Highfield Resources Limited Spanish Potash Projects

Highfield Resources Limited
Spanish Potash Projects
June 2013
ASX Code: HFR
1
The information contained in this presentation
that relates to Exploration Results, Mineral
Resources or Ore Resources was prepared by
Ms Tabetha Stirrett, P.Geo of North Rim. Ms
Stirrett is the Competent Person under JORC
Code standards and is a Professional
Geoscientist and member in good standing with
the Association of Professional Engineers and
Geoscientists of Saskatchewan which is a
JORC Code ‘Recognised Professional
Organisation’ (RPO).
Ms Stirrett is a geologist with North Rim and
has sufficient experience to qualify as a
Competent Person for the relevant style and
type of mineralisation and deposit under
consideration in this presentation.
This presentation includes certain ‘forward
looking statements’. All statements, other than
statements of historical fact, are forward looking
statements that involve various risks and
uncertainties. There can be no assurances that
such statements will prove accurate, and actual
results and future events could differ materially
from those anticipated in such statements.
Such information contained herein represents
management’s best judgment as of the date
hereof based on information currently available.
The company does not assume any obligation
to update any forward looking statement.
Ms Stirrett consents to the inclusion in this
presentation the matters based on this
information in the form and context they appear.
2
Table of Contents
1. Potash
2. Spanish Potash Projects
3. Sierra del Perdon
4. Javier
5. Pintano
6. Why Spain?
7. Why Highfield?
8. Highfield Capital Structure
9. Development Activity
10.Summary
3
Executive Summary
- Highfield’s three 100% owned projects sit in the Navarra sub basin of Spain’s potash producing
Ebro Basin.
- Sierra del Perdon hosts two former operating mines that produced around 9m tonnes of
potash over a 25 year period via multiple ramps and traditional underground mining techniques.
A drilling campaign to test the mine method hypothesis is planned to commence in June 2013.
- Javier and Pintano are located within 60kms of the Sierra del Perdon asset and within
220kms of ICL’s Iberpotash producing mines.
- Javier is a relatively shallow deposit with predominantly sylvinite mineralisation that appears
perfect for a low cost conventional mining operation accessed via a ramp.
- Pintano is south east of Javier and is marginally deeper but appears to have stronger sylvinite
mineralisation with significant exploration areas open to the east.
- Highfield is working towards a program that will see significant value added to all three projects
in the 2013 Calendar Year.
- Three drilling campaigns are planned to enhance resource classification and test mining
assumptions.
- With unrivalled locational advantages it is argued Highfield’s potash projects are the most
commercially viable of any non producing potash company globally.
4
1.
Potash
What is potash?
The term potash is used to
describe various minerals
and chemicals valued primarily
for their potassium content.
The main source of potash is
potassium chloride.
Potash is a widely used
nutrient fertiliser along with
nitrogen and phosphorous.
Fertiliser use accounts for
approximately 95% of total
potash consumption.
Sunflowers
N
Source: IFA
NP
NPK
5
1.
Potash
How is it formed?
http://higheredbcs.wiley.com/legacy/college/levin/0471697435/chap_tut/chaps/chapter10-06.html
6
1.
Potash
How is it mined?
Solution
Room and Pillar
http://www.kgs.ku.edu/Hydro/Hutch/SaltMining/index.html
What is Potash?, IMEx Consulting 2010
7
1.
Potash
How is it processed?
Conventional underground sylvinite mining
8
2.
Spanish Potash Projects
Location
Location in Ebro Basin relative to Iberpotash
Location in Spain
Highfield
Iberpotash
N
0
200kms
9
2.
Spanish Potash Projects
Highfield’s 100% Owned Spanish Projects and Permits
10
2.
Spanish Potash Projects
Surface – predominantly marginal farm land used for low value crops.
11
3.
Sierra del Perdon
Area – The evaporite is 12kms long and around 7kms wide (around 84kms2)
Thickness – The salt layer ranges from 10m to 180m thick and averages around 60m
Depth – Ranges from less than 100m in the east to 1,500m in the west.
Potasas de NAVARRA
Historic mines
Potasas de SUBIZA
12
3.
Sierra del Perdon
Two Former Operating Mines – the evaporite has been mined via conventional means
from 1972 to 1996.
Potasas de Navarra
Mining infrastructure
Sierra del Perdón
evaporite
Potasas de Subiza
Mining infrastructure
13
3.
Sierra del Perdon
Production– around 37m tonnes of sylvinite and 5m tonnes of carnallite was extracted
over the period yielding the saleable potash graphed below.
Production History
600,000
500,000
400,000
Potash
300,000
200,000
100,000
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
-
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4.
Javier
Area – 5kms long and around 4kms wide (around 20kms2)
Thickness – The salt layer ranges from 15m to 100m thick and averages around 60m
Depth – Ranges from 300m to 550m.
Javier
Pintano
15
4.
Javier
Drill holes
16
4.
Javier
Re-assayed holes
Javier Potash Intersections - Re-assayed Wells
Effective April 23rd, 2013
Drill Hole
Seam
From (m)*
To (m)*
Thickness (m)**
Weighted K2 O**
Weighted KCl**
J3***
Upper
409.50
415.00
5.50
4.96
7.85
Lower
420.28
421.58
1.30
6.86
10.86
NGR***
Lower
300.30
304.69
4.39
12.10
19.15
VST***
Upper
369.01
373.86
4.85
12.93
20.47
Lower
378.17
379.41
1.24
10.43
16.51
*Historical assay depths: No wireline for J-3, NGR & VST so depths could not be shifted or confirmed off wireline
** Interval and Weighted KCl and K2 O values listed due to sylvite (does not include potassium from carnallite)
***Re-assayed holes use weighted K2 O values which were calculated in Vulcan modeling software as total seam composites.
This includes compensation for missing core.
It is important to note that due to lack of directional surveys, the assay thicknesses may not represent the true potash
thicknesses.
Note: Thicknesses and grades are reflective of the selected resource intervals based on the re-assaying analytical results.
Numerous samples were taken over each interval and have been weighted in order to produce the listed results.
To convert K2 O to KCl, multiply by a factor of 1.5829.
17
5.
Pintano
Area – 20kms long and around 5kms wide (around 100kms2)
Thickness – The salt layer ranges from 15m to 100m thick and averages around 60m
Depth – Ranges from 500m in the west to 1,200m in the east.
Javier
Pintano
18
5.
Pintano
Drill holes
19
5.
Pintano
Historic assay results
Pintano Potash Intersections used in Exploration Target
Drill Hole
PP-2B
P-1
PP-3
P-2**
PP-2***
P-3
PP-1
MGD
From (m)*
To (m)*
509.55
636.33
801.40
514.44
644.91
808.87
N/A
Interval (m)
4.89
8.58
7.47
1.50
N/A
No Potash
No Potash
No Potash
Weighted % K2O Over Interval****
13.89
10.84
13.33
8.00
*Historical assay depths: depths for PP-2B shifted to match wireline depths, not required for PP-3, no
wireline for P-2.
** Interval and Weighted K2O values based on cut-offs and the broad assumptions are discussed within
the release.
***Full assay results are not available, wedge hole PP-2B used instead.
**** Based on historical assay results, weighted over sample interval lengths.
20
6.
Why Spain?
Location
Salt Markets in Spain and Europe
Potash markets proximate to production
No ongoing royalties
Tax advantages
1. Margin




