EQ Resources to acquire Vietnam’s largest ferrotungsten plant in $13.5m deal

Leading tungsten mining company EQ Resources (ASX: EQR) has made a strategic move to acquire the largest ferrotungsten (FeW) plant outside China.

The company has executed a binding Heads of Agreement (HoA) to acquire 100% of the shares in unlisted Tungsten Metals Group (TMG) and its subsidiaries, including all interest in associate company Asia Tungsten Products.

TMG currently owns and operates a large Vietnamese plant regarded as one of the most competitive facilities in the industry, with a potential production capacity of 4,000 tonnes per annum FeW.

Vertical integration

EQ chief executive officer Kevin MacNeill said completion of the transaction would allow for diversification and vertical integration of the company’s upstream operations.

“This transaction aligns with EQ’s strategic initiatives to be the pre-eminent western tungsten producer,” he said.

“Upon completion of the transaction, EQ will have achieved a strategic diversification of products, customers and geography and be the proud 100% owner and operator of critical western tungsten operations on three continents.”

“Additionally, EQ will have achieved […] leveraging our substantial resource base and existing production output throughout the tungsten supply chain.”

Strategic fit

Mr MacNeill said the plant acquisition is a strategic fit with EQ’s world-class tungsten assets at Mt Carbine in North Queensland and Barruecopardo in the Salamanca Province of Spain.

The TMG facility has mainly operated in recent years as a toll treatment facility for third-party customers, converting primary and secondary tungsten raw materials into high-quality FeW.

TMG executive chair Tony Adcock said bringing together the advanced FeW plant in Vietnam with EQ’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 EQ positioned very well to benefit from the tailwinds in the tungsten and ferrotungsten markets globally.”

Under the HoA, EQ has assessed the enterprise value of TMG at $13.5 million and agreed to issue an estimated 170 million new fully paid ordinary EQR shares and make a payment of $2.5m in cash while assuming TMG’s liabilities.