Potash Developer · 2015. 2. 23. · from potash mining and potash exploration • Javier and...

Highfield Resources Ltd

Potash Developer

March 2014

ASX Code: HFR

COMPETENT PERSON STATEMENT

Information relating to resources was prepared by Mr Leo Gilbride, P.Eng andMs Vanessa Santos, P.Geo, of Agapito Associates. The Competent Person underJORC Code standards is Mr Leo Gilbride, P.Eng and Ms Vanessa Santos, P.Geo.of Agapito Associates of Colorado, USA. Mr Gilbride is a licensed professionalengineer in the State of Colorado, USA and is a registered member of theSociety of Mining, Metallurgy and Exploration Inc. Ms Santos is a licensedprofessional geologist in South Carolina and Georgia, USA, and is a registeredmember of the Society of Mining, Metallurgy and Exploration Inc.

The Society of Mining, Metallurgy and Exploration Inc is a JORC Code‘Recognized Professional Organization’ (RPO). An RPO is an accreditedorganization of which the Competent Person under JORC Code ReportingStandards must belong in order to report Exploration Results, MineralResources, or Ore Reserves through the ASX. Mr Gilbride is the Vice Presidentof Engineering and Field Services and Ms Santos is the Chief Geologist withAgapito Associates and both have sufficient experience to qualify as aCompetent Person for the relevant style and type of mineralisation and depositunder consideration of this release. Mr Gilbride and Ms Santos consent to theinclusion in the report of the matters based on this information in the form andcontext in which it appears.

FORWARD LOOKING STATEMENT

This presentation includes certain ‘forward looking statements’. All statements,other than statements of historical fact, are forward looking statements thatinvolve various risks and uncertainties. There can be no assurances that suchstatements will prove accurate, and actual results and future events coulddiffer materially from those anticipated in such statements.

Such information contained herein represents management’s best judgment asof the date hereof based on information currently available. The company doesnot assume any obligation to update any forward looking statement.

Contents

1. Projects being Developed

2. Javier-Vipasca Project

3. Sierra del Perdón Project

4. Pintano Project

5. Javier Potash Project

6. Practical Plans and Experienced Team

7. Summary

A. Corporate Overview

B. Board and Senior Management

C. Organisational Structure

D. Mining in Spain

E. Intrepid Potash

3

Virtual image of the Javier Process Plant Installation (for marketing purposes only)

Summary

• Three 100%-owned potash projects located in Northern Spain

• Solid resources with substantial evidence

• Massive infrastructure and mineralisation advantages likely to deliver lower relative capex, lower relative opex, enhanced margins and quicker speed to market

• Margin advantages with sales channels into north western Europe and Brazil

• Two projects being developed in parallel to reduce risk

• Initial production target of 2016 with staggered introduction of production thereafter

• Experienced team with proven track record in Spain

• Active program to deliver key milestones in coming months

4

1. Projects being Developed

5

• Three 100%-owned projects

• Substantial amount of historical data

from potash mining and potash

exploration

• Javier and Sierra del Perdón being

developed in parallel (one in Navarra

and one in Aragón)

• Targeting staggered introduction of

production with four different products

• Cash flow funding expansion

Map showing the relative locations of Highfield´s three Spanish potash projects

2. Javier-Vipasca

6

• Project area covers over 95kms2

• JORC Inferred Mineral Resource

estimate of 163m tonnes of

sylvinite @ 10.9% K2O (17.3%

KCl) (ASX 8 Oct 2013)

• Resource estimate covers less

than 25% of project area

• Shallow predominantly sylvinite

mineralisation appears suitable

for underground conventional

mining accessed via a decline

• Thick halite in hanging wall and

foot wall with relatively thick

sylvinite seams

• Building on substantial historical

informationJavier-Vipasca Project Area showing historic and current drill holes, seismic lines and JORC Resource estimate

3. Sierra del Perdón

7


• JORC Mineral Resource estimate

targeted for release in March 2014

based on drilling campaign delivering

consistent sylvinite grades of over

15.0% K2O (~24% KCl) (ASX 27 Nov

2013)

• Two mines operated between 1972

and 1996 producing close to 10m

tonnes of KCl

• Both mines operated via a decline and

used floatation circuits for processing

• Thick halite in hanging wall and foot

wall with relatively thick sylvinite

seams


information Sierra del Perdón Project Area showing historic and current drill holes and mining infrastructure

4. Pintano

8


• JORC Inferred Mineral Resource

estimate of 183m tonnes of

sylvinite @ 11.2% K2O (17.8%

KCl) (ASX 20 Nov 2013)

• Resource estimate covers less

than 10% of project area

• Shallow predominantly sylvinite

mineralisation appears suitable

for underground conventional

mining accessed via a decline

• Thick halite in hanging wall and

foot wall with relatively thick

sylvinite seams


informationPintano Project Area showing historic drill holes, seismic lines and JORC Resource estimate


