EQ Resources turns tungsten prices into a stronger balance sheet

From solvency concerns to a recapitalised balance sheet

EQ Resources Limited (ASX:EQR) has gone from questioning its ability to remain a going concern to reporting its first full-year profit. The tungsten producer posted a statutory net profit of A$7.1 million for FY2026, compared with a A$39.2 million loss a year earlier, while EBITDA swung to A$50.6 million from negative A$9.5 million.

The balance-sheet repair was substantial. EQR raised A$56.5 million in new equity, converted A$25.8 million of debt into shares, received A$23.5 million from option exercises and refinanced €15 million of Spanish debt with Traxys Europe over three years at EURIBOR plus a 5.5% margin. Cash rose to A$28.2 million and net working capital moved from a restated A$96.8 million deficit to a A$16.2 million surplus. The price of that rescue was equally clear: shares on issue rose from 2.7 billion to 5.1 billion.

Tungsten prices offset weaker mine production

Revenue more than doubled to A$165.4 million, helped by a dramatic rise in the Fastmarkets APT benchmark from about US$350 per mtu in March 2025 to approximately US$2,900 by June 2026. Yet production moved in the opposite direction. Group output fell to 118,946 mtu from 167,805 mtu, with Barruecopardo producing 90,666 mtu and Mt Carbine 28,280 mtu.

Extreme weather did much of the damage. A 1-in-50-year rainfall event flooded part of the Barruecopardo pit, while water constraints, cyclonic weather and disrupted blasting affected Mt Carbine. Both operations finished the year more strongly: Mt Carbine’s June-quarter production rose 176% to 13,050 mtu after the Iolanthe vein was reached, while higher-grade ore was re-accessed at Barruecopardo in early July. The annual report says the June quarter produced record group revenue of A$79 million and record operating cash flow, but full-year operating cash flow remained negative at A$5.6 million.

Mt Carbine expansion puts execution under scrutiny

The centrepiece of the next phase is the A$39 million Mt Carbine Expansion Project, approved in June. It is designed to double crushing capacity from roughly 1 million tonnes a year to 2 million tonnes, while automating crushing, screening, ore sorting and product handling. Commissioning is expected to begin in the March 2027 quarter, with an initial targeted production increase of 500 tonnes of WO₃ a year from the low-grade stockpile.

EQR is also betting on a wider Queensland processing hub. Its Mt Carbine tenement footprint increased from 783 square kilometres to 1,136 square kilometres, with another 824 square kilometres under application, following acquisitions involving Sunshine Metals, Aus Critical Minerals and TTTP1. Drilling is under way at both producing operations, while a 12,000-metre Wolfram Camp program is planned for FY2027. The company says the work should support resource and reserve updates later in 2026, although exploration success and conversion into economic mineable reserves remain unresolved.

Safety remains the uncomfortable weakness

The financial recovery has not been matched by safety performance. Barruecopardo’s lost-time injury frequency rate improved to 15.8 from 22.5, but Mt Carbine’s deteriorated to 43.0 from 36.6. The chair described the group’s overall safety outcome as unacceptable, with independent audits completed and a new Mt Carbine safety manager due to join in the first quarter of FY2027.

That makes FY2027 a more demanding test than the headline profit suggests. EQR must service the Traxys facility, fund A$26.0 million of contracted capital commitments, deliver the expansion on schedule and turn higher tungsten prices into sustainable operating cash flow. It must do so while improving safety and absorbing the dilution created by the recapitalisation. The company’s repaired balance sheet has bought it room to execute; it has not yet proved that the operational recovery can last.