Highfield Resources Ltd (ASX:HFR) is poised to receive a major injection of funding from Yankuang Energy Group Co., Ltd after the Australian Foreign Investment Review Board (FIRB) offered a statement of no objection to Yankuang Energy’s proposed investment in the company.
Yankuang Energy proposes to subscribe for up to US$376 million worth of ordinary shares in Highfield at A$0.50 per share, forming part of the ‘Cornerstone Placement’ and ‘Southey Vend-In’ agreements.
Highfield is seeking to raise a total of US$220 million in equity capital from Yankuang and other strategic investors.
The funding will enable HFR to fully fund the Muga Phase 1 potash project and acquire the Southey Potash Project in Saskatchewan, Canada, via the acquisition of Yankuang’s subsidiary Yancoal Canada Resources for consideration valued at US$286 million.
Major step toward completion
“This positive result from FIRB is another major step in getting the deal to completion,” Highfield Resources CEO and managing director Ignacio Salazar said.
“FIRB’s timely approval is the result of presenting a solid application. The company is making significant progress with regards to the other jurisdictional approvals for the transaction.”
Read: Highfield Resources inks agreements totalling US$220M to transition to global potash leader
The Southey project, a greenfield potash mine, is 60 kilometres north of Regina, Saskatchewan.
It has received significant investment and completed a feasibility study in 2016.
Highfield plans to use solution mining technology for potash extraction at Southey, a proven and environmentally favourable method.
Shares jump
Investors have also welcomed the FIRB decision with shares rising 20.41% to $0.295 within the first hour of ASX trading.