HIGHFIELD RESOURCES LIMITED — AGM Information 2017

Nov 29, 2017

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AGM Presentation Highfield Resources

2017

COMPETENT PERSON STATEMENT – RESOURCES

This ASX release was prepared by Mr. Peter Albert, Managing Director of Highfield Resources. The information in this release that relates to Ore Reserves, Mineral Resources, Exploration Results and Exploration Targets is based on information prepared by Mr José Antonio Zuazo Osinaga, Technical Director of CRN, S.A.; and Mr Manuel Jesús Gonzalez Roldan, Geologist of CRN, S.A.

Mr José Antonio Zuazo Osinaga is a licensed professional geologist in Spain, and is a registered member of the European Federation of Geologists, an accredited organisation to which Competent Persons (CP) under JORC 2012 Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, Ore Reserves or Exploration Targets through the ASX.

Mr José Antonio Zuazo Osinaga has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as CP as defined in the 2012 edition of the JORC Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves.

FORWARD LOOKING STATEMENTS

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.

. Highfield Resources Limited

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1. Corporate Summary

	Fully Diluted Equity
Ordinary Shares on Issue		329.2m
Options & Performance shares		45.2m
Fully Diluted		374.4m
Undiluted Market Cap at A$1.05 (7 November 2017)		A$346m
Cash as at 30 September	2017	~A$68m
Enterprise Value		A$278.8m / US$211.1m1
Average Daily Volume (6 months)		~195,000
	Shareholders (Fully Diluted)
Spanish in-country management		6.6%
Board		4.4%
EMR Capital		28%
Other Shareholders		57%
	Total	100%

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Broker	Recommendation	12-month Price Target
Bell Potter	BUY	A$1.10
Blue Ocean	BUY	A$3.10
Canaccord Genuity	BUY	A$1.45
Foster Stockbroking	BUY	A$2.30
RBC Capital Markets	BUY	A$2.00
Taylor Collison	BUY	A$3.47
	AVERAGE	A$2.24

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1) USD:AUD exchange rate 0.76:1.00

2. Board and Senior Management

Board and Senior Management experienced in construction and operations

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Derek Carter
Non-Executive
Chairman
Pauline Carr Jim Dietz
Owen Hegarty Richard Crookes
Non-Executive Director Non-Executive Director Independent Independent
Board of Directors Non-Executive Director Non-Executive Director
Sixto Jiménez Peter Albert Isaac Querub
Advisor Managing Director & CEO Advisor
Senior Leadership Team
Mike Norris Ricardo Peréz Hayden Locke
John Claverley Gonzalo Mayoral Javier Olloqui
Chief Financial Stakeholder Head of Corporate &
Project Director Permitting Human Resources
Officer Management Strategy
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3. Vision and Core Values

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“To build a successful, sustainable, potash business with respect for stakeholders and the environment”

Respect

To act and communicate collaboratively with transparency, sincerity and an understanding of cultural diversity.

Commitment

We are committed to best practices in health and safety, the environment, and the communities in which we operate.

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Excellence

To seek to continuously improve through a cycle of goal-setting, accountability, evaluation and innovation, resulting in enhanced value creation.

Attitude

To uphold the highest standards in regards to ethical performance, honesty, integrity, fairness and equality with all stakeholders.

4. The Muga Potash Mine

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Muga - Highfield’s high margin potash development project

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Located in Northern Spain, within 150km of key Atlantic Port near San Sebastian (Port of Pasajes)

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Detailed engineering and design underway, long lead items ordered and deposits paid

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Current reserves of 47 years with substantial mine life upside potential

Full production1.08 Mtpa:

• Phase 1 – delivering 540ktpa

• Phase 2 – delivering an additional 540ktpa

MoUs signed with two Atlantic Coast ports for long term logistics solution

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All-in-sustaining Cash Cost to Port – €130 / tonne of MOP

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At full capacity, unlevered, post tax, NPV10 – US$1.46 billion

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MOUs signed with three traders for the sale of MOP, discussions underway with fertiliser offtakers

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4. The Muga Potash Mine

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Relatively simple, proven technology with first rate access to end markets

Simple Mining Decline access to shallow mineralisation Underground room and pillar mining

Proximity to Local Markets Located in a potash consuming region Good access to the large Brazilian an US markets

First Class Infrastructure

Direct connection to national electricity grid Close to port, no road or rail upgrades

Conventional Processing Sylvinite ore

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5. The Muga Potash Mine

Marginal farm land with natural terrain features allowing low impact development

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5. The Muga Potash Mine

Restoration plan designed to progressively reinvigorate the project site at end of mine life

