Highfield Resources Limited · ASX:HFR
Highfield Resources — Investor Presentation (September 2023)
32 slides from Highfield Resources's investor presentation, September 2023
Slide 1: Potash: an overview of the commodity and the market
Potash: an overview of the commodity and the market Market Presentation September 2023 ASX: HFR
Slide 2: Potash
Potash
Slide 3: 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 4: The Global Potassium Cycle
Potash – Where does it come from? K in liquid fraction to water courses • The potassium cycle is the biogeochemical cycle that Disposal of human waste Rivers describes the movement of potassium throughout the earth’s lithosphere, biosphere, atmosphere, and hydrosphere Food Sea water • Potassium is a
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) • As shown in the image, crop yields are increased as potassium levels are increased • Potassium chloride-based fertilisers are the most com
Slide 6: The most common usage for potash is as a blend in NPK fertiliser
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, amino acids that control crop quality, seed production almost all biological and more processes Phos • Encourages root g
Slide 7: Different sources of potassium: annual size of markets (2021)
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 crops
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 Speciality application Granular Standard c. 45% c. 55% • Includes SOP Primary markets are India and Chi
Slide 9: Potash – How is it produced? Solution mine
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? 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 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 are estimated to Jordan be around 16 Billion tonnes of K2O • Reserves mainly found in Canada and Russia where 3.1% Brazil
Slide 14: Potash market – Very concentrated production
Potash market – Very concentrated production Russia Canada Belarus Germany 18% 10% 37% 5% China Israel • About 90% of global production 6% 12% 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
Slide 15: Potash market – Share by country
Potash market – Share by country 2022 Market share - Exports by country • In 2022, Russia and Belarus combined potash production accounted for 28% (18 Mt) of worldwide production, down from 39% (28 Mt) in 6% 2021 5% • In 2022, Russia and Belarus combined MOP exports accounted for 28% of worldwide ex
Slide 16: Potash market – Production and demand
Potash market – Production and demand Most large potash producers are far away from key markets 22Mt 20Mt 6Mt 4Mt 10Mt 27Mt Europe 4Mt 6Mt North CIS 1Mt 7Mt America Middle East Asia 0Mt 1Mt Africa 13Mt 0Mt 1Mt 2Mt Oceania Average production 2012-2022 (Mt) Latin America Average demand 2012-2022 (Mt)
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: 2% 80,000 70,000 Unidentified 60,000 Middle East Total Oceania 50,000 Africa Total Other Latin America (ex. Mexico & Brazil) 40,000 CIS Total Europe Total India 30,000 Brazil
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 (hectar per person) 0.24 • Arable land per person has been decreasing steadily 0.23 0.22 • The World Bank and The Food and 0.21 Agriculture Organisation of the UN 0.2 anticipates that as the global
Slide 19: Potash market outlook – Demand forecast
Potash market outlook – Demand forecast The future for potash demand looks positive 2.4 10.0 • According to UN data the total world population will reach 8.6 Billion by 2.2 9.0 2030 and 9.8 Billion in 2050 2.0 1.8 8.0 • Crop production has been increasing as the population grows and will need Billio
Slide 20: Potash 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 Billions of tonnes 50 1.5 with crop production Mt 40 1.0 30 20 0.5 10 0.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 21: Potash market outlook
Potash market outlook Potash demand is expected to keep on increasing Between 2012 to 2022, global potash demand has increased 2.76% per annum, as arable land per person has been steadily decreasing. With the global population continuing to grow, demand for potash is expected to continue growing too
Slide 22: Potash Supply
Potash Supply
Slide 23: Potash price history
Potash price history Crop prices influence potash prices (in blue) 2022-2023 Prices fall as eroded affordability, unfavourable weather in some markets, and expectations 1000 for lower and more stable prices lead farmers to skip applications. From 2023 prices appear to be more stable. Global financia
Slide 24: Muga Mine
Muga Mine
Slide 25: Highfield Resources and the Muga Project
Highfield Resources and the Muga Project Conventional Underground A potash developer listed on Muga is a two-phase project Room and Pillar mining. Conventional Flotation and the ASX (HFR) with projects which will produce a total of Declines accessing shallow Crystallisation processing in Northern Sp
Slide 26: 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 27: 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 6Mt • The Muga mine will be close to key demand areas of 4Mt Muga Mine MOP trade routes Europe • With extremely competitive and versatile export 308 options: truck or ship 627 31
Slide 28: 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 1,150.0 1,050.0 Prices in Europe have Unstable condit
Slide 29: Muga is forecast to be one of the highest margin mines globally
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 Presen
Slide 30: Conclusion
Conclusion
Slide 31: Conclusion
Conclusion 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 yields and therefore increasing With forecasts pointing towards a requirem
Slide 32: 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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