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Highfield Resources progressing towards construction of flagship Muga Potash Project in Spain

The company’s main focus is on the development of the Muga Project as it nears a final investment decision and the commencement of construction.

Highfield Resources Ltd - Highfield Resources progressing towards construction of it flagship Muga Potash Project in Spain
Mining at Muga is planned to commence at a depth of around 350 metres from surface and is ideal for a relatively low-cost conventional mine

Highfield Resources Ltd (ASX:HFR) is progressing with the approvals process for its Muga Potash Project in Spain’s potash producing Ebro Basin.

During the first half of 2020, the company’s subsidiary Geoalcali has been focused on securing the mining concession and construction permits necessary to take the project to the construction phase.

Highfield remains confident of securing the necessary debt and equity financing for Muga, which will support a final investment decision and the commencement of construction at the project.

Mining concession pending

The mining concession documentation was submitted on March 13, 2020, following which the Spanish Government initiated a countrywide confinement program due to the impact of COVID-19, with both the group’s employees and government officials working from home.

Shortly after June 22, 2020, when the nationwide COVID-19 State of Alarm was lifted, the start of the public exposition period with respect to the mining concession documentation was gazetted in the National Bulletin on July 4, 2020.

The public exposition period of 30 working days was concluded as scheduled on August 29, 2020, following which Geoalcali will have an opportunity to respond to any queries brought forward.

Highfield estimates that the mining concession will be awarded during the fourth quarter of 2020.

Vipasca permit exploration

Geoalcali has been focusing on the more prospective areas in the east of the Vipasca permit (around 27 square kilometres) which could represent a strategic extension of the Muga Project.

In the first half of 2020, Geoalcali completed its drilling program at the Vipasca permit area, releasing assay results for holes V18-03 and V18-05.

Drill-hole V18-03 confirmed the continuity of the Vipasca ore deposit which remains open towards the west.

Specifically, V18-03 intersected a total of 30.2 metres of potash mineralisation including:

  • 1.5 metres at an average grade of 11.98% K2O from 1022 metres;
  • 1.8 metres at an average grade of 11.29% K2O from 1060 metres; and
  • 1.5 metres at an average grade of 12.79% K2O from 1070 metres.

Drill-hole V18-05 confirmed the extension and continuity of the potash mineralisation between the Muga Project and Vipasca - linking these two projects.

On June 30, 2020, Geoalcali received the exploration permit for the Muga Sur Permit Area which abuts the south part of the Muga Project area.

Development on schedule

During the half-year, design development continued to progress in line with the project program timetable and engineering submissions were made by the principal equipment suppliers and engineering consultants.

Basic design of the process plant is advancing well and detailed design is ongoing.

K-Utec AG Salt Technologies has completed the test-work that will be used to detail the systems and components necessary for the dewatering and backfilling system and continues to progress the basic design work for the backfilling storage and placement systems.

Geoalcali is also carrying out additional lab work to further optimise the salt quality specification that will be produced from the Muga Mine.

Negotiations with Komatsu Mining Corporation for the acquisition of two bolter miners continued during the half-year and Geoalcali expects to sign an equipment purchase contract once negotiations are satisfactorily completed.

The signing of the bolter miners purchase contract will represent a significant contract award and a critical step in developing the Muga Project towards production.

MOUs signed

During the half-year Geoalcali signed two more non-binding offtake MOUs, the first with Keytrade AG to provide up to 300,000 tonnes per annum of muriate of potash (MOP).

Keytrade is a large Swiss-based agri-trader which is active in more than 115 countries, with key offices in Zurich, Madrid, Tampa, São Paulo, New Delhi and Beijing.

The second MOU signed was with Maxisalt whereby Geoalcali will provide up to 500,000 tonnes per annum of salt, comprising 400,000 tonnes of vacuum salt, a higher value product, and 100,000 tonnes of de-icing salt.

Maxisalt is an international salt distribution company located in Barcelona and a global distributor of rock salt, solar salt and vacuum salt, which is used for water treatment, industrial applications and animal feed.

The sale of salt contributes economically, providing a by-product credit that benefits the Muga Project’s financials and will also help maintain the low environmental footprint of the mine.

In addition, salt sales will assist in ensuring full compliance with environmental conditions, including the removal of all salt from surface as part of rehabilitation of the mine site following the end of potash production.

Geoalcali continues to engage in ongoing offtake discussions with other potential wholesale customers, distributors and global traders for the entire production capacity of MOP and salt from the mine.

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