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5. Timeline to Production and Key Milestones

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Construction and commissioning – 2 years from commencement of construction

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Month of Project
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Item Pre-Development Stages
Detailed Engineering and Design
Long Lead Items Ordered
Electricity Connection
Water
Site Preparation:
Plant Site
Waste Dumps
Brine / Salt Ponds
Underground:
Box Cut
Decline
Drifts and Conveyors
Aboveground:
Storage Buildings
Process Plant
Drying, Compacting and Glazing
Plant Commissioning
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First Production

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6. Muga Capital and Operating Costs Muga’s low capital cost on $/t of production basis ranks best in class

Key Attributes:

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No major aquifer unit allows simple decline access

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Decline access to mineralisation significantly lowers capital cost relative to most potash peers Sylvinite ore enables simple and conventional process flow sheet Grid electricity connection lowers capital and operating cost

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No port upgrades, rail spurs or other infrastructure expenditure First class roads and motorways and access to site

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Updated MOU with Acciona to provide project delivery assistance

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6. Muga Capital and Operating Costs

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Low delivered cost to customer positions Muga to be a high margin potash mine

Muga – Estimated Operating Cost
Component	Amount (€ / tonne MOP)	Amount (US$ / tonne MOP)
Mining	55.1	61.2
Processing	45.1	50.1
Transport(FOB Pasajes)	17.4	19.4
Direct Cash Operating Cost	117.6	130.7
SG&A	7.5	8.3
SustainingCapital	5.0	5.6
Royalties	0.0	0.0
All-in-Sustaining Cash (AISC) Cost (FOB Pasajes)	130.1	144.6

• Muga is expected to deliver bottom third all-in-sustaining cash (AISC) cost delivered to Europe, Brazil and the USA

• Muga benefits strongly from:

• No brine inflow management costs

• Proximity to domestic customers (< 200km)

• Proximity to export port (< 150km)

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Cost to fob $/t
Cash Cost to FOB Export Port
250
200
150
Highfield
100
50
0
0 10 20 30 40 50 60 70
MOP Capacity (mn t)
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• No royalties or government levies

• Low sustaining capital cost

• Low ongoing SG&A cost due to location

Source: Argus FMB Consulting Services

Note: Argus cash cost to FOB curve is not on an all-in-sustaining basis 13 and excludes SG&A and sustaining capital costs

6. Muga Capital and Operating Costs

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Independent verification that Muga would make Highfield the highest margin producer

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7. Stakeholder Engagement

Committed to sustainable development, supporting the local community

Safety

• Developing a strong safety first culture within our work force

• Focus on minimising harm to both workers and surrounding environment

Social Development

Minimise Environmental Impact

• Core focus on minimising risk and impact on environment surrounding the project area

• ESIA completed in compliance with industry best practice, Spanish legislation, IFC’s guidelines and Equator Principles

• • Implement robust and appropriate ongoing monitoring and response plans

• Creating an industry and direct employment for the long term

• Creating indirect employment in multiple supporting industries

• Continue to invest in community initiatives surrounding the project

Sustainable Economic Development

• Creating quality employment with a preference for local employees and contractors

• Become a significant employer in the region

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7. Stakeholder Engagement

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Open and transparent communication with the local community

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Mayors of the region and Company representatives

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Working sessions, information talks, and site visits to explain the project to all our local stakeholders

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Feedback forms to measure our social acceptance

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8. Implementing our sustainable strategy

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Setting an example

Community involvement

• Over 93% of feedback received has expressed that this project will bring benefits to the region.

• Over 100 initiatives with town halls, social associations, foundations and scientific/agricultural organisations

• Obtaining and maintaining community support (Social Licence to operate)

• Forética, the most important sustainability institution in Spain has recognised the Community Communication Plan of Geoalcali as an example of best practice in transparency and stakeholder management

• We are certified in both Navarra and Aragon CSR government programs

• Voluntary Official Consultation Process undertaken as a commitment to transparency and open communication in order to provide a stronger basis for the environmental permits and social license

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9. Permitting

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Environmental permitting process moving towards conclusion

Environmental Declaration

Mining Concession

Construction Permits

• Town Halls

In the last 6 months:

• Company considers it is in the final stage of the DIA process

• Revised ESIA plus Mine Plan and Mine Restoration Plan have been subject to two processes:

• Following a positive DIA the Department of Mines, can consider the award of the Mining Concession (CE)

  • Water Authority

  • Power connection and lines

  • • Roads

  • Building permits

• Formal review by the referal authorities

• Voluntary Public exposition by the Company

• Continued close engagement with local communities who remain extremely supportive

• ´

• • In the Company s view there are no impediments to a positive DIA being issued.

