agreement Finalized
EQ Resources Ltd (ASX, EQR), a global tungsten producer with operations in Australia and Spain, has completed a significant US$7.5 million royalty funding deal with Oaktree Capital Management. The agreement grants Oaktree a 2.5% royalty on gross proceeds from the sale of tungsten concentrate produced at the Barruecopardo Project in Salamanca Province, Spain. This funding injection is earmarked to accelerate essential capital projects at Barruecopardo and bolster the company’s working capital.
Strategic Equity Conversion by Major Shareholder
In a complementary move, Cronimet Asia Pte Ltd, a key shareholder and offtake customer for EQ Resources’ Mt Carbine project in Queensland, has converted a US$3 million offtake prepayment into equity at a conversion price of A$0.035 per share. This conversion reduces future cashflow offsets against sales and signals Cronimet’s confidence in EQ Resources’ growth strategy. The transaction aligns shareholder interests and strengthens the company’s balance sheet.
Implications for Project Development and Financial Health
The royalty funding provides EQ Resources with immediate capital to support ongoing development at Barruecopardo, which is critical for maintaining momentum in tungsten production amid a favourable pricing environment. The royalty agreement includes a buy-back option allowing EQ Resources to repurchase up to 25% of the royalty within five years, offering flexibility to manage future financial commitments.
Meanwhile, the debt-to-equity conversion with Cronimet reduces the company’s debt burden and enhances liquidity, which is vital for advancing the Mt Carbine project. This move also reflects a strategic partnership between EQ Resources and Cronimet, potentially smoothing future collaboration and offtake arrangements.
Looking Ahead
EQ Resources’ dual financing initiatives underscore its commitment to sustainable growth and shareholder value creation in the critical minerals sector. The company’s focus on expanding its tungsten assets in two continents positions it well to benefit from increasing demand for this strategic metal. Investors will be watching closely how these funding arrangements translate into operational progress and financial performance in the coming quarters.
Bottom Line?
With fresh capital secured and shareholder alignment strengthened, EQ Resources is poised for the next phase of growth in tungsten mining.
Questions in the middle?
- How will the royalty funding impact EQ Resources’ long-term profitability and cash flow?
- What are the strategic implications of Cronimet’s equity conversion for future offtake agreements?
- Will EQ Resources exercise the royalty buy-back option within the next five years?