9

Mineral Extraction

• Decline into relatively shallow sylvinite

mineralisation with initial mine target having a

depth to surface of ~300m

• Underground conventional room and pillar

operation

• Thick sylvinite seams for ease of extraction

• Strong hanging and foot wall salt ensuring

good competency for mining

• Hydrology and geotechnical studies complete

Virtual image of the Javier Process Plant and Decline Access(for marketing purposes only)


10

Mineral Processing

• Simple conventional flotation circuit

• Relatively coarse sylvinite for ease of

processing and higher recoveries

• Minimal carnallite

Primary ore storage80,000 T ROM

Primary Crushing

Primary Rod Mill

Deslimer

Flotation

Dewatering

DryerCompaction

Granular MOPStorage15,000 T

Standard MOPStorage15,000 T

Simplified process plant flows


11

Utilities

• Grid electricity within 7kms of the proposed

processing plant location

• Gas network within 8 kms of the proposed


• Water network within 5kms of the proposed


Detailed map of Javier Project area showing proposed processing plant location and distances to

bring electricity, gas and water to site


12Freight Terminal adjacent to Sierra del Perdón tenements

existing rail≈250km

existing roads≈50km

Upgraded Rail Freight Terminal

at Noain

Port of Bilbao

Processing Plant at Javier

HV power ≈ 7km

MP gas ≈ 8 km

Water ≈ 3,2km

Transport and Logistics


13

Markets

• PFS to assume 50% sold into

domestic Spanish, French and

Portugeuse markets

• And 50% sold into Brazil

• Margin advantages with both sales

channels

• Potash Price assumption current at

February 2014

PROJECT TIMELINE Base Case 2014 2015 2016 2017

End Date J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Development Studies

Internal Scoping Study 31-Dec-13

Pre-Feasibility Study 31-Mar-14

Definitive Feasibility Study 30-Jun-14

Permits and Approvals

Memoria Resumen (Preliminary Env

Submission) 14-Feb-14

EIA and other Env. Documents 30-Jun-14

Environmental Approval 31-Mar-15

Mining Concession Documents 30-Jun-14

Mining Concession Approval 31-Mar-15

Construction Permit Approval 30-Apr-15

Activity Licence Approval 1-Jul-16

Drilling Programme

Infill Drilling 31-Mar-14

Assays and Testing 30-Apr-14

Design and Engineering

Mine Detail Design Development 30-Nov-14

Process Engineering Detail Design

Development 31-Oct-14

Buildings and Facilities Design Development 28-Feb-15

Infrastructure and Logisitics Design

Development 28-Feb-15

Construction

Procurement 30-Jun-15

Construction (to 300t/hr) 1-Jul-16

Ramp Up Intermediate Production (to 450t/h) 1-Apr-17

Ramp Up Full Production (600t/h) 30-Dec-17

Financing

Financing Programme 31-Mar-15


2

3

Detailed Feasibility Study Finalised

1

Environmental Impact Declaration Received

2

Mining Concession Granted

3

Drilling and Assays Finalised

4

Design Work Complete

5

Construction Start

6

4

5

6 7

9

Production Start (Phase 1)

7

Full Production Start

8

Financial Close

9

1

8

14


15

MIN

EEN

VIR

ON

MEN

TAL

Memoria Resumen

Response to Memoria Resumen

Environmental Impact Study

EIS Review and Approval

Environmental Impact

Declaration

Restoration Plan

Environmental Risk Analysis and Valuation

Field Studies as required

Basic Project Mining Review and Approve Mining Concession Granted

Construction LicenseProject

Construction LicenseGranted

Activity LicenseProject

Activity LicenseSubmitted

Activity LicenseGranted

Mineral Resource UtilizationMine Plan and DetailsH+S, Ventilation, Dewatering etc.

Plant design and detailsBuildings and Facilities Design and Details

Welfare, H+S, Fire Protection details

Activity License granted at end of Construction

Construction License will not be granted before Concession Awarded

Environmental Authorization for Plant (if required)

Approvals Process


16

Environmental Approvals Progress

MEMORIA RESUMEN

EIA

RESTORATION PLAN

ENVIRONMENTAL AUTHORISATION

ENVIRONMENTAL RISK ANALYSIS

APPLICATIONS ACTIONS TO COMPLETE STAGE OVERALL

Territorial Diagnosis Review of Alternatives Identification of Preliminary Impacts Prepare Submission

COMPLETE

Territorial Diagnosis Specific studies (Hydrogeological study, socioeconomic Impact Study, Seismic Study). Preliminary Impacts Identifications

Field studiesPrevention and corrective actions and Monitoring Program Prepare Submission

IN PROGRESS

Preliminary RestorationWaste Management PlanFinal rehabilitation and landscape integration studiesPrepare Submission

IN PROGRESS

Quantification of natural resources, raw and auxiliary materials, substances, water and energy used.

