ASX-listed EQ Resources (EQR) has signed a binding heads of agreement (HoA) to acquire 100% of the shares in Tungsten Metals Group (TMG) and its subsidiaries, as well as the 40% interest in Asia Tungsten Products (ATC) held by George Chen.

TMG Group owns and operates the largest and most advanced ferrotungsten (FeW) plant outside of China, located in Vĩnh Bảo, Vietnam. The facility, which has a production capacity of 4 000 t/y FeW, has primarily operated as a toll treatment plant, converting tungsten raw materials into high-quality FeW for third-party customers. Due to its scale and favourable cost structure, especially in terms of electricity and labour costs, the plant is considered one of the most competitive in the global market.

Under the terms of the HoA, EQR will acquire TMG for an enterprise value of A$13.5-million, which includes all outstanding shares in TMG and Chen’s stake in ATC, as well as the assumption of TMG Group’s liabilities. The acquisition will be financed through the issuance of an estimated 170-million fully paid ordinary shares in EQR (consideration shares) and a cash payment of A$2.5-million, which EQR intends to fund through customer prepayments for FeW.

EQR CEO Kevin MacNeill stated that the acquisition was in line with the company’s strategy to become a pre-eminent global tungsten producer.

The acquisition will also position EQR to capitalise on synergies between its existing operations and TMG’s advanced Vietnamese plant. According to the company, the enlarged entity will benefit from a more competitive cost structure and greater scale, as well as the growing demand for tungsten and ferrotungsten products worldwide.

TMG executive chairperson Tony Adcock welcomed the deal, stating that combining TMG’s operations with EQR’s resource base would create significant value for shareholders.

The transaction remains subject to customary conditions precedent, including regulatory approvals, with the deal expected to close in the coming months.