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HIGHFIELD RESOURCES LIMITED Capital/Financing Update 2014

Aug 3, 2014

65048_rns_2014-08-03_58bbbc32-060d-404b-bd86-9ed17dd8898f.pdf

Capital/Financing Update

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ASX Release 4 August 2014

MUGA POTASH PROJECT DELIVERS SUBSTANTIAL UPSIDE INTO SHALLOW PREVIOUSLY UNEXPLORED PROJECT AREA

Highlights

  • Shallow potash mineralisation intersected in three drill holes outside of current JORC Measured and Indicated Mineral Resource estimate including:

  • J13-07 – 1.8m at 12.8% K2O (20.2% KCl) from 285.7m and 1.2m at 13.1% K2O (20.7% KCl) from 288.4m

  • J13-08 – 4.5m at 12.0% K2O (19.0% KCl) from 239.9m and 1.2m at 16.6% K2O (26.3% KCl) from 245m

  • J13-10 – 1.8m at 16.1% K2O (25.6% KCl) from 240.1m and 0.9m at 14.3% K2O (22.6% KCl) from 252.4m

  • Upgraded JORC Measured and Indicated Mineral Resource being prepared to include extensions to mineralisation outside of current Mineral Resource

  • New drill holes identifying strong shallow mineralisation expected to enhance DFS mine plan and life

  • Ten infill drill hole program commenced

Spanish potash developer Highfield Resources (HFR:ASX) (the “Company”) is pleased to announce additional exploration results from its initial Muga-Vipasca Project area drill campaign.

The Muga-Vipasca Project (formerly the Javier-Vipasca Project, refer ASX News Release-Javier Potash Project Divided Into Two Potash Projects – 29 July 2014) area includes two 100% owned potash projects located in Spain´s potash producing Ebro Basin. The Project area covers over 110 km2 and encompasses the Javier Basin that is defined by the Muga and Vipasca leases.

Managing Director Anthony Hall commented:

The extension of potash mineralisation into the shallow south eastern area of the Muga Project is great news for our initial mine target as it provides additional shallow options for the commencement of mining and the decline access.

The extent of mineralisation is also likely to provide a longer mine life than projected in the PFS – and this is before we consider upside from projects at Vipasca and Pintano that abut the Muga Project area.

Highfield Resources Ltd. ACN 153 918 257 ASX: HFR

Registered Office C/– HLB Mann Judd 169 Fullarton Road Dulwich, SA 5065 Australia

Head Office Calle Navas de Tolosa, 5 - 1°B, 31002 Pamplona, Spain

Directors Company Secretary Derek Carter Donald Stephens Richard Crookes Anthony Hall Owen Hegarty Pedro Rodriguez

Issued Capital 155.825 million shares 103 million performance shares 23.3 million options

–––––––––––––––––– –––––––––––––––––– Tel: +61 8 8133 5098 Tel: +34 948 050 577 Fax: +61 8 8431 3502 Fax: +34 948 050 578

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Drilling Results

The Company has recently completed the final drill holes of its initial planned drilling campaign in the MugaVipasca Project area. Drill holes J13-01, J13-07, J13-08, J13-10 and J13-11 were designed to test the extent of mineralisation along strike into the south eastern section of the Project area (Figure 1). With the exception of J1311, the mineralisation showed very positive extension into the shallow south eastern section.

J13-10 that intersected sylvinite mineralisation starting at depths from surface of less than 240m, including 1.8m at 16.1% K2O (25.6% KCl) from 240m and 0.9m at 14.3% K2O (22.6% KCl) from 252m.

J13-08 in the central western part of the Javier Basin intersected 13.2m of mixed sylvinite and carnallite mineralisation starting at depths from surface of 235.1m. The 13.2m included 4.5m at 12.0% K2O (19.0% KCl) from 239.0m and 1.2m at 16.6% K2O (26.3% KCl) from 245m. The carnallite mineralisation appeared restricted to the A Bed.

