Company Interview / Highfield Resources secures funding deal

Ignacio Salazar states Highfield Resources (ASX:HFR) completes an unconditional share placement, raising $12 million USD. The funds target the Muga potash project in Spain, which involves strategic partnerships with key Chinese investors like Tianyuan Energy, Beijing Energy, and Taishan.

Ignacio highlights the Muga project's readiness, stressing ongoing efforts in permitting and financing. Essential contracts for debt, electricity, and gas are in place. The European market, historically supplied by Russia and Belarus, faces a deficit. Muga aims to fill this gap, contributing vital potash supply.

Ignacio discusses the complementarity of the Southey project in Saskatchewan, Canada, pointing out its quality resources and proximity to Asian markets. The strategic partnerships are pivotal, ensuring robust capital and market access. Highfield Resources continues to leverage strategic partnerships and market positioning.

Full unedited transcript below:

0:00

Let's get some company news. Now. In the small end of the market, and High Field Resources has completed the unconditional portion of an institutional share placement, 12 million USD from new and existing institutional investors. The funds are earmarked for the company's Muga potash project in Spain for the details. Highfields chief executive Ignacio Salazar joining us now. Welcome to Osbi. Thanks for joining us. Tell us why you've undertaken this placement.

0:30

Well, we we announced very recently the the strategic partnership with a very three important Chinese investors. Tianyuan energy, very well known, by the way, in Australia because of the Jungle Australia project company. They were the ones sponsoring that development. Beijing Energy are a very important renewable company from China and Taishan. So all of them are providing the funding of Mura in Spain for this project. And also we are combining the Junghwan um, A project that they have in Canada. Important project. So it's a massive change for the company in the sense that we will finally, after the permitting process, financing process, getting Mura in Spain fully funded. Plus, in addition to that, we have a more future with another project in Canada. So on the back of that, and because that is signed and sealed, but we have some regulatory approvals from different countries. So obviously

1:29

this is this level of transaction is that we decided to make this certain funding to make sure that we cover the time from signing and, and of of these agreements to completion. Can you tell us a little more then about your potash project there in Spain? You say it is construction ready? What comes next then to get it up and running?

1:53

Well, what comes next is to complete this transaction and get the money to get going. I mean, really, really, um, a lot of effort in the last few years to going through the permitting, going through other elements of the financing. I mean, we have the debt financing already in place. We have the contractors in place. We have electricity, gas contracts as well in place, the team ready to go. So that aligned access to absolutely everything that we need for the project. So very much the the company, the project has been working hard to get to this point, and we were simply going through a very thorough strategic process to get to this final piece of the puzzle with. And we feel very, very pleased that can be kind of be any more strategic that done this in the sense that we got,

2:43

well, as I said, even over asset and if a different company going forward, but basically a project you were asking in the middle of Europe, in the middle of the market for a potash project, the market is not, uh, something to manage. It's in fact the biggest strength of the project, such a high volume commodity like potash, very important transportation costs as part of the economic equation and very important to have the flexibility to access to the markets. European market, you know in deficit used to be very much supply by Russia, Belarus the number two three producers globally as the and most of the imports, half of the consumption of protests in Europe came from those places. But now, um, Mugabe will be a major contributor inside Europe to the European fertilizer and the and the farming sectors. So it's your expectation then that what there is that supply deficit you're going to fill that. Um, yes.

3:42

And sorry. Go on. Sorry. Yes, yes. I mean it's 7 million tons. Just to give you maybe a bit more specific, 7 million tonnes is the Mark mop market, by the way. Exporters in the sense of Mop rather than Aesop. Probably better now in Australia. And the three and a half. Let's let's use simple numbers is the gap. And we will get in Moura up to one. So this will be a very important contribution. And bear in mind, in Europe Mines are declining, very old mines. So the internal production in Europe is declining. So this will be will not complete the gap. Still Europe remains in deficit but very important contribution considering we are ready to go now. As you know a mining project takes forever. So if Europe tries to sort of find that somewhere else, that is going to be a long, long journey, you know, while we are now ready. So do you have offtake agreements in place then? So in fact, the offtake agreements, as I said,

4:42

marketing and markets for us is our strength. So we very much kept we have a lot of numbers. Well more than double our production in non-binding agreements. But we kept the non-binding because the strategic process and part of the the new partners will take aim offtake agreements. So we use that more as a tool rather than anything else. So from now on we will develop this the the offtake agreements, some of them a small part of them with the current new shareholders of a company and then with the rest 75% of production We are expecting to go to Europe. The other 25%, probably southern hemisphere, other areas, just to to create a bit of balance and have some flexibility. And Ignacio, can you tell us more about your Southey project in Saskatchewan in Canada? Where is that at?

5:32

Yes, so, so very much. I mean, obviously our main objective in with the strategic process was to fund Mura, which is a small company we have access to, obviously, and big support from currency holders for a long time, but well, not enough considering our site. So we knew we had to get this strategic first of all, well, it resulted to be a well, the result beyond our expectations in the sense that the strategic solution covers all the funding. Although although we will be talking to the market, but and there will be always possibilities to to join, but we are more than covered with the strategic solution. But that in addition came up with this Saudi project. Saudi very much in the middle of the Saskatchewan basin. A very well known for, uh, potash, probably top quality, uh, from a geological point of view of quality of resources, mined lives and and low cost point of view. So very much

6:32

the challenge with these projects are capital and markets and considering, well, if nothing else, the new shareholders, the capital strength plus the access to the Asian markets and the possibilities of of takes there, I think that will be essential. So we have all the quality of that project, all the size that that project will bring to the, the company and the, the elements that typically we will have to be competing with, well, global, um, level, uh, quality projects. Uh, we will have an advantage, you know, in terms of we will go to embark on that with a very strong support in terms of capital and in terms of markets. It is very complementary to Muga. Muga been a bit smaller, but where muga the key strength is the well being the middle of the market. The Saudi is about quality of the resource and quality of the well at the end of the day and low and my life low cost. And given where your resources and

7:32

projects are. How did you come to be listed here in Australia?

7:37

Well, that is I mean, that is history as usual and very normal. Typical history to geology is one Spanish, one Australia get together and they decide that they might be a possibility of a project is the beauty of a junior mining industry. And basically the one in Spain is, is, uh, looking for the permits. And the one in Australia. Well obviously tries is where Australia they know some investors and, and some initial capital to get the company going. So very typical story is really the initial uh, well entrepreneurs are the ones that uh

8:14

dictate a bit where things happen. But no, no scientific analysis or clever design behind that or only just pragmatism.