Highfield Resources Limited · ASX:HFR
Highfield Resources — Schröder Equities Conference 2016
20 slides from Highfield Resources's conference presentation, Mar 7, 2016
Slide 1: High Strategic Value in Global Potash Markets
For personal use only Highfield Resources Ltd High Strategic Value in Global Potash Markets 4 March 2016 Schröder Equities Conference Zurich, Switzerland ASX Code: HFR
Slide 2: Competent Person Statement – Resources and Reserves
COMPETENT PERSON STATEMENT – RESOURCES Information relating to resources was prepared by Mr Leo Gilbride, P.Eng and Ms Vanessa Santos, P.Geo, of Agapito Associates. The Competent Person for Resources under JORC Code standards is Mr Leo Gilbride, P.Eng and Ms Vanessa Santos, P.Geo. of Agapito Associa
Slide 3: Contents
Highfield Resources Limited CONTENTS For personal use only 1. Introduction 2. Potash – Solid Unchanged Long Term Demand Drivers 3. Muga Potash Mine – Industry Leading Margins 4. Strategically Valuable New Supply 5. What is Highfield Worth? 6. A Strong Commitment to Spain 7. Real Community Engagement
Slide 4: 1. Introduction
1. Introduction For personal use only • Fundamental demand drivers in fertiliser remain unchanged despite recent price weakness • Potassium expected to show strongest growth of key macronutrients • Highfield’s flagship Muga Potash Mine is the lowest capex K60 MOP development asset globally • Muga is
Slide 5: Potash demand is closely linked to population growth
2. Potash – Solid Demand Fundamentals Potash demand is closely linked to population growth, providing stability For personal use only “Around 90% of potash is used as an agricultural fertiliser”1 • More people to be fed Strong, • Less land available for consistent growth growing food in fertiliser d
Slide 6: CRU forecasts growth in demand for potash
2. Potash – Solid Demand Fundamentals CRU forecasts growth in demand for potash to be over 2m tonnes per annum (3.4% CAGR) For personal use only Strong forecast demand growth for potash Source: CRU Outlook for N, P and K, January 2016 6
Slide 7: Despite price declines Highfield expects cash margins over 50%
2. Potash – Solid Demand Fundamentals Despite price declines Highfield expects cash margins over 50% at current levels For personal use only Actual Global Potash Netbacks Observations • Although global prices have fallen the premium into Europe continues • FMR Argus estimates current GMOP pricing at
Slide 8: The Muga Mine would have made Highfield the highest margin producer in 2015
3. Muga Potash Mine – Industry Leading Margins The Muga Mine would have made Highfield the highest margin producer in 2015 For personal use only 8
Slide 9: The lowest cost supplier into western Europe
3. Muga Potash Mine – Industry Leading Margins The lowest cost supplier into western Europe For personal use only • Highfield’s competitive position into the European market is undoubtable • c. 7 million tonne per annum market • Southern France, Spain and UK & Ireland is approximately 2 million tonn
Slide 10: The lowest cost supplier into the US cornbelt
3. Muga Potash Mine – Industry Leading Margins The lowest cost supplier into the US cornbelt which consumes over 5 million tonnes p.a. For personal use only • Despite its European location, Highfield would be among the lowest cost producers to the large US market • Based on current prices, Highfield
Slide 11: Significantly lower cost than majority of peers to Brazil
3. Muga Potash Mine – Industry Leading Margins And significantly lower cost than majority of peers to Brazil, the largest seaborne market For personal use only • Brazil is the largest seaborne market for potash accounting for c. 15% of global demand • At current prices, few producers make money sell
Slide 12: Unrivalled strategic value, market positioning and optionality
4. Strategically Valuable New Supply Unrivalled strategic value, market positioning and optionality For personal use only Potash Sector Competitive Highfield’s Assets Dynamics The Muga Potash Mine Very High Barriers to Entry • The lowest capital cost to • No greenfields mines built in production of
Slide 13: The market is currently valuing Highfield as a single asset company
5. What is Highfield Worth? The market is currently valuing Highfield as if it were a single asset MINING company… For personal use only • Muga forecast to make Highfield the highest margin potash producer globally • Lowest cost into all target sales markets • Mine life of at least 47 years at 1.08
Slide 14: Potash producers are not valued on an NPV10 basis
5. What is Highfield Worth? Potash producers are not valued on an NPV10 basis… For personal use only PotashCorp 20.0x Mosaic 18.0x ICL Arab Potash 16.0x Uralkali SQM 14.0x Intrepid 12.0x EV / EBITDA 10 Year Ave. 12 Months 10.0x Forward EV / EBITDA 9.7x 8.0x 6.0x 4.0x 2.0x 0.0x Source: CapitalIQ as a
Slide 15: Potash producers have traded at significant premiums to NPV10
5. What is Highfield Worth? Potash producers have traded at significant premiums to NPV10 For personal use only • Forecast US$200 million per annum in EBITDA at 9.7x EV / EBITDA TODAY’s potash prices US$1.94 bn • Potash producing peers average EV/EBITDA multiple of 9.7x Optimisation Study NPV10 – US
Slide 16: Muga is less than 10% of the total basin area
5. What is Highfield Worth? And Muga is less than 10% of the total basin area… For personal use only Project Pipeline - Muga Extension - Muga Exploration Target - Sierra del Perdón - Los Pintanos - Vipasca • Muga Mine covers only 8.5% of project - Izaga areas - Sulphate of Potash (SOP) 9.7x EV / EBI
Slide 17: Spanish based company with future workforce of more than 800 employees
6. A Strong Commitment to Spain Spanish based Company with future workforce of more than 800 employees For personal use only Spanish Based Senior Management Team 5
Slide 18: Highfield is actively participating in the community through its Geoalcali Foundation
7. Real Community Engagement and Support Highfield is actively participating in the community through its Geoalcali Foundation For personal use only Geoalcali Foundation • Established in September 2014 • Over 30 community projects to date • Visible statement of Company´s intent to actively support t
Slide 19: Summary
8. Summary For personal use only • Highfield’s portfolio of assets are among the most strategically valuable in natural resources • The flagship Muga Potash Mine is the lowest capex mine to production globally • In production Highfield is independently forecast to have the highest margin of any pota
Slide 20: For personal use only
For personal use only REGISTERED OFFICE 169 Fullarton Road Dulwich SA 5065 Australia HEAD OFFICE Avenida Carlos III, 13-15, 1B, 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
Highfield Resources — Schröder Equities Conference 2016 on 6ix