Highfield Resources Limited · ASX:HFR
Highfield Resources — Investor Presentation (May 2014)
48 slides from Highfield Resources's investor presentation, May 26, 2014
Slide 1: Highfield Resources Ltd Investor Presentation
For personal use only Highfield Resources Ltd Investor Presentation May 2014 ASX Code: HFR
Slide 2: Competent Person Statement and Forward Looking Statements
COMPETENT PERSON STATEMENT Information relating to resources was prepared by Mr Leo Gilbride, P.Eng and For personal use only Ms Vanessa Santos, P.Geo, of Agapito Associates. The Competent Person under JORC Code standards is Mr Leo Gilbride, P.Eng and Ms Vanessa Santos, P.Geo. of Agapito Associates
Slide 3: Contents and Appendices
Highfield Resources Ltd INVESTOR PRESENTATION For personal use only CONTENTS APPENDICES 1. Highfield Resources A. Corporate Overview 2. Three 100% owned projects B. Board and Senior Management 3. Located in a producing basin C. Management Experience – Case Study 4. Substantial Resource with signific
Slide 4: Highfield Resources – A potash mine developer
1. Highfield Resources – A potash mine developer For personal use only Highfield Resources Ltd (HFR) is an ASX-listed developer of potash mines with three projects in northern Spain. The mines will be underground conventional mines with limited visual and environmental impact. Virtual image of the P
Slide 5: Highfield has three 100% owned projects
2. Highfield has three 100% owned projects For personal use only 5
Slide 6: Projects are located in a producing basin
3. Projects are located in a producing basin For personal use only Catalan Potash Sub- basin Navarra Potash Sub- Basin Operating since 1925 Two producing mines operated between 1963 and 1997 Two producing mines presently Underground conventional mining being consolidated into one Underground convent
Slide 7: Substantial Resource and significant potential
4. Substantial Resource and significant potential For personal use only Property Area Resource Classifica Tonnes K2O KCl Cont Mt Cont Mt Coverage tion (Mt) Grade % Grade % K2O KCl M&I 157.3 11.3 18.0 17.8 28.1 Javier* 97km2 c. 30% Inferred 111.3 11.1 17.6 12.4 19.6 Total 268.6 11.2 17.8 30.2 47.7 M&
Slide 8: Projects have Capex and Opex advantages
5. Projects have Capex and Opex advantages For personal use only CAPEX OPEX Underground conventional Roadheaders and continuous miners Decline access MINING Thick sylvinite seams Coarse grains Flotation Circuit PROCESSING Minimal carnallite First World Country Grid electricity Electricity, gas and w
Slide 9: Projects have Capex and Opex advantages (Numis)
5. Projects have Capex and Opex advantages For personal use only Highfield Projects Source: Numis Securities, 22 May 2014 9
Slide 10: Projects have Capex and Opex advantages (GMP)
5. Projects have Capex and Opex advantages For personal use only Source: GMP, 19 May 2014 10
Slide 11: Advantages deliver reduced technical risk
6. Advantages deliver reduced technical risk For personal use only Shallow Mineralisation ✔ Decline Access ✔ Room and Pillar Mining ✔ Conventional Flotation Circuit ✔ Hydrological Studies Complete ✔ 11
Slide 12: Javier Project PFS demonstrates project advantages
7. Javier Project PFS demonstrates project advantages For personal use only Mine Highlight 20 year mine life and 860,000 T Potash/ year € US$ Financial Highlights Total Capex 231M 308M Pre-production Capex 187M 250M C3 Opex FOB Bilbao 122/ T 162/ T Financial Metrics NPV10 801M 1,068 Post Tax, Unleve
Slide 13: Javier PFS – Capex Summary
7. Javier PFS – Capex Summary For personal use only Capital Expenditure (Capex) has been estimated based on present day(CY14) €M US$ M estimates from local, experienced contractors Underground development and machinery 36.048 48.064 and consultants and is presented under the following headings: Proc
Slide 14: Javier PFS – Opex Summary
7. Javier PFS – Opex Summary For personal use only €/ T US$/ T MOP MOP Operational Expenditure (Opex) has been estimated using C1 Costs present day (CY14) rates for labour, utilities and consumables Mining 31.28 41.71 and is presented under the following headings: Processing 28.31 37.75 Transport 16
Slide 15: With potential DFS upside – Resource
8. With potential DFS upside – Resource For personal use only Over 70% of the Project area is unexplored Javier Project Map Showing JORC M&I Resource 15 Javier Project PAB Bed Block Model Diagram
Slide 16: With potential DFS upside – By-product credits
8. With potential DFS upside – By-product credits For personal use only 400km radius 200km radius Key salt target markets covering large parts of Spain and France including the Pyrenees Source: K+S Compendium September 2013 16
Slide 17: Success is producing potash like Intrepid Potash
