Highfield Resources Limited · ASX:HFR
Highfield Resources — Investor Presentation (September 2024)
47 slides from Highfield Resources's investor presentation, Sep 24, 2024
Slide 1: Funding Muga and Creating a New Global Potash Company
Funding Muga and Creating a New Global Potash Company 23 September 2024 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Disclaimer and Important Notice
Disclaimer and Important Notice This presentation (Presentation) has been prepared by Highfield Resources Limited ACN 153 918 257 (Company, Highfield or HFR) and is dated 23 September 2024. This Presentation has been prepared in connection with the binding transaction documents (collectively, the Tr
Slide 3: Disclaimer and Important Notice (cont’d)
Disclaimer and Important Notice (cont’d) PAST PERFORMANCE The operating and historical financial information given in this document is given for illustrative purposes only and should not be relied upon as (and is not) an indication of the Company's views on the future performance of the Group or the
Slide 4: Disclaimer and Important Notice (cont’d)
Disclaimer and Important Notice (cont’d) MUGA PROJECT ORE RESERVE, MINERAL RESOURCE ESTIMATES AND PRODUCTION TARGET The information in this presentation that relates to the Muga Project Ore Reserve reported as of 31 October 2021 is based on, and fairly represents, information and supporting document
Slide 5: Section 1: The Transaction and the New Highfield
Section 1 The Transaction and the New Highfield
Slide 6: Transformative Transaction Signed
Transformative Transaction Signed Highfield has entered into binding agreements with Yankuang Energy and a number of strategic investors in relation to a transaction which is expected to transform Highfield into a globally diversified potash company and deliver the remaining funding for Phase 1 of t
Slide 7: Compelling Strategic Transaction Rationale
Compelling Strategic Transaction Rationale 1 Establishing a leading pure play potash company with a diversified portfolio of projects in tier-1 jurisdictions underpinned by strong ESG credentials 2 Tangible near-term production with Muga construction ready and fully funded post completion of the Tra
Slide 8: Fully Funded Muga Phase 1: Sources & Uses
Fully Funded Muga Phase 1 Muga Project Capital Estimated Funding Equity Funding Solution Secured and in Place Sources & Uses Sources US$M €M(2) Transaction US$220M Equity Funding: €321M Senior Secured New Share Issuance for Southey Vend-in 286 267 ▪ Yankuang Energy Project Financing New Share Issuan
Slide 9: Complementary Potash Projects Across Two Tier-1 Jurisdictions
Complementary Potash Projects Across Two Tier-1 Jurisdictions Geographically diverse assets located to supply potash into key growth markets Southey Project Muga Project Large-scale and High-Quality Potash Mine The Next Major European Potash Mine Key metrics Key metrics(1) ◼ Ownership: 100% ◼ Owners
Slide 10: Supportive Potash Market Fundamentals
Supportive Potash Market Fundamentals Global food security is expected to be a key theme in the future with population increasing and arable land decreasing, growing the need for more fertilizer use Potash prices have been strongly correlated to crop prices Crop prices are expected to recover and po
Slide 11: Highly Experienced Leadership Team
Highly Experienced Leadership Team Ignacio Salazar, CEO Olivier Vadillo, Head of Marketing & Investor Relations • Over 30 years of experience in the natural resources industry • More than 12 years’ professional experience in strategic consultancy • CEO of Highfield since July 2020 • Previously worke
Slide 12: Strong Support from Shandong Energy and Yankuang Energy
Strong Support from Shandong Energy and Yankuang Energy Yankuang Energy, a subsidiary of Shandong Energy, is expected to become Highfield’s majority shareholder post completion of the Transaction. Yankuang Energy led the transformation of Yancoal Australia into a leading ASX listed coal producer and
Slide 13: Synergy Potential with Strategic Shareholders
Synergy Potential with Strategic Shareholders The strategic investors Beijing Energy, Taizhong and others provide new angles for Highfield to explore value optimization opportunities and synergies through collaboration Beijing Energy International Holding Co.,Ltd. (Beijing Energy) is an internationa
Slide 14: Section 2: Transaction Next Steps
Section 2 Transaction Next Steps
Slide 15: Pathway to Completion of the Transaction
Pathway to Completion of the Transaction The Southey Vend-in and the Cornerstone Placement are inter-conditional, and completion is expected in early 2025 • The Southey Vend-in and the Cornerstone Placement (together the Transaction) are inter-conditional Timeline and • The Transaction completion is
Slide 16: Short Term Funding Overview
Short Term Funding Overview • US$15.0 million (~A$22.4 million)(2) total raise comprising of an Institutional Placement(1) to raise up to US$12.0 million (~A$17.9 million)(2) via the the issue of up to 59.9 million New Shares equivalent to ~15% of total Shares, and SPP to raise US$3.0 million (~A$4.
