Highfield Resources (ASX: HFR) ('Highfield' or the 'Company') is pleased to provide an update to the Muga-Vipasca Potash Project ('Muga' or the 'Project') Feasibility Study that reconfirms the compelling economics of the Project.
NPV8 of EUR1.89 billion and 25% IRR
Sensitivity analysis using current flat real spot prices for the whole life of mine results in a posttax NPV8 of EUR2.8 billion and a 42% IRR
At full production, EBITDA of around EUR400 million per annum
Economics resulting in a 30-year mine life
The Feasibility Study is based on significantly more advanced engineering and procurement: in the current Study, 86% of the capex estimate is based on signed contracts, firm offers and updated prices. Compared with 59% in the previous feasibility study update from 2019
Cautionary Statement
The production target set out in this update is derived from Proved and Probable Ore Reserves, additional Measured, Indicated and Inferred Mineral Resources from the Muga-Vipasca tenement as well as the Exploration Target at the Vipasca and Muga Sur tenements. There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the production target itself will be realised. The potential quantity and grade of an Exploration Target is conceptual in nature, there has been insufficient exploration to determine a mineral resource and there is no certainty that further exploration work will result in the determination of mineral resources or that the production target itself will be realised. The technical parameters underpinning the Mineral Resource in the market announcement dated 30 March 2021 and the Exploration Target in the market announcement dated 23 November 2021 continue to apply and have not materially changed.
Ignacio Salazar, CEO, commented: 'We are delighted to announce an up-to-date Feasibility Study for the Muga Project. Potash is a great commodity with very strong global prices and exceptional longterm fundamentals. This Feasibility Study Update reconfirms Muga's outstanding economics, and the effect on revenue of current spot prices would multiply returns. The updated numbers have been prepared with a significantly higher degree of confidence following all the engineering and procurement work of the last few months. With supportive shareholders, potential strategic investors and a significant debt capacity, Highfield is well positioned to finance Muga. The team is ready to progress Muga into construction and realise the intrinsic value of this Project.'
Mine plan
The 2021 Mine Plan is based on the Proved and Probable Ore Reserves as well as the abutting Exploration Target as per the ASX announcement released on the 23 November 2021 (refer ASX, 'Updated Ore Reserve Estimate - Muga Project') and the additional Measured, Indicated and Inferred Mineral Resources audited by SRK Consulting ('SRK') as per the ASX release on 30 March 2021 (refer ASX, 'Annual Report to the stakeholders'). The revised mine plan used in this updated Feasibility Study was developed by Highfield with technical mine planning support from the Spanish mining engineering consultants, IGAN Consulting Group. The portion of the plan that supports the Ore Reserve has been reviewed by SRK who incorporated various capital and operating cost sensitivities into their assessment so as to confirm its robustness.
Contact:
Ignacio Salazar
Tel: +34 948 050 577
(C) 2021 Electronic News Publishing, source ENP Newswire