9. Success is producing potash like Intrepid Potash For personal use only Intrepid is the largest producer of muriate of potash (‘‘potassium chloride’’ or ‘‘potash’’) in the United States and is dedicated to the production and marketing of potash and langbeinite (‘‘sulfate of potash magnesia’’), ano
Slide 18: We have an experienced and successful team
10. We have an experienced and successful team For personal use only Experienced Board Experienced Executive Management Team In-country, site-based, Delivery Team MANAGEMENT In-house mining experience TEAM In-house processing experience In-house potash experience In-house Environmental Manager Agapi
Slide 19: The Javier timeline is achievable
11. The Javier timeline is achievable For personal use only 2014 2015 2016 2017 2018 2019 Javier - Production Ph1 Vipasca Construction DFS Construction Full Production… Ph1 Ph2 19
Slide 20: The permitting process is well understood
12. The permitting process is well understood For personal use only MINE Mineral Resource Utilization Mining Basic Project Review and Mine Plan and Details. H+S. Concession Ventilation. Dewatering etc. Mining Approve Granted Response to Environmental ENVIRONMENTAL Memoria Environmental EIS Review Me
Slide 21: The permitting process is well understood
12. The permitting process is well understood For personal use only APPLICATIONS ACTIONS TO COMPLETE STAGE OVERALL Territorial Diagnosis MEMORIA Review of Alternatives COMPLETE RESUMEN Identification of Preliminary Impacts Prepare Submission Territorial Diagnosis Specific studies (Hydrog
Slide 22: Summary
Summary Highfield Resources Ltd (HFR) is an ASX-listed developer of potash mines with three projects in northern Spain. For personal use only The mines will be underground conventional mines with limited visual and environmental impact. Management understands the opportunity and is focussed on disci
Slide 23: Appendices
For personal use only Appendices 23
Slide 24: A. Corporate Overview
A. Corporate Overview For personal use only Fully Diluted Equity 7% 15% Equity Number Ordinary 135.5m 24% Options 21.0m Performance A* 51.5m Performance B* 51.5m Fully Diluted 259.5m Other Management In Country Management * Performance shares were granted for acquisition of the 54% Other Shareholder
Slide 25: B. Board and Senior Management
B. Board and Senior Management Derek Carter A geologist with over 40 years experience in exploration and development, including nearly 20 years in management of ASX listed exploration For personal use only Non Executive Chairman companies. Held senior positions in the Shell Group, including Chief Ge
Slide 26: C. Team Experience Case Study – Aguas Teñidas
C. Team Experience Case Study – Aguas Teñidas • Aguas Teñidas is a Copper, For personal use only Lead, Zinc concentrates mine in Huelva Province. • The mine was developed, built and initially operated by members of the Highfield senior management team. • The facility opened in 2009 after a 12 month
Slide 27: D. Javier-Vipasca Project
D. Javier-Vipasca Project For personal use only • Project area covers over 95kms2 • JORC Measured and Indicated and Inferred Mineral Resource estimate of 268.6 m tonnes of sylvinite @ 11.2% K2O (17.8% KCl) (ASX 16 May 2014). • Resource estimate covers less around 30% of project área. • Shallow predo
Slide 28: E. Sierra del Perdón Project
E. Sierra del Perdón Project For personal use only • Project area covers over 140kms2 • Company drilling has delivered consistent sylvinite grades of over 15.0% K2O (~24% KCl) (ASX 27 Nov 2013). • Two mines operated between 1963 and 1996 producing in excess of 10m tonnes of potash (K60 product). • B
Slide 29: F. Pintano Project
F. Pintano Project • Project area covers over For personal use only 125kms2 • 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 appe
Slide 30: G1. Javier Project PFS – JORC Summary
G1. Javier Project PFS – JORC Summary For personal use only JORC MINERAL RESOURCE CALCULATION - 14 MAY 2014 Tonnes In- Potash Bed K2O (wt%) KCl (wt%) MgCl2 (wt%) Insolubles Place (Mt) Measured and Indicated P0 11.9 9.4 14.9 1.62 22.7 PAB 89.7 11.6 18.4 0.68 16.0 Independent geological P1 17.3 9.5 15
Slide 31: G2. Javier Project PFS – Mining Target Calculation
G2. Javier Project PFS – Mining Target Calculation For personal use only A Mining Estimate targeting only high HIGH GRADE MINING ESTIMATE - 14 MAY 2015 grade composites within beds PAB and P2 Potash Tonnes In- K2O (wt%) KCl (wt%) MgCl2 (wt%) Insolubles Bed Place (Mt) has also been prepared. Measured
Slide 32: G3. Javier Project PFS – Mining Sequence
G3. Javier Project PFS – Mining Sequence For personal use only The mine design and sequence for the PFS was prepared by SADIM, under the direction of Ms Dulce Vega (MSc Mining , Camborne School of Mines and Mining Engineer, ETSIM Oviedo). Block model of PAB Bed mining target The mining target is con
Slide 33: H1. Javier PFS – Capex and Opex