Slide 17: Short Term Funding Timetable
Short Term Funding Timetable Description(1) Date(2) SPP record date (7.00pm AEST) Friday, 20 September 2024 Announcement of the Placement and SPP Aftermarket Monday, 23 September 2024 Company enters trading halt, and Placement bookbuild opens Tuesday, 24 September 2024 Placement bookbuild closes Wed
Slide 18: Section 3: Muga
Section 3 Muga
Slide 19: Muga: Strong Competitive Advantages and Economics
Muga: Strong Competitive Advantages and Economics Potash market has A critical future facing 1. Location Forecast to be one of the The Muga Potash Mine attractive long-term commodity leveraged to highest margin potash 2. Shallow is set to deliver a new fundamentals food security Thematic mineralizat
Slide 20: Location, Shallow Mineralization, and Infrastructure in Place
Location, Shallow Mineralization, and Infrastructure in Place ▪ Location is a Key Competitive Advantage, strategically located in the middle of the premium European market ▪ Excellent infrastructure in place with National Electricity Grid Substation in Sangüesa immediate access to ports, transport a
Slide 21: Muga is Entering a Market in Europe where Supply is Declining
Muga is Entering a Market in Europe where Supply is Declining Majority of potash mines in Europe are aged or closed, and it is anticipated that the supply from these older mines will decline over the next decade Owner Location Capacity (kt) Start Closure Muga P1: 500 Construction Muga Pamplona - Oth
Slide 22: Muga has Top Quartile Margins
Muga has Top Quartile Margins Europe trades at a premium to other markets Margin curve forecast for 2026 (real US$) 1,150 Potash Standard MOP bulk fob Vancouver, USD/t 290.0 1,050 Rest of world Highfield Potash Granular MOP bulk cfr northwest Europe, USD/t 950 240.0 850 190.0 750 USD/t 650 140.0 USD
Slide 23: Low Investment Required at Muga
Low Investment Required at Muga Muga has half the capex intensity compared to other global development projects (US$ Per Tonne of Potash) 2,500 Capex intensity US$/t 2,000 1,500 Average Capex (US$/t) 1,000 500 - Milestone Phase 1 Bamnet Narong Jansen Phase 1 Woodsmith Colluli Kola Vanguard & Autazes
Slide 24: Commitment to ESG
Commitment to ESG Strategic project in the international landscape with deep ties to local communities Environmental Social Governance ▪ Progressive rehabilitation of the mine, ▪ Social Baseline Study prepared by ▪ First junior mining company admitted as a including backf illing and sal t sa l e s G
Slide 25: Compelling Project Economics
Compelling Project Economics Economics Operational 2 phase planned Excellent logistics with €340 million pa Strategically located NPV8 of €1.82 billion First quartile margin production up to 1Mtpa a cce ss to renewable EBITDA in full with low-cost a cce ss 24% IRR (post-tax) position of Muriate of P
Slide 26: Section 4: Southey
Section 4 Southey
Slide 27: Southey Delivers Significant Long Term Growth Optionality
Southey Delivers Significant Long Term Growth Optionality ◼ Located in Southeastern Saskatchewan, c.60 km north of Regina city ◼ Southey project is situated in massive railway networks, and is accessible to Kinder Morgan port in Vancouver, which covers all regions of Western Canada and the Pacific N
Slide 28: Solution Mining is a Proven Mining / Extraction Methodology
Solution Mining is a Proven Mining / Extraction Methodology Southey Project adopted Solution Mining method. Key phases of Solution Mining are shown below 1 Primary Mining 2 Secondary Mining Summary of exploration programme: Injection Production ‒ Phase 1: 7 exploration holes were drilled with a Inje
Slide 29: Key Takeaways
Key Takeaways 1 Establishing a leading pure play potash company with a diversified portfolio of projects in tier-1 jurisdictions underpinned by strong ESG credentials 2 Tangible near-term production with Muga construction ready and fully funded post completion of the Transaction 3 Highly complementa
Slide 30: Appendix: Transaction Documentation – Supplementary Information
Appendix Transaction Documentation – Supplementary Information
Slide 31: Summary of the Southey Vend-in Implementation Agreement
Summary of the Southey Vend-in Implementation Agreement ▪ The key function of the Implementation Agreement is to commit HFR (or its nominee) to acquire all of the issued share capital of the Target (Target Shares) from the Vendor in consideration for the issue by HFR of New Shares to Yankuang (or it
