Engineering and construction update
Highfield Resources’ flagship Muga Project is targeting relatively shallow sylvinite beds, across around 60 square kilometres in the Provinces of Navarra and Aragón. Mining is planned to commence at a depth of about 350 metres from surface and is therefore ideal for a relatively low-cost conventional mine. During the quarter, Highfield prepared a HAZOP (hazard and operability analysis) report which covers the operational risk assessment and performance stress tests of the final designs.
Highfield plans to finalise these analyses while the project is pending the grant of the Mining Concession.
As soon as the concession is granted, the company plans to share the information with its construction partner, Acciona, and progress with the negotiation of the construction agreement and the project implementation.
Highfield Resources is making progress in finalising the review of restoration and remediation plans at its Muga Potash Project in Spain and “looks forward to a swift conclusion of the Mining Concession process”, according to CEO Ignacio Salazar.
Since the end of the March quarter, the thorough review by various government entities has progressed satisfactorily for the Muga project.
The Ebro Water Agency and the two environmental departments of Madrid and Navarra have submitted positive reports to the Mining Authorities. An emergency plan for Muga has also been approved by the Navarra Emergency Services Department. Highfield is now awaiting the environmental department of Aragón to finalise its report, which the company understands is close to completion.
Clear path forward
Chief executive officer Ignacio Salazar said: “The final fifth section of the mining concession review has needed extra effort as it required several other government entities to be consulted on the restoration, emergency and water plans.
“Credit to the team and the administrations that, despite the number of parties involved, this part of the process is close to being resolved.
“We very much appreciate the recent public shows of support for the Muga Project by the President of Navarra in a recent meeting with Highfield management and in her recent visit to the mine area.
“We also very much welcomed the publication by the Government of Navarra of the Social Baseline Study.
“With the path to finalise the review of the restoration and remediation plans clear, we look forward to a swift conclusion of the Mining Concession process for the Muga Project.”
Additionally, the company has been advised that the mining authorities have finalised their review of those queries raised during the public exposition carried out in August 2020. The public exposition related exclusively to the restoration plan that is also part of the scope of section 5. No material issues have been raised by the Mining Authorities as a result of these reviews.
Highfield has been advised that once the report from the environmental department of Aragón is received and if no further clarification is required by the Authorities, the next step is to send the text of the mining concession document to the Central Government’s lawyers for its final legal review prior to the mining concession award being issued.
Sales and marketing update
Highfield has already signed non-binding MOUs representing more than its full phase-1 production capacity for potash and salt. During the quarter, the company continued to engage with traders, potential offtake partners and logistics partners which are interested in a more strategic participation in the project.
Muga Project financing
As part of its debt financing strategy, Highfield continued to work closely with Endeavour Financial to identify potential lenders, as well as preparing for the engagement with lenders and the due diligence that will take place following award of the Mining Concession. The company also continues to engage with key brokers and strategic partners as it prepares to secure the equity portion of the financing at some stage after the receipt of the mining concession.