2. Infrastructure
 Highly developed transport infrastructure
 Electricity, gas and water networks in place
 Significant labour force in country
3. Capability
 Contractors in country with potash experience
 Deep history of mining
4. Geopolitical Risk
 EU Country with well established democracy
21
7.
Why Highfield?
Unrivalled Project Viability
1. Geology
 Proven extraction via ramps into mineralisation and conventional
underground mining techniques
2. Options
 Three relatively shallow projects
3. Management
Capability
 Management team has developed three mines in Spain and
worked on some of the country’s largest infrastructure projects
4. Speed to
Production
 Shallow mineralisation with infrastructure in place enabling a
relatively short capex to revenue profile
5. Small Mine Option
 Projects viable at lower levels of annual production providing
significantly more funding and offtake partner options
 Ability to cash flow fund expansion
22
8.
Highfield Capital Structure
Strong Management Alignment
Equity
Ordinary*
Options
135.5m
21%
20.0m
Performance A**
51.5m
Performance B**
51.5m
Fully Diluted
Fully Diluted Equity Split
Number
11%
Spanish in Country Mgt
Other Management
68%
Other Shareholders
258.5m
* Subject to approval of second tranche of EMR Capital
investment and Director options at EGM on 28 June 2013
** Performance shares were granted for acquisition of the
Spanish assets with the following milestones
A.
JORC Indicated Resource of 150m tonnes at 13% K20;
and
B.
Construction and operating approvals for production of
500,000 tonnes of potash per annum.
Cash at Bank post EMR second
tranche of capital*
~ A$11m
23
9.
Development Activity
Significant Activity Planned to Progress Mine Development
1. Q2 CY13
 Drilling campaign to commence at Sierra del Perdon (June)
 Javier core samples re-assayed and presently being tested for
processing plant design
 Recruitment of project team completed
 Pamplona office established
2. Q3 CY13




3. Q4 CY13
 JORC resource estimate released on Sierra del Perdon
 Updated JORC resource estimate released on Javier
 Drilling campaign commenced at Pintano
JORC resource estimate released on Javier
Mine method confirmed for Sierra del Perdon
Drilling campaign commenced at Javier
Transport and Infrastructure Studies completed
24
10.
Summary
- Highfield’s three 100% owned projects sit in the Navarra sub basin of Spain’s potash producing
Ebro Basin.
- Sierra del Perdon hosts two former operating mines that produced around 9m tonnes of
potash over a 25 year period via multiple ramps and traditional underground mining techniques.
A drilling campaign to test the mine method hypothesis is planned to commence in June 2013.
- Javier and Pintano are located within 60kms of the Sierra del Perdon asset and within
220kms of ICL’s Iberpotash producing mines.
- Javier is a relatively shallow deposit with predominantly sylvinite mineralisation that appears
perfect for a low cost conventional mining operation accessed via a ramp.
- Pintano is south east of Javier and is marginally deeper but appears to have stronger sylvinite
mineralisation with significant exploration areas open to the east.
- Highfield is working towards a program that will see significant value added to all three projects
in the 2013 Calendar Year.
- Three drilling campaigns are planned to enhance resource classification and test mining
assumptions.
- With unrivalled locational advantages it is argued Highfield’s potash projects are the most
commercially viable of any non producing potash company globally.
25