Highfield Resources Ltd is preparing to move into the construction phase at its flagship Muga Project in Spain after closing out the 2021 financial year.
The potash company spent the June quarter completing the final steps to secure mining concessions covering the Fronterizo, Muga and Goyo areas, which make up the Muga Project.
Looking ahead, Highfield intends to negotiate a construction agreement with its preferred construction partner, Acciona, and progress financial discussions to secure debt and equity funding alongside Endeavour Financial.
It will also expedite other pre-construction activities, such as finalise an equipment procurement and manage the local town hall construction licences in Navarra and Aragón.
At the end of the June quarter, Highfield had around A$12.6 million in the bank to support its operations as it prepares to enter construction.
“Advancing on all fronts”
Highfield Resources CEO Ignacio Salazar said: “The grant of the mining concession has been a major achievement and elevates the Muga project and the company into a completely different phase.
“We are already preparing for construction, advancing on all fronts.
“I had the opportunity to thank our staff for their efforts and the administrations in an event we ran at the mine site on July 16, 2021, with the endorsement of the President of Navarra.
“Muga is a unique project and has the potential to deliver great benefits to all our stakeholders. And we are moving forward to build it.”
Muga Project
Highfield’s flagship potash project spans roughly 60 square kilometres across Spain’s Navarra and Aragón regions.
Over the June quarter, the ASX-lister took the final steps necessary to prepare the asset for mining concession approval and, on July 5, Highfield received the greenlight and began preparations to enter construction at the potash project.
With the mining concessions now granted, Highfield will finalise the purchase of some long-lead-time equipment. The company has already shared the information with its construction partner, Acciona, to progress with the negotiation of the construction agreement and the project implementation.
More broadly, Highfield has already signed non-binding memorandums of understanding representing more than its full Phase-1 production capacity for potash and salt at the Muga Potash Mine.
Positively, supply constraints in the potash market seen during the quarter have encouraged discussions with traders, potential offtake partners and logistics partners interested in a strategic participation in the project.
Now, with the mining concessions under its belt, Highfield believes work towards debt financing for the Spanish potash asset will accelerate.
The company is able to finalise its preparation for the debt financing work in conjunction with Endeavour Financial, while preparation for the financiers’ independent technical, social, environmental and market due diligence is underway.
Highfield ended the June quarter with $12.6 million in the bank, while some of its key quarterly expenses related to engineering above and below ground, a second payment for a crystallizer and a down payment to kick-off the works to upgrade the electric substation that will feed the Muga Potash Mine during commissioning.
The potash developer has enough capital to sustain operations for more than three quarters, if its cash burn remains consistent.