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Highfield announces A$101m raising to build Spain potash mine

Highfield announces A$101m raising to build Spain potash mine

Photo by Bloomberg

11th May 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – Potash hopeful Highfield Resources resumed share trading on the ASX on Monday, after announcing to the market that it would raise about A$101-million through a share placement.

Highfield announced to shareholders that it would place some 56.12-million shares, at a price of A$1.80 each, to institutional and sophisticated investors in Australia, Asia, Europe and North America.

The share placement would be completed on May 15, and would not require shareholder approval, as it fell within the company’s placement capacity.

Proceeds from the placement would be used to fund the equity component of the capital expenditure required for the Muga potash project, in Spain.

“This is a major milestone in the company’s history as it not only reflects the quality of the Muga potash project, but also demonstrates to the referral authorities in Spain that we are in a position to build a mine,” said Highfield MD Anthony Hall.

“The placement delivers a major de-risking milestone of mining funding, in combination with European commercial banks. Following the placement, we are in an extremely strong financial position, with more than A$120-million and cash, and no debt.”

A definitive feasibility study into Highfield’s Muga project estimated that a capital investment of $256-million would be required to deliver 1.123-million tonnes a year of granular potash, over 24 years.

Hall said that the company was proceeding with detailed design and engineering, as well as other development and contracting work in preparation for full site construction to start after permitting, which was expected later in 2015.

Initial production from Muga was planned for the second quarter of 2017, with full production targeted for January 2019.

Meanwhile, indicative project financing terms have been received from leading European commercial banks, which have indicated a debt-to-equity ratio of 65% could be expected.

“We continue to have very positive discussions with leading European commercial banks, giving us confidence that proceeds from the placement, combined with other means of financing, will comfortably fund the development and construction of the Muga mine,” Hall said.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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