Highfield Resources Limited · ASX:HFR
Highfield Resources — Investor Presentation (April 2022)
33 slides from Highfield Resources's investor presentation, April 2022
Slide 1: Constructing the Next European Potash Mine
Constructing the Next European Potash Mine Corporate Presentation April 2022 ASX: HFR
Slide 2: Potash
Potash
Slide 3: Potash – What is it?
Potash – What is it? Potassium The name “Potash” comes from the early production technique where potassium was dissolved from wood Atomic symbol: K ash, boiled and precipitated in large iron pots Atomic number: 19 Atomic weight: 39 Element category: Alkali metal One of the most important chemicals m
Slide 4: Potash – Where does it come from?
Potash – Where does it come from? K in liquid fraction to water courses Disposal of Rivers • Large potash bearing rock deposits derive from the human waste minerals of ancient seas that dried up millions of years ago Food Sea water • Potash can be derived from sylvinite (KCl and NaCl) or carnallite
Slide 5: 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) • Potassium chloride-based fertilisers are the most common method for applying potassium to plants • Potassium is key for water retention a
Slide 6: Potash – What is it used for?
Potash – What is it used for? The most common usage for potash is as a blend in NPK fertiliser • Vital for photosynthesis • Significant component • Aids in structural strength, of amino acids that crop quality, seed control almost all production and more biological processes • Encourages root growth
Slide 7: Potash – Different sources of potassium
Potash – Different sources of potassium Annual size of markets (2021) KCl/ MOP K2SO4 / SOP KNO3 / NOP Polyhalite 70Mt 6Mt 2Mt 0.5Mt • The largest and most widely • Higher cost, it is used for cash • Higher cost to make, used for • Mineral currently mined in small used potassium based fertiliser crop
Slide 8: 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 Sspeciality application Granular Standard Includes SOP c. 45% c. 55% SOP with Magnesium USA and Brazil
Slide 9: Potash – How is it produced? Solution mining
Potash – How is it produced? Heated brine is injected Potash rich brine pumped back to SOLUTION MINE 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 10: 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 11: Potash – How is it produced? Conventional mine
Potash – How is it produced? 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 which allows the use of 350m flotation processing and crystallisation • Lo
Slide 12: Potash Market
Potash Market
Slide 13: 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 • Current recoverable potash 0.4% deposits is estimated to Jordan be around 16 Billion tonnes of K2O • Reserves mainly found in Canada and Russia where 3.1% Brazil m
Slide 14: Potash market – Very concentrated production
Potash market – Very concentrated production Belarus Russia Canada Germany 18% 20% 33% 5% 6% 9% Israel 9% ROW Over 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 the main
Slide 15: Potash market – Share by country
Potash market – Share by country 2021 Market share – Exports by country • In 2021 Russia and Belarus accounted for 38% of worldwide production, or about 27 Mt of potash. 4% • Combined, Russia and Belarus accounted for 41% of global 4% MOP exports last year. With sanctions on Belarus starting to come
Slide 16: Potash market – Production and demand
Potash market – Production and demand Most large potash producers are far away from key markets 27 24 7 Mt Mt Mt 4Mt 12Mt 4Mt Europe 28 Mt 6 North Mt CIS 1 America Mt 8Mt Middle East 2 Mt Asia 0Mt Africa 16 0Mt 1Mt Mt Production (Mt) Demand (Mt) Oceania 2Mt Latin America Basis: year 2021 Logistics i
Slide 17: Potash market – potash demand
Potash market – potash demand Potash demand has been steadily increasing over the last 9 years Compound Annual Growth Rate: 3.96% 80,000 70,000 60,000 Unidentified Middle East Total 50,000 Oceania Africa Total Other Latin America (ex. Mexico & Brazil) ‘000 t 40,000 CIS Total Europe Total 30,000 Indi
Slide 18: Potash market outlook – Arable land per person
Potash market outlook – Arable land per person The future for potash demand looks positive Arable land (hectare per person) 0.24 • Arable land per person has been 0.23 decreasing steadily 0.22 • The World Bank and The Food and 0.21 Agriculture Organisation of the UN anticipates that as the global 0.
Slide 19: Potash market outlook – Demand forecast
Potash market outlook – Demand forecast The future for potash demand looks positive • According to UN data the total world 2.0 10.0 population will reach 8.6 Billion by 1.8 9.0 2030 and 9.8 Billion in 2050 1.6 8.0 • Crop production keeps on increasing as population grows and will continue Billions o
Slide 20: Potash market outlook – potash demand
Potash market outlook – potash demand The future for potash demand looks positive 2.0 80 1.8 70 1.6 60 1.4 Potash application Billions of tonnes 1.2 50 has increased in line 1.0 40 with crop production Mt 0.8 30 0.6 20 0.4 10 0.2 0.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 21: Potash market outlook
Potash market outlook Potash demand is expected to keep on increasing Arable land per person has been steadily decreasing, whilst global potash demand has increased 3.96% per annum from 2012 to 2021. With global population continuing to grow, increasing demand for potash is expected to continue. Gro
Slide 22: Potash Supply
Potash Supply
Slide 23: Potash supply outlook
Potash supply outlook Potential capacity additions 120.00 100.00 80.00 60.00 40.00 20.00 - 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Current Nameplate Capacity (TOTAL) Petrikov Belaruskali Nakhon Ratchasima Thai Kali Co Volgakaliy EuroChem Muga Highfield Resources Lyuban Slavk
Slide 24: Potash price history
Potash price history Crop prices influence potash prices Global financial 2021 Mine closures, Government measures to ensure fertiliser crisis 800 supply amid Covid-19 crisis, and 800 July 2014 Rouble high affordability levels have drops 50% Belarusian pushed potash and crop prices up 2008 food crisi
Slide 25: Potash price – MOP-SOP differential
Potash price – MOP-SOP differential 900.0 250.0 800.0 200.0 • SOP has historically traded at a premium to 700.0 MOP as it is used for cash crops rather than 150.0 600.0 staple crops 500.0 100.0 • The SOP-MOP differential has fluctuated 400.0 50.0 during 2022, as MOP prices kept increasing 300.0 • Th
Slide 26: Muga Mine
Muga Mine
Slide 27: Muga mine and the European market
Muga mine and the European market Muga’s location is one of its major attributes Muga will be one of only two Proximity to local premium European market potash mines located in Southern Europe ~130- 220km from mine to Access to world class infrastructure Competitive access to the large ports markets
Slide 28: Muga mine and the European market
Muga mine and the European market European markets accessible to Muga mine Muga’s location is one of its major attributes 6.9 Mt • The Muga mine will be close to key demand areas of Muga Mine MOP trade routes Europe 4.1 Mt • With extremely competitive and versatile export 316 kt 1,104 kt options: tr
Slide 29: Muga mine and the European market
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 750.0 Unstable conditions in Belarus and Russia Marke
Slide 30: Muga mine and the European market
Muga mine and the European market Muga is forecast to be one of the highest margin mines globally 150.0 100.0 US$/ t 50.0 0.0 0 10 20 30 40 50 60 70 -50.0 Millions of tonnes of MOP Rest of world Highfield Source: CRU, Highfield Resources., ASX Release 8 December 2021 Highfield Resources Market Prese
Slide 31: Conclusion
Conclusion
Slide 32: Conclusion
Conclusion Prices are hitting twelve-year highs. Global population is growing, Europe’s production shortage has demand for food is increasing and become more evident amid the arable land is decreasing current geopolitical situation Increasing need for higher crop With forecasts pointing towards a yi
Slide 33: 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
Highfield Resources — Investor Presentation (April 2022) on 6ix