J13-07 intersected 5.1m of sylvinite mineralisation starting at depths from surface of 281.8m. The 5.1m included 1.8m at 12.8% K2O (20.2% KCl) from 285.7m and 1.2m at 13.1% K2O (20.7% KCl) from 287.2m.

J13-01 intersected 0.9m of sylvinite mineralisation starting at depths from surface of 285.6m. J13-11 did not intersect potash mineralisation and has served to define the extent of mineralisation between the Muga and Pintano Projects.

J13-04 was designed to test the historical Undues de Lerda drill hole. Consistent with the Undues de Lerda drill hole, J13-04 only intersected a thin upper salt above the thick lower evaporite layer. J13-11 also lacked potash mineralisation, possibly due to a depositional or structural high as suggested in the regional seismic approaching the saddle area that divides the Javier Basin from Pintano.

Upgraded JORC Mineral Resource Estimate

The Company´s independent resource and engineering consultants, Agapito Associates Inc., are currently preparing an upgraded JORC Mineral Resource estimate utilising the information obtained from the recently completed drill holes. This Resource estimate is expected to be completed on receipt of results from the second phase of drilling in the current Quarter.

The Company believes the upgraded JORC Mineral Resource estimate and the drilling campaign demonstrating strong shallow mineralisation into the south eastern section of the Muga-Vipasca Project area along strike will serve to enhance the mine plan and life. The DFS that is currently being completed is expected to benefit from this.

Infill Drill and Resource Extension Program

The Company and Agapito Associates have recently developed an infill and resource extension drill program that has been designed to provide sufficient information for mine planning purposes for the proposed Muga mine. This ten drill hole program has commenced and is targeted for completion in September 2014. Upon completion there will 34 holes in the Muga-Vipasca Project, primarily in the Muga Potash Project area.

For more information:

Mr Anthony Hall Managing Director Ph: +34 617 872 100

Mr Simon Hinsley Investor Relations Ph: +61 401 809 653

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Figure 1: Muga-Vipasca Project area showing current JORC Mineral Resource estimate, potash exploration drill holes and seismic lines

Competent Persons’ Statement

This ASX release was prepared by Mr. Anthony Hall, Managing Director of Highfield Resources. The information in this release that relates to Mineral Resources and Exploration Results is based on information prepared by Mr. Leo J. Gilbride, P.Eng. and Ms. Vanessa Santos, P.Geo. of Agapito Associates, Inc. (AAI) of Colorado, United States of America (USA). Mr. Gilbride is a licensed professional engineer in the State of Colorado, USA and is a registered member of the Society of Mining, Metallurgy and Exploration, Inc. (SME). Ms. Santos is a licensed professional geologist in South Carolina and Georgia, USA, and is a registered member of the SME. SME is a Joint Ore Reserves Committee (JORC) Code ‘Recognized Professional Organization’ (RPO). An RPO is an accredited organization to which the Competent Person (CP) under JORC Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, or Ore Reserves through the ASX. Mr. Gilbride is a Principal and Ms. Santos is the Chief Geologist with AAI and both have 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 a CP as defined in the 2012 Edition of the JORC Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr. Gilbride and Ms. Santos consent to the inclusion in the release of the matters based on their information in the form and context in which it appears.

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About Highfield Resources

Highfield Resources is an ASX-Listed potash company with four 100%-owned projects located in Spain (Figure 2).

The Company’s Javier, Pintano (Figure 3) and Sierra del Perdón potash projects are located in the Ebro potash producing basin in Northern Spain covering a project area of nearly 400km[2] . The Sierra del Perdón project includes two former operating mines. The Company has completed a PFS for its Muga (formerly Javier) Project and is currently working towards completing a DFS by the end of the 2014 Calendar Year.

