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Highfield Resources Applies For Mining Concession For Muga Potash Mine

Highfield Resources (ASX:HFR) has now lodged a mining concession application for its wholly-owned Muga Potash Mine in Northern Spain.

There is an improved mine plan that includes two declines for underground mineral extraction and two 400 tonne per hour processing lines capable of producing more than 1 million tonnes of K60 product per annum.

The initial mine life estimated at 19 years with likely upside from recent drilling success and substantial unexplored permit areas.

Key milestones are approaching with the DFS on track for completion in March 2015; Targeting commencement of construction in Q4 CY2015; and Targeting first production in 1H of CY2017.

Anthony Hall, managing director, commented: "The lodgement of our mining concession application is a very significant development and marks the beginning of the Company transitioning from explorer to developer.

"Recent drilling success has supported our decision to include two declines for mineralisation extraction.

"The ability to operate two declines is likely to deliver very compelling project economics while increasing operational efficiencies, smoothing processing grade profile and ultimately improving reliability and performance.

"The lodgement of the mining concession is the culmination of the hard work and dedication of our Spanish-based project team and consultants.

"We look forward to continuing to deliver positive results in the coming months and continue to target the commencement of on-site construction activities in Q4 of CY2015."

Mining Concession Application

The mining concession application was lodged on Wednesday 10 December 2014 with the mining departments in Navarra and Aragón.

The same application will also be lodged with the Central Government in Madrid on Monday 15 December 2015.

The application includes an Environmental Impact Assessment (NYSEMKT:EIA) and Mineral Extraction Plan.

The application is for the simultaneous construction of two declines / ramps to an underground conventional sylvinite mine accessed at depths of less than 300 metres below surface.

The mine will commence with two underground operational fronts delivering the equivalent of 400 tonnes per hour of ore to the processing plant.

Approximately nineteen months later, the size of the operation will be increased to an equivalent of 800 tonnes per hour of ore.

In full operation, the mine will be able to produce over 1 million tonnes of K60 product per annum.

The initial mine life is estimated at 19 years, with likely upside represented by recent drilling success and substantial unexplored permit areas.

The Muga Potash Project targets the relatively shallow potash (sylvinite) beds in the combined Muga-Vipasca Project that covers an area of more than 110 square kilometres.

Global fertiliser market

The global fertiliser market is worth around $200 billion.

Potash, also known as Muriate of Potash (MOP) or potassium chloride (KCl), is the most common method of providing potassium to crops.

Over 95% of production is destined for use in fertilisers.

The global consumption of MOP is currently around 60 million tonnes per annum, but this is expected to trend upwards as population grows and hence food demand grows.

Different views on production capacity but most believe there is a capacity gap beyond 2020.

Analysis

Highfield Resources has now lodged a mining concession application for the Muga Potash Mine, and the proposed mine looks to be capable of delivering compelling project economics when the DFS is completed next quarter.

The dual decline strategy offers advantages including increasing potential scale to over 1 million tonnes of potash per annum.

The company has assembled a Spanish based team and Spanish consultants that have deep experience in building mines in the country, and will now work towards completing the design and building a significant potash mine in Spain.

Key milestones to come for Highfield:

- DFS on track for completion in March 2015;
- Targeting commencement of construction in Q4 CY2015; and
- Targeting first production in 1H of CY2017.

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