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10. Upside – SOP Project & K62 Project

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Highfield has a number of near term value creation opportunities

SOP Project

K62 Crystallisation Project

• Scoping Study complete for 500ktpa SOP Mannheim facility

• Total capex US$147 million

• Lowest quartile cash cost to customer

• Crystallisation plant to process slimes and tailings from Muga Potash Mine to produce K62 MOP and high purity vacuum salt

• Scoping Study released May 2015

• MOUs signed with acid suppliers, HCl customers and ports

• Initial Capital Cost of US$124 million including contingency

• Good access to US market, strong implied margins to Highfield

• NPV10 of US$222 million (NPV8 – US$285 million)

• Study contemplated production of 135ktpa of K62 MOP and 260ktpa of high purity vacuum salt

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10. Upside – Other Projects

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Control of basin of projects with shared characteristics of Muga Potash Mine

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10. Upside – Other Projects

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Control of basin of projects with shared characteristics of Mu a Potash Mine g

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Muga Extension

Sierra del Perdón

• Exploration target of 127 to 255 million tonnes at 12% to 16% K2O

• Scoping Study completed April 2015

• Decline access to underground conventional with flotation processing

• Target based on geophysical surveys confirming continuation of evaporite from Muga Potash Mine

• Total Capex – US$233 million

• 520ktpa of K60 MOP with initial mine life of 20 years

• High level of confidence in exploration target

• Unlevered, post tax, NPV10 – US$527 million (NPV8 – US$662 million)

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10. Upside – Other Projects

Control of basin of projects with shared characteristics of Mu a Potash Mine g

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Izaga

Pintanos

Vipasca

• Grass roots exploration tenement

• Current Exploration Target of 343m to 1,565m tonnes at 10 to 15,4% K2O covering 60 km[2]

• Exploration Target of between 320 million and 1,2 billion tonnes at 12% to 16% K2O

• Clear continuation of evaporitic sub basin

• Additional northern extension identified covering 2.8km[2]

• TDEM and gravimetric surveys show strong continuity of evaporite horizon

• Historical drilling encounter potash horizons within evaporite

• Upside potential equal to current Muga Project Resource and Mine Reserve

• Permit contiguous with Muga and shares many characteristics

• Historical drilling not able to be used for resource purposes

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11. Value Proposition – Potash Market

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Many experts believe potash prices have reached the marginal cost of production

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Solid Demand
Fundamentals
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65 million
K+S
tonnes 63 million
Bethune
tonnes
Producer
Discipline
Returning
5.9 million 1.9 million
tonnes tonnes
2015 2016 Closures and 2017 2017 Potential
Production Supply Operating Consensus Under
Capability Reductions Capability Demand Supply
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We have seen the start of a recovery for potash prices

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Source: Argus FMB, PotashCorp, Company websites and releases

11. Value Proposition - Highfield Low capex, low risk, high margin potash development

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Lowest capital cost to
Low Capital Cost Outstanding production
Investment
Metrics
Bottom quartile delivered
High Margin
cost to customer
Lower Technical
Strong funding interest Risk Compelling Over A$65 million in
and optionality Investment
cash
Value
Muga NPV10 – US$1.46bn
Outstanding
Investment
Metrics First world jurisdiction
Lower Risk
Clear path to export
Low Geopolitical
markets
Risk
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12. Summary

• Outstanding portfolio of projects with Muga the flagship

• Low capital cost to production

• Lowest quartile delivered cash cost to customer at full capacity

• At full capacity, NPV10 – US$1.46 billion

• Experienced team of mine builders and operators

• Peter Albert has over 30 years’ experience in building and operating mines globally

• Jim Dietz (NED) was COO of PotashCorp for more than 10 years

• Well funded

  • Over A$65 million in the bank

• Supportive project finance syndicate with credit approvals previously received for facility to support construction

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Logo of the Company’s core values acronym CREA

• Advancing environmental and then development permits to commence construction

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REGISTERED OFFICE

169 Fullarton Road Dulwich SA 5065 Australia

HEAD OFFICE

Avenida Carlos III, 13-15, 1B, 31002 Pamplona, Spain T +34 948 050 577 | F +34 948 050 578

FURTHER INFORMATION

Peter Albert Managing Director T +34 628 590 109 Hayden Locke Corporate Development T +34 609 811 257

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