EQ Resources has executed a binding heads of agreement (HoA) to facilitate diversification and vertical integration of its upstream operations.
Under the HoA, EQ Resources is to acquire 100 per cent of the shares in Tungsten Metals Group Limited and its subsidiaries (together, TMG) and separately George Chen’s interest in Asia Tungsten Products Co Ltd (ATC). The agreement will result in EQR obtaining 100 per cent ownership of TMG Group.
TMG Group currently owns and operates the largest ferrotungsten (FeW) plant outside of China, located in Vietnam. With a potential production capacity of 4,000tpa, the facility is regarded as one of the most competitive in the industry due to its scale and favourable cost structure.
The transaction aligns with EQ Resources’ strategic plans to leverage its existing substantial resource base and production output along the tungsten supply chain.
The HoA is subject to customary due diligence procedures and shareholder approvals. It is expected to be completed in the first half of 2025.
Per the terms of the HoA, the company has determined that TMG Group’s enterprise value is $13.5 million, including the acquisition shares (100 per cent of TMG shares plus George Chen’s 40 per cent interest in ATC) and liabilities as of the date of the HoA.
Precedent and any applicable adjustments, at the closing of the transaction, EQ Resources has agreed to issue an estimated 170 million new fully paid ordinary EQ Resources shares and make a payment of $2.5 million in cash (the company intends to fund this through customer prepayments for FeW) while assuming TMG Group liabilities.
EQ Resources’ CEO, Kevin MacNeill, said the company is pleased to announce the HoA for the 100 per cent acquisition of the TMG Group.
“This transaction aligns with EQR’s strategic initiatives to be the preeminent western tungsten producer. Upon completion of the transaction, EQR will have achieved a strategic diversification of products, customers and geography and be a proud 100 per cent owner and operator of critical western tungsten operations on three continents.
“Additionally, EQR will have achieved 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, said, “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 realised following this potential transaction, with the enlarged EQR positioned very well to benefit from the tailwinds in the tungsten and ferrotungsten markets.”
