Highfield Reports Definitive Feasibility Study Results for Muga Project in Span

- March 30th, 2015

Highfield Resources Ltd. (ASX:HFR) announced it has completed a definitive feasibility study at its Muga project in Spain. According to the study, Muga will produce 1.12 million tonnes of muriate of potash (MOP) annually, generating one of the larger margins in the potash industry with a lower capital cost.

Highfield Resources Ltd. (ASX:HFR) announced it has completed a definitive feasibility study at its Muga project in Spain. According to the study, Muga will produce 1.12 million tonnes of muriate of potash (MOP) annually, generating one of the larger margins in the potash industry with a lower capital cost.

Highlights from the report include:

  • Post tax unlevered project NPV10 of US$1.42 billion
  • Post tax, unlevered IRR of 51.9 percent
  • EBITDA in first full year of production of US$296 million (EBITDA margin of 66 percent)
  • Ore Reserve of 146.0 million tonnes at average grade of 12.73 percent K20
  • Initial 24 year mine life based solely on reserves
  • Proposed mine is a technically robust underground conventional room and pillar operation via twin decline access which enhances operational efficiency and reduces risk
  • Average yearly, steady state production of 1.123 million tonnes of granular K60 potash with operational expenditure (“OPEX”) in full production estimated at US$135 per tonne
  • Independent expert spot potash prices discounted by 10 percent for contract pricing and sales and marketing fees delivering a 2017 FOB Vancouver standard product reference price of US$315 / tonne in real terms
  • Pre-production capital cost estimated at US$256 million including a 12.5 percent contingency
  • Total capital cost estimated at US$354 million including 12.5 percent contingency
  • DFS peer reviewed by Canadian based international engineering firm for gap analysis on both CAPEX and OPEX
  • Construction tenders to be released to Spanish contractors next quarter
  • Construction remains on track for Q4 2015

As quoted in the press release:

The DFS is based on extracting 138 million tonnes of the sylvinite Ore Reserve at an average grade of 12.75 percent K2O. The 138 million tonnes was taken from the total Ore Reserve of 146 million tonnes of sylvinite at an average grade of 12.73 percent K2O calculated by independent Spanish based consultants Consultores Independientes.

Anthony Hall, managing director at Highfield Resources, commented:

The DFS builds on a compelling pre-feasibility study and reconfirms Muga´s potential to be a very low capex, high margin potash mine. We believe Muga has the potential to be the highest margin potash mine globally in production and this is very exciting for everyone involved with the Company. The work of our Spanish team and predominantly Spanish based consultants has been exceptional. I cannot overstate how important it is to have such a strong local capability. We are now moving into a construction ready phase and anticipate releasing tenders next quarter to ensure we are ready to commence construction in Q4 of this year as planned.

Click here to read the full Highfield Resources Ltd. (ASX:HFR) press release.

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