Slide 32: Summary of the Southey Vend-in Implementation Agreement (cont’d)
Summary of the Southey Vend-in Implementation Agreement (cont’d) ▪ Condition precedents to the completion of the Transaction under the IA include the following: ‐ necessary regulatory approvals, including FIRB approval in Australia, various Chinese regulatory approvals, Canadian foreign direct inves
Slide 33: Summary of the Equity Subscription Agreements (ESAs)
Summary of the Equity Subscription Agreements (ESAs) ▪ The key function of each ESA is to commit HFR to issue New Shares to the Strategic Investors, and to commit the Strategic Inv estors to pay to HFR cash for those New Shares. The price of the New Shares is the same as the price per New Share impl
Slide 34: Appendix: Summary of key terms of Placement Agreement
Appendix Summary of key terms of Placement Agreement
Slide 35: Summary of key terms of Placement Agreement
Summary of key terms of Placement Agreement Placement Agreement Summary Morgan Stanley Australia Securities Limited and DBS Bank Ltd. will act as joint lead managers and bookrunners of the Placement and Conditional Placement (JLMs). The Company entered into a placement agreement with the JLMs in res
Slide 36: Summary of key terms of Placement Agreement (cont’d)
Summary of key terms of Placement Agreement (cont’d) Termination (cont’d) v) (*) any response in the due diligence questionnaire or any other information supplied by or on behalf of the Company to the Joint Lead Managers is or becomes false, misleading or deceptive, or is or becomes likely to mislea
Slide 37: Appendix: Key Risks
Appendix Key Risks
Slide 38: Key Risks
Key Risks This section describes the key business risks of investing in Highfield, together with the risks relating to participation in the Offer each of which may affect the value and performance of the New Shares. It does not describe all of the risks of an investment in Highfield. Before investin
Slide 39: Key Risks (cont’d)
Key Risks (cont’d) Liquidity, borrowing covenants and funding The proceeds of the Offer may not be sufficient for expenditure that might be required for Highfield to remain a going concern until completion of the Transaction. Highfield may need to raise additional debt or equity funds in the future
Slide 40: Key Risks (cont’d)
Key Risks (cont’d) Regulatory risks Highfield's development activities are subject to extensive laws and regulations relating to numerous matters including resource licence consent, conditions including environmental compliance and rehabilitation, taxation, employee relations, health and worker safe
Slide 41: Key Risks (cont’d)
Key Risks (cont’d) Failure to satisfy licence or lease conditions Highfield's mining operations are predominantly governed by the laws and regulations of Spain and, assuming the successful completion of the Southey Vend-in, Canada, including the granting of licences or leases. Each licence or lease
Slide 42: Key Risks (cont’d)
Key Risks (cont’d) Geology and estimation of resources and reserves The volume and quality of the potash that Highfield recovers may be less than the estimates included in this presentation. Resource and reserve estimates (including those contained in this presentation) are stated to the JORC Code a
Slide 43: Key Risks (cont’d)
Key Risks (cont’d) Information technology risks There is a risk that Highfield’s core systems and technologies could be exposed to damage or interruption from systems failures, computer viruses, cyber-attacks, power or telecommunications providers’ failures, fire, natural disasters, terrorist acts,
Slide 44: Key Risks (cont’d)
Key Risks (cont’d) There may be changes in accounting standards Accounting standards may change. This may affect the reported earnings of Highfield and its financial position from time to time. Highfield will continue to assess and disclose, when known, the impact of adopting new accounting standard
Slide 45: Appendix: International Selling Restrictions
Appendix International Selling Restrictions
Slide 46: International Selling Restrictions
International Selling Restrictions China Neither this document nor any other document relating to the New Shares may be distributed to the public in the People’s Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region
Slide 47: International Selling Restrictions
International Selling Restrictions Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in
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