Highfield Resources Ltd (ASX:HFR) is trading higher on inking a project financing mandate letter with a group of experienced European mining finance lenders for a €312.5 million senior secured project financing package.
The package includes a €300 million senior secured project financing facility and a €12.5 million standby cost overrun facility to finance the construction and development of its 100%-owned Muga Potash Project in Spain.
Investors have responded positively to the news with shares as much as 10.2% higher in the first hour of trade to A$1.135 while the company's market cap is approximately A$400 million.
Experienced European mining financiers
A group of four international financial institutions, comprising BNP Paribas S.A., ING Bank N.V., Natixis and Société Générale (London branch) will act as the mandated lead arrangers (MLAs).
The execution of the mandate letter follows the agreement-in-principle of the non-binding indicative term sheet for the facilities, which will cover a significant portion of the pre-production investment required to complete Phase 1 construction of Muga.
"We are delighted to reach this new milestone towards the construction of Muga,” CEO Ignacio Salazar said.
Favourable geopolitical location for potash
“BNP Paribas, ING, Natixis and Société Générale have extensive experience in providing project financing to mining projects and signing this €312.5 million mandate letter is no doubt a testament to the high-quality strong economics and top ESG credentials of this project," he said.
“In addition, the strategic location of Muga in southern Europe is being viewed more favourably than ever in the current geopolitical situation, making it an attractive candidate for financing from the international banking community.
“In the context of reviewing alternative financing options which are complementary to project finance, the strategic advantages of Muga are also providing increased impetus to the company’s engagement with potential strategic partners. "
About Highfield Resources
Highfield Resources is an ASX-listed potash company focused on construction of its flagship low-cost, low-capex Muga Project in Spain, over which it was granted a mining concession in July 2021.
Muga features shallow mineralisation with no aquifers above it, so there is no need to build a shaft.
Quality infrastructure is readily available in the region and, importantly, the project is in the heart of a European agricultural region which has a clear deficit in potash supply.
In addition to its secure southern European location, the company says that recent events in Russia and Belarus have increased the awareness of the strategic value of the Muga project for both Spain and the European Union.