SYDNEY: EQ Resources Limited (EQR) has announced a binding Heads of Agreement (HoA) to acquire 100% of the shares in Tungsten Metals Group Limited (TMG) and its subsidiaries, as well as Mr. George Chen’s shares in Asia Tungsten Products Co Ltd (ATC). Together, TMG and ATC form TMG Group.

TMG Group owns and operates the largest and most advanced ferrotungsten (FeW) plant outside of China, located in Vĩnh Bảo, Haiphong Province, Vietnam. The plant, built in 2011, has the potential to produce 4,000 tonnes of FeW annually and is recognized for its competitive cost structure, particularly in electricity and labor.

Under the HoA, EQR has valued TMG Group at A$13.5 million, which includes all shares and liabilities. Upon closing the transaction, EQR will issue approximately 170 million new shares and pay A$2.5 million in cash, funded through customer prepayments for FeW, while assuming TMG Group’s liabilities.

EQR’s CEO, Kevin MacNeill, expressed excitement about the acquisition, stating, “EQR is pleased to announce the execution of a Heads of Agreement for the 100% acquisition of the TMG Group. This transaction aligns with EQR’s strategic initiatives to be the preeminent western tungsten producer. Upon completion, EQR will diversify its products, customers, and geography, and become the proud owner and operator of critical western tungsten operations on three continents. Additionally, EQR will achieve vertical integration of our upstream operations, leveraging our substantial resource base and existing production output throughout the tungsten supply chain.”

TMG’s Executive Chair, Tony Adcock, also highlighted the benefits of the acquisition, saying, “Bringing together TMG Group’s advanced ferrotungsten plant in Vietnam with EQR’s high-quality upstream operations represents a compelling investment case for all shareholders. The TMG Board believes there are significant synergies that can be realized following this potential transaction, with the enlarged EQR well-positioned to benefit from the tailwinds in the tungsten and ferrotungsten markets globally.”

The strategic rationale behind EQR’s interest in the acquisition stems from its understanding of TMG Group’s business, goals, and market positioning. The transaction will allow EQR to integrate its upstream operations with TMG’s capabilities, aligning with EQR’s strategy to leverage its substantial resource base and production output along the tungsten supply chain. Upon completion, EQR will have operations on three continents, enhancing its position as a leading western producer and supplier of tungsten products.

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