Highfield Resources Limited · ASX:HFR
Highfield Resources — Investor Presentation (September 2024)
34 slides from Highfield Resources's investor presentation, September 2024
Slide 1: Potash: an overview of the commodity and the market
Potash: an overview of the commodity and the market September 2024 | ASX:HFR
Slide 2: Highfield Resources
Highfield 7 Resources
Slide 3: Potash
POTASH
Slide 4: Potash – What is it?
Potash – What is it? Potash are potassium salts, with the common ones being K (potassium) is the base of all potassium salts MOP, SOP, NOP Atomic symbol: K Atomic number: 19 Muriate of potash (MOP) is the most common way to apply Atomic weight: 39 potassium to plants Element category: Alkali metal E
Slide 5: Potash – Where does it come from?
Potash – Where does it come from? K in liquid fraction to water courses • The potassium cycle is the biogeochemical cycle that Disposal of Rivers describes the movement of potassium throughout the human waste earth’s lithosphere, biosphere, atmosphere, and hydrosphere Food Sea water • Potassium is a
Slide 6: Potash – What is it used for?
Potash – What is it used for? An adequate supply of potash is key to ensuring healthy, nutritious plant growth and crop yield Effect of potash on crops (kg/ha) • As shown in the image, crop yields are increased as potassium levels are increased • Potassium chloride-based fertilisers are the most com
Slide 7: Potash – What is it used for? (NPK)
Potash – What is it used for? The most common usage for potash is as a blend in NPK fertiliser • Vital for photosynthesis • Significant component of • Aids in structural strength, crop amino acids that control quality, seed production and almost all biological more processes • Encourages root growth
Slide 8: Annual size of potash markets
Potash – Where does it come from? Annual size of markets (2021) KCl/MOP K2SO4 / SOP KNO3 / NOP Polyhalite 68Mt 7Mt 2Mt 0.5Mt • The largest and most widely used • Higher cost, it is used for cash • Higher cost to make, used for • Mineral currently mined in small potassium-based fertiliser crops rathe
Slide 9: Potash – Different types of potash
Potash – Different types of potash Potassium fertilisers MOP SOP c. 90% of market c. 10% of market Difficult to substitute as MOP contains by far the highest levels of key macro-nutrient potassium Speciality application Granular Standard c. 45% c. 55% • Includes SOP Primary markets are India and Chi
Slide 10: Potash – How is it produced? Solution mine
Potash – How is it produced? Heated brine is Potash rich brine SOLUTION MINE injected pumped back to underground the surface • Solution mining tends to be used for deep deposits • It involves drilling both injection and extraction wells to the target ore body • Heated brine is injected underground,
Slide 11: Potash – How is it produced? Brine pumping
Potash – How is it produced? BRINE PUMPING • Potash (and other minerals such as lithium) enriched brines are pumped from within the beds of salt lakes (salars) or inland seas like the Dead Sea • The brine is pumped directly into evaporation ponds • Generally low capex and opex operations • Challenge
Slide 12: Potash – How is it produced? Conventional mine
Potash – How is it produced? Mine view including outside installations, ramp and underground mine plan CONVENTIONAL MINE • Machinery includes short wall, continuous miners and road headers • Conveyors or shaft hoists bring ore to the surface for processing • Ideal to target high grade sylvinite ore
Slide 13: Potash Market
POTASH MARKET
Slide 14: Potash market – Global reserves
Potash market – Global reserves 34.6% 0.2% 46.1% Russia UK 7.9% Canada Belarus 0.2% 1.6% 1.4% 0.4% Spain Germany 2.2% USA Israel China 0.4% Jordan • Current recoverable potash deposits are estimated to be 3.1% around 16 Billion tonnes of K2O Brazil • Reserves mainly found in Canada and Russia where
Slide 15: Potash market – Highly concentrated production
Potash market – Highly concentrated production Russia Canada Belarus Germany 19% 15% 33% 5% China Israel 10% 6% • About 90% of global production comes from six key countries which have the ability to control market dynamics • Canada acts as the swing supplier and the Vancouver FOB price has become t
Slide 16: Potash market – Production and demand
Potash market – Production and demand 22.7 4.… 6.1… Mt ● Potash supply is highly concentrated with Top 5 21.1 Mt countries producing 85% of global supply 9.8… Europe 3.8 Mt 6 Mt 28.… ● Low logistics cost is a key part of a potash producer’s 1 Mt CIS competitive advantage. Most large potash producers
Slide 17: Potash market – Potash demand
Potash market – potash demand Potash demand has been steadily increasing over the last 10 years Compound Annual Growth Rate (2013-2023): 2.6% 90 80 Forecast 70 Unidentified Oceania 60 India China 50 Middle East Mt Asia (ex M. East, China, India) 40 Brazil Latin America (Ex Mex, Bra) 30 North America