Type and amount of emissions from the installation

Technology to prevent, avoid emissions or reduce them.

Measures relating to the prevention, reduction and management of waste generated.

Systems and planned measures to reduce and control emissions and discharges.

Prepare Submission

TO BE STARTED

Postulation of risk scenarios and Selection of critical scenario

Monetization and calculation of risk and financial guarantee analysis of uncertainty

Risk management

Prepare Submission

TO BE STARTED

6. Practical Plans and Experienced Team

17

• Experienced Board

• Managers who have identified,

developed and operated mines in

Spain

• Pamplona office with 15 in the

Project team

• Detailed, conservative and practical

plans to go to market

• Highly credible consultants

Iberian Minerals Corp –

Aguas Tenidas Copper,

Zinc and Lead

Concentrates Mine

(opened 2009)

developed and operated

by members of the

senior management

team

Key Project Consultants

7. Summary

18

• Three 100%-owned potash projects located in Northern Spain

• Solid resources with substantial evidence

• Massive infrastructure and mineralisation advantages likely to deliver lower relative capex, lower relative opex, enhanced margins and quicker speed to market

• Margin advantages with sales channels into north western Europe and Brazil

• Two projects being developed in parallel to reduce risk

• Initial production target of 2016 with staggered introduction of production thereafter

• Experienced team with proven track record in Spain

• Active program to deliver key milestones in coming months

A. Corporate Overview

19

* Performance shares were granted for acquisition of the

Spanish assets with the following milestones

A. JORC Indicated Resource of 150m tonnes at 13% K20

(20.6% KCl); and

B. Construction and operating approvals for production of

500,000 tonnes of potash per annum.

Equity Number

Ordinary 135.5m

Options 21.0m

Performance A* 51.5m

Performance B* 51.5m

Fully Diluted 259.5m

Cash at Bank at 31 December 2013

~ A$7.5m

Fully Diluted Equity

24%

15%61%

Fully Diluted Equity Split

Spanish In Country Management

EMR Capital

Other Shareholders

B. Board and Senior Management

20

Derek Carter

Non Executive Chairman

BSc, MSc, FAusIMM(CP)

A geologist with over 40 years experience in exploration and development, including nearly 20 years in management of ASX

listed exploration companies. He has held senior positions in the Shell Group of Companies, including Chief Geologist in

Spain and was the Managing Director of the ASX listed Minotaur Resources from its inception in 1993 to 2010.

Anthony Hall

Managing Director

BBus, LLB (Hons), ACSA

A qualified lawyer and company secretary with close to 20 years commercial experience in venture capital, risk management,

strategy and business development. Was responsible for the listing process of Highfield Resources in 2011 and prior to this

worked in roles in the strategy, energy, risk management and legal industries.

Pedro Rodriguez

Development Director

BSc, MSc

A geologist with over 30 years experience in mining services in Spain. He has worked for six international mining companies

including Billiton International, Navan-Almagrera and Newmont. Most recently he had direct responsibility to the Board of

ALMAGRERA SA for delivering a mining chemical complex with more than 460 direct employees and revenues of US$50m pa.

Richard Crookes

Non Executive Director

BSc (Geol), Grad Dip App Fin

A geologist with over 25 years experience in the resources and investments industry. Prior to joining EMR Capital as an

Investment Manager, he was an Executive Director in Macquarie Bank’s Metals Energy Capital Division and Chief Geologist and

Mining Manager of Ernest Henry Mining (now Xstrata).

Owen Hegarty

Non Executive Director

BEc (Hons), FAusIMM

A mining executive with 40 years experience in the global mining industry, including 25 years with Rio Tinto where he was

Managing Director of Rio Tinto Asia and Managing Director of the Group’s Australian copper and gold business. He is a

director of various listed and unlisted resources’ companies including his position as the Chairman of specialist resources

private equity firm, EMR Capital, Highfield’s largest shareholder and cornerstone investor.

John Claverley

General Manager

CEng, Eur Ing, BSc, MCIBSE

A professional engineer with over 30 years experience in major construction and infrastructure projects across Europe. Has

worked for more than 20 years in Spain in a design, project management and Enterprise Management capacity for

international firms in the construction and infrastructure sector.

Gonzalo Mayoral

Director of Mining

BEng(Mining), MBA

A qualfied mining engineer with over 15 years experience in Spanish construction and infrastructure projects. Prior to joining

Highfield Resources was the General Manager of a large Spanish construction and geotechnical consultancy.

