July 2014 – Australia’s Paydirt – Taking the Highfield in Spain

Home / Media / July 2014 – Australia’s Paydirt – Taking the Highfield in Spain

With unemployment topping 26% in Spain last year, anything with the potential to create jobs in the country will be looked upon favourably.

Through its Javier potash project, Highfield Resources Ltd could generate as many as 500 jobs a year over an estimated 20-year life of mine, as confirmed in a recent PFS.

Socioeconomic studies also indicated that Javier would be responsible for 1.5% of the GDP in the surrounding provinces of Navarra and Aragón, Highfield managing director Anthony Hall told Paydirt.

“The unemployment in Navarra is 16.2% and in Aragón it is 18% at present, so by Spanish standards they are actually doing well,” Hall said.

“In Pamplona, every second day there is a protest of some description that generally relates to the employment scenario. It is very difficult in Spain presently. From an economic stimulus point of view our project is very good, but we counterbalance that by making sure we do the right things at an environmental level and with the relationships we establish with the corporations and universities.

“Investing in the economic organisations in Aragón and Navarra is important and we are very mindful that we have to deliver economic benefits more than just in the community we are working in,” Hall said.

A DFS on the $1 billion project (NPV with a 10% discount) is under way and Highfield hopes to have Javier construction ready early next year, with 430,000 tpa K60 potash production slated to start in 2016.

Ramp up is anticipated to take 18 months before the underground operation hits full tilt of 860,000 tpa. Highfield has targeted the markets in Spain, Portugal, France and Brazil for off-take.

Capital costs of $US308 million have been estimated, and Hall is confident project financing can be sorted within Europe.

“The strategy will be to engage two major European commercial banks – one Spanish and one French – to work with us on the project finance,” Hall said.

“They are relatively confident about being able to fund two-thirds of the capital required. From there we have to work out what is the best way to raise the remaining equity required to take the mine into construction.”

With a 15% stake in the company, private equity group EMR Capital is Highfield’s major cornerstone investor.

EMR, chaired by Owen Hegarty, who is also a non-executive director at Highfield, has already backed the company with about $10 million.

“The sense that we get from EMR is that they have an appetite to continue to support the project, so we are in a really fortunate position of seeking that equity funding for the mine, if that’s the route we decide to go down,” Hall said.

Firming up financing options will continue as Highfield ticks off drilling, metallurgical test work, detailed underground engineering and lodgement of mining concession applications (including the EIS) for DFS purposes.

The DFS is scheduled for completion early next year and, should the company progress according to its stated timeline, full production from Javier, in the Spanish potash precinct of Ebro, will be in 2018.

By then Highfield should know if it has a larger project on its hands, as 70% of the project area is still unexplored.

There is scope for the resource, currently 268.6mt of sylvinite @ 11.2% potash (17.8% KCI), to be expanded in the DFS.

Additionally, the company has two other 100% potash projects in Spain and is well advanced at the Sierra Del Perdon, also in the country’s north.

“We are excited by Sierra Del Perdon, which is our brownfields project. We haven’t talked a lot about the brownfields operation but we are fairly progressed in a scoping study on that project at present. I think the market may actually be surprised that we have not only got one good project but ultimately three really good projects [supported by existing infrastructure],” Hall said.

Sierra Del Perdon covers 140sq km, with two mines in the region producing 10mt of potash from 1963 to 1996.

Like at Sierra Del Perdon, Highfield has historical information to work with at its Pintano project, which has an inferred resource estimated at 183mt of sylvinite @ 11.2% potash (17.8% KCI).

Pintano is contiguous with Javier, giving Highfield the opportunity to investigate the potential of integrating the projects.

– Mark Andrews


Article courtesy of Australia’s Paydirt. To subscribe to Australia’s Paydirt please follow the prompts at https://www.paydirt.com.au/subscriptions/