Slide 18: Potash market – European production
Potash market – European production 7,000 6,000 • European potash production is declining • There are no new European projects as 5,000 developed as Muga • The region’s sensitivity to international 4,000 conflicts and supply chain disruptions has '000 t been exposed in recent years. 3,000 • As Russi
Slide 19: Market outlook – Arable land per person
Potash market outlook – Arable land per person Arable land The future for potash demand looks positive 0.24 0.23 0.22 • Arable land per person has been Hectares per person decreasing steadily 0.21 • The World Bank and The Food and 0.2 Agriculture Organisation of the UN 0.19 anticipates that as the g
Slide 20: Market outlook – Demand forecast
Potash market outlook – Demand forecast The future for potash demand looks positive • According to UN data the total world 2.4 10.0 population will reach 8.5 Billion by 2.2 9.0 2030 and 9.7 Billion in 2050 2.0 8.0 • Crop production has been increasing 1.8 as the population grows and will need Billio
Slide 21: Market outlook – Potash demand
Potash market outlook – Potash demand The future for potash demand looks positive 2.5 80 70 2.0 Potash application 60 has increased in line 50 with crop production 1.5 Billions of tonnes Millions of tonnes 40 1.0 30 20 0.5 10 0.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201
Slide 22: Potash market outlook
Potash market outlook Potash demand is expected to keep on increasing Between 2013 and 2023, global potash demand has increased 2.6% per annum, with arable land per person steadily decreasing. With the global population continuing to grow, demand for potash is expected to continue to grow. Growth of
Slide 23: Potash Supply
POTASH SUPPLY
Slide 24: Potash price history
Potash price history Crop prices influence potash prices (in blue) 450 400 Prices indexed to 100 at Jan 2017 350 300 250 200 150 100 50 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 GMOP - CFR NW Europe USD/tonne Corn - USD/tonne Soy bean - USD/tonne Wheat - USD/tonne Source: Argus, Highfield
Slide 25: Muga Mine
MUGA MINE
Slide 26: Muga Project Overview
Muga Project Overview A potash developer listed on the ASX (HFR) Local Spanish head office and project office with the entire executive team based in with projects in Northern Spain Pamplona, near the Muga Project site Muga is a two-phase project which will produce a total of 1 Mtpa of muriate of po
Slide 27: Access to Customer Markets
Location is a key competitive advantage Access to Customer Markets • Strategically located in the middle of the European market • Potash price premium in Europe ~1,750km from mine to port ~1,700km from mine to port ~6,800 nautical miles Primary Market – U.S. Muga ~8,700 nautical miles Primary Market
Slide 28: Muga mine and the European market
Muga mine and the European market European markets accessible to Muga Muga’s location is one of its major attributes mine 6.1 Mt Muga Mine MOP trade routes 4.6 Mt • The Muga mine will be close to key demand areas of Europe 930 kt • With extremely competitive and versatile export 390 kt options: truc
Slide 29: Muga: New Supply in Europe, which has Many Older Mines
Muga: New Supply in Europe, which has Many Older Mines Majority of potash mines in Europe are aged or closed, and it is anticipated that the supply from these older mines will decline over the next decade Owner Location Capacity (kt) Start Closure Muga P1: 500 Construction Muga Pamplona - Other Mine
Slide 30: Muga mine and the European market – prices
Muga mine and the European market • Tight local supply due to mine closures and high cost of local producers have maintained the European price premium • Given the mine’s location, a large part of the regional premium will be captured at the mine 1,150.0 Prices in Europe have 1,050.0 historically pe
Slide 31: Margin curve forecast
Margin curve forecast Margin curve forecast for 2026 (real US$) 290.0 Rest of world Highfield 240.0 190.0 140.0 USD/ t 90.0 40.0 -10.0 0 10 20 30 40 50 60 70 -60.0 Millions of tonnes MOP Low costs and higher netbacks at the mine gate position the mine as potentially one of the highest margin potash
Slide 32: Conclusion
CONCLUSION
Slide 33: Conclusion
Conclusion Global population is growing, Europe’s production shortage has demand for food is increasing and become more evident amid the current arable land is decreasing geopolitical situation Increasing need for higher crop yields and therefore increasing requirement With forecasts pointing toward
Slide 34: ASX:HFR
ASX:HFR REGISTERED OFFICE 169 Fullarton Road Dulwich SA 5065 Australia SPAIN HEAD OFFICE Avenida Carlos III, 13-15, 1B, 31002 Pamplona, Spain T: +34 948 050 577 | F: +34 948 050 578 FURTHER INFORMATION Ignacio Salazar CEO T: +34 948 050 577 Olivier Vadillo Investor Relations T: +34 609 811 257
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