H1. Javier PFS – Capex and Opex For personal use only Virtual image of the Process Plant Installation in the typical landscape of the region (for marketing purposes only) 33
Slide 34: H2. Capex – Underground
H2. Capex – Underground For personal use only €M US$ M Surface Infrastructure 0.647 0.863 Decline Construction 6.689 8.919 Primary Underground Infrastructure 5.653 7.537 Initial Ventilation Raise 0.706 0.941 Initial Services Installations 0.639 0.852 Machinery – Phase 1 13.115 17.487 Machinery – Pha
Slide 35: H3. Capex – Above Ground
H3. Capex – Above Ground For personal use only €M US$ M Processing Plant 84.543 112.724 Civil Works and Site Preparation 6.481 8.641 General Site Infrastructure 4.221 5.628 Storage Facility 15.955 21.273 Waste Management 9.859 13.145 TOTAL 121.059 161.412 Virtual image of the Process Plant and Decli
Slide 36: H4. Capex – Utilities & Logistics Infrastructure
H4. Capex – Utilities & Logistics Infrastructure TRANSPORT €M US$ M For personal use only Road Connections to Existing Highways 0.930 1.240 Port of Bilbao Local Road Improvements 1.482 1.976 existing rail Rail Freight Terminal Improvements 0.440 0.587 ≈250km Rail Freight Terminal Staff 0.534 0.712 A
Slide 37: H5. Capex – Other Costs
H5. Capex – Other Costs For personal use only €M US$ M • Other Costs included in the Capex build-up include all design engineering, construction Engineering, Procurement 9.213 12.284 and Construction Management management, procurement and cost management services Owners Costs 7.011 9.347 • General a
Slide 38: H6. Opex – Underground
H6. Opex – Underground For personal use only €/T US$/ T ROM ROM Underground Infrastructure 1.96 2.61 Services 0.40 0.53 Labour 1.05 1.40 Electricity Consumption 2.26 3.01 Miscellaneous 0.02 0.03 Sub Total 5.69 7.59 Contingency 1.14 1.52 (20% of all costs) TOTAL 6.83 9.10 Virtual image of Mine Interi
Slide 39: H7. Opex – Above Ground
H7. Opex – Above Ground For personal use only €/ T US$/ T ROM ROM Labour 0.61 0.81 Electricity Consumption 2.09 2.79 Gas consumption 0.57 0.76 Water consumption 0.04 0.05 Flotation reagent consumption 1.09 1.45 Operations and Maintenance 0.72 0.96 Waste water treatment 0.03 0.04 Sub Total 5.15 6.87
Slide 40: H8. Opex – Transport
H8. Opex – Transport For personal use only €/ T US$/ T MOP MOP Road Transportation 5.19 6.92 Rail Transportation 8.66 11.55 Port Charges and Taxes 2.00 1.50 Port Incidentals 1.50 2.00 Sub Total 16.85 22.47 Contingency (20% of all costs) 3.37 4.49 TOTAL (per tonne of product) 20.22 26.96 Aerial View
Slide 41: H9. Opex – Other Costs
H9. Opex – Other Costs For personal use only • General and Administrative Expenses have been calculated using local cost bases and include all corporate €/ T US$/ T expenses, all design and construction MOP MOP management costs and permit fees. • Ongoing mine infrastructure is Sustaining Capex 6.71
Slide 42: H10. Key Financial Metrics
H10. Key Financial Metrics For personal use only CAPEX & OPEX HEADLINES € US$ Initial Pre Production Capex (300T/h) 187M 250M Total Capex for Nominal Production (600T/h) 230M 308M C1 Opex/ T MOP at Nominal Production (600T/ h) 108/ T 145/ T C3 Opex/ T MOP at Steady State (nominal production) 122/ T
Slide 43: I. Location Advantage Explained
I. Location Advantage Explained For personal use only 43
Slide 44: J.1 Potash – An important nutrient for all plant and animal life
J.1 Potash – An important nutrient for all plant and animal life For personal use only K – the potassium in potash - increases yield and quality of agricultural produce, enhances the ability of plants to resist biotic stresses (diseases, pests and insect attacks) and a-biotic stresses (cold and drou
Slide 45: J.2. There is a large global market
J.2. There is a large global market Current global market is around 60m tonnes per annum. For personal use only There are two views of supply / demand dynamics but both forecast that consumption will continue to grow. Mining major, BHP Billiton predicts a long term deficit in supply from 2020. In co
Slide 46: K. Potash Prices in Different Markets
K. Potash Prices in Different Markets For personal use only Source: CRU 9 May 2014 46
Slide 47: L. Valuations – Producers
L. Valuations – Producers For personal use only EV/EBITDA Price/Earnings In local currency Last Price Market Cap Producers Ticker (listing cncy) (listing cncy) 2013 2014E 2015E 2013 2014E 2015E EV (m) Cash (m) Debt (m) Agrium AGU US $90.90 $13,062 7.83x 8.18x 6.69x 12.43x 14.03x 10.39x 15,979 592 3,
Slide 48: For personal use only
For personal use only REGISTERED OFFICE 169 Fullarton Road Dulwich SA 5065 Australia HEAD OFFICE Calle Navas de Tolosa, 5 – 1°B, 31002 Pamplona, Spain T +34 948 050 577 | F +34 948 050 578 www.highfieldresources.com.au info@highfieldresources.com.au FURTHER INFORMATION Anthony Hall Managing Director
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