Highfield Resources to receive Muga project funds and transform into global potash company

HOUSTON (ICIS)–Highfield Resources announced it has entered into binding agreements with several parties which would provide the remaining funding needed for the Muga potash project in Spain and transform the firm into a globally diversified potash company.

The Spanish fertilizer firm said it has made a pact with Yankuang Energy Group and several strategic investors including Beijing Energy and Singapore Taizhong Global Development, with the transaction raising $220 million in equity capital and providing for the acquisition of the Southey potash project in Saskatchewan, Canada.

The company said this provides an opportunity to unlock significant value with the support from a strong shareholder base and the establishment of a partnership with Yankuang Energy, which it said is committed to supporting their growth and development.

Under the terms Highfield Resources will issue new shares to Yankuang Energy, Beijing Energy and Taizhong for a total of $170 million.

In addition, the company has entered a non-binding letter of intent with another strategic investor in relation to the subscription for $20 million of new shares and is negotiating with other strategic investors for a further $50 million of new shares.

Highfield and Yankuang have also entered an agreement for the company to directly acquire all the issued capital of Yancoal Canada, which owns the Southey asset located approximately 60 km north of Regina.

It is being designed as a solution mining operation with environmental approval in place and a feasibility study completed. Highfield previously said there is a high confidence reserve estimate at the project with significant resource potential.

Forecasted to have a mine life of more than 65 years, the planned annual production is estimated at 2.8m tonnes/year of muriate of potash (MOP).

Completion of this transaction is subject to the satisfaction of certain conditions including receipt of required regulatory approvals and Highfield Resources shareholder approval, but the company anticipates it will be completed by early 2025.

“This is an outstanding outcome which is expected to result in the commencement of Muga construction and puts Highfield on a very strong platform of growth for the future,” said Ignacio Salazar, Highfield Resources CEO and managing director.

“On completion of this deal, we believe we will have the assets, the team and the capital to unlock and create significant value for Highfield.”