C. Organisational Structure

21

Board of Directors

Anthony Hall

Managing Director

Simon Hinsley

Investor Relations

Aaron Bertolatti

CFO and Co Sec

Mariá Yoldi

FinancialController

Pedro Rodriguez

Development Director

Jose Manuel Prada

Resource Geologist

Gonzalo Mayoral

Mine Engineering

Fernando Palero

Chief Geologist

Carlos Ruiz

Drilling Assistant

Angel Banales

Drilling Assistant

Lucia Martin

Project Geologist

Daniel Muñiz

Geophysical Geologist

John Claverley

General Manager

Helena Mazo

Head of Corporate Affairs

TBC

Community Officer

Jorge Chocarro

Approvals Lawyer

Victor Dotti

Process Engineering

Laura Pingarron

Environment

Joaquin Vazquez

Commercial Manager

* Executive Committee

D.1 Mining in Spain

22

Spain has a long history of mining and has attracted interest from many large gold and base-metal mining companies.

– The country is host to some highly prospective geology, such as the Iberian Pyrite Belt in southern Spain.

The Spanish metals & mining industry had total revenues of $18.7 billion in 2011, accounting for approximately 3.6% of the European metals & mining industry value.

– The iron & steel segment was the industry's most lucrative, with total revenues of $16.4 billion, equivalent to 88% of the industry's overall value.

Potash mining has been undertaken in Spain for centuries

– Iberpotash, a business unit of ICL Fertilizers, currently operates two mines and a processing facility in Catalonia where over 1 million tonnes of red potash is expected to be produced per year from 2015.

Key drivers for international mineral investment in Spain include:

– transparent legislative framework and positive fiscal environment for the extraction of natural resources

– well-developed infrastructure – availability of a skilled workforce– its long mining tradition and past successes in exploration and

mine development– and the availability of non-refundable Government grants for

both exploration and mine development (Cambridge Mineral Resources plc, 2011).

Source: USGS 2010 Minerals Year Book – May 2012

0

100,000

200,000

300,000

400,000

500,000

600,000

2007 2008 2009 2010 2011

Spain Potash Production (K2O)

Gypsum, 7,100,000t

Potash, 436,026tSalt,

4,180,000t

Steam Coal, 4,264,789t

Lignite, 2,357,557t

Key commodity production (2011)

Source: World Mining Data, International Organizing Committee for the World Mining Congresses – 2013

D.2 Mining in Spain

23

It is a commonly held belief that the permitting of a mining project in Spain is one of the biggest hurdles to the success of the project. This is predominantly because of the well-publicized issues surrounding the permitting of high profile projects.

Problems frequently cited include lack of community support (eg Rio Narcea’s Salave Project – (now Astur Gold) suffered early set backs from lack of community support at a time of low levels of unemployment); “Red Tape” (eg EMED’s Rio Tinto project suffered from multiple ownership, tailings legacy issues, various bankruptcies etc) or Environmental concerns (eg Berkeley Resources Uranium project in Salamanca suffering from confused responsibilty for permitting)

However, there have been several successful permitting campaigns on major projects in the last two to three years including:

• W Resources (WRES LN) – tungsten tailings treatment project received environmental approval in October 2012 in less than 12 months after submitting

• Edgewater Exploration (EDW CN) – received EIS approval in Jan 13 some 12 months after submitting.

• Ormonde Mining (ORM LN) – received final permitting in January 2014 for their open pit tungsten project – less than three years from the initial Investigation Permit submission.

Owner Property Commodity Processing Mine Date Location

Lundin Mining Aguablanca Coppe/ Nickel Concentrator Open Pit Jan 2005 Extremadura

Trafigura Behweer Aguas Teñidas* Copper/ Lead/ Zinc Concentrator Underground Dec 2008 Andalucia

First Quantum Las Cruces* Copper Concentrator Open Pit Apr 2009 Andalucia

Orvana Minerals El Valle - Boinas Gold Concentrator Underground Jun 2011 Asturias

Source: RFC Ambrian, Company Data, Geoalcali Research* Projects developed and permitted by members of the Highfield Resources team.

E. Intrepid Potash

24

2012 Annual Report – Intrepid Potash

Pure play potash producerlisted on NYSE

Carlsbad West is anundeground conventional mine at depths to surface of around1,000m

Average production over 2010 to 2012 period of 392k tonnesper annum.

Average grade was 11.5% K2O

Average recovery was 72%

E. Intrepid Potash

25

November 2013 – Intrepid Company Presentation

Intrepid has a higher cash margin than Potash Corp, Mosaic and Agrium

As at 10 February 2014 Intrepidhad a market capitalisation of nearly US$1.2bn

Intrepid produced 796k tonnesof potash and 131k tonnes of Lanbeinite in 2012

Intrepid reinforces theproposition that potash is allabout extraction and location

26

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