Highfield Resources Ltd (ASX:HFR) has agreed on a non-binding indicative term sheet with a group of European mining finance lenders resulting in an overall package for €312.5 million to finance the construction of its 100% owned Muga Potash Project in Spain.
A senior secured project financing package will cover a significant portion of the pre-production investment required to complete the Phase I construction of Muga.
Mining finance lenders
The group of experienced lenders includes Société Générale, ING Bank N.V. and Natixis for a €300 million financing facility and an additional €12.5 million cost overrun facility.
In addition, the company has received strong interest from local Spanish banks who wish to participate in the facilities.
“Critical milestone”
Highfield’s CEO Ignacio Salazar said: “As we approach construction at Muga, we have reached another critical milestone by entering into a term sheet for €312.5 million of senior debt.
"Following an extensive due diligence process by independent experts, we managed to increase the debt facility in quantity and in tenor compared to original expectations, which shows the merits and the growing confidence in the Muga project.
"This is a major achievement in the financing strategy of Muga which provides further impetus to progressing strategic investments and other financing options.”
Facility terms
Outline of terms:
- Senior secured project financing facility of €300 million;
- Additional cost overrun facility of €25 million of which €12.5 million is funded from senior debt;
- Carve out for equipment lease financing of up to €22.5 million; and
- Facility tenor of up to 10 years, including a 2.5-year grace period.
The facility remains subject to the lenders completing their final due diligence and credit approvals.
Endeavour Financial is acting as financial advisor to the company.
About Muga
Highfield Resources is an ASX-listed potash company that is focused on the construction of its flagship low cost, low capex Muga-Vipasca Project in Spain having been granted the Mining Concession in July 2021.
Muga is a unique project in Western Europe. It has decline-accessible shallow potash mineralisation without any overlying aquifers.
The project benefits from quality and readily accessible infrastructure already in place in the region and importantly, the Muga Project is in the heart of a European agricultural region that has a clear demand for potash supply to meet future requirements.
Highfield’s potash tenements (Muga-Vipasca, Pintanos and Sierra del Perdón) are in the Ebro potash producing basin in Northern Spain, covering an area of around 250 square kilometres.