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Figure 2: Location of Highfield´s Muga-Vipasca, Pintano, and Sierra del Perdón Projects in Northern Spain

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Figure 3: Pintano Project area showing current JORC Mineral Resource estimate, potash exploration drill holes and seismic lines

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New Drill Hole Assay Results for Muga-Vipasca Project Area

Table 1: Summary of J13-01 Assay Results – Selected Intervals

DDH J13-01 POTASH GRADES (ICP analysis)

K2O(%) MgO(%) Na2O(%) Cl(%) SO4(%) CaO(%) Water
Insolubles
From 285.60
to
286.50
Thickness: 0.9 m
CAPA"B"		 Average
max. Value
min. Value		 8.69
10.00
7.54		 1.49
2.92
0.23		 30.20
31.68
29.39		 46.97
50.50
44.50		 3.59
5.03
2.52		 2.25
3.02
1.64		 16.14
22.11
11.42

Notes:

  1. Max = maximum, Min = minimum

  2. ALS conducted assay using inductively coupled plasma (ICP) method. Samples were processed by ALS Sevilla, Camas, Spain and analysed by ALS Loughrea, Galway, Ireland

  3. Intervals are cored intervals (versus true thickness intervals).

  4. Composite grades calculated as length-weighted averages

Table 2: Summary of J13-07 Assay Results – Selected Intervals

DDH J13-07 POTASH GRADES (ICP analysis)

K2O(%) MgO(%) Na2O(%) Cl(%) SO4(%) CaO(%) Water
Insolubles
From 281.80
to
283.3
Thickness: 1.5 m
CAPA"CERO"		 Average
max. Value
min. Value		 5.46
14.76
0.92		 1.15
2.09
0.33		 24.98
29.93
21.03		 39.38
43.20
36.30		 2.88
5.51
2.55		 2.22
2.60
1.92		 32.52
39.43
24.63
From 285.70
to
287.50
Thickness: 1.8 m
CAPA"A"		 Average
max. Value
min. Value		 12.78
18.55
6.35		 0.21
0.38
0.13		 28.21
38.28
24.26		 45.38
54.30
40.50		 5.31
6.83
3.60		 3.17
4.04
2.21		 20.49
26.47
11.54
From 288.40
to
289.60
Thickness: 1.2 m
CAPA"B"		 Average
max. Value
min. Value		 13.08
16.02
10.88		 0.08
0.10
0.03		 33.40
37.88
28.31		 49.83
57.90
43.60		 4.55
6.32
3.27		 2.63
3.69
1.75		 18.18
18.18
0.22
From 284.50
to
289.60
Thickness: 5.1 m
Potash interval		 Average
max. Value
min. Value		 9.29
18.55
1.01		 0.36
3.20
0.03		 30.71
38.42
23.59		 46.73
57.90
40.50		 4.98
8.15
2.61		 3.01
4.85
1.75		 17.69
27.89
0.22

Notes:

  1. Max = maximum, Min = minimum

  2. ALS conducted assay using inductively coupled plasma (ICP) method. Samples were processed by ALS Sevilla, Camas, Spain and analysed by ALS Loughrea, Galway, Ireland

  3. Intervals are cored intervals (versus true thickness intervals).

  4. Composite grades calculated as length-weighted averages

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Table 3: Summary of J13-08 Assay Results – Selected Intervals

DDH J13-08 POTASH GRADES (ICP analysis)

K2O(%) MgO(%) Na2O(%) Cl(%) SO4(%) CaO(%) Water
Insolubles
From
235.1
to
237.5
Thickness: 2.4 m
CAPA"CERO"		 Average
max. Value
min. Value		 4.75
9.78
0.65		 0.52
0.78
0.30		 25.28
28.58
21.43		 36.65
41.10
32.50		 3.43
4.67
2.73		 2.79
3.50
2.39		 34.76
41.50
26.75
From 239.90
to
244.40
Thickness: 4.5 m
CAPA"A"		 Average
max. Value
min. Value		 12.01
15.30
9.70		 4.62
7.48
0.33		 19.99
27.77
14.96		 45.99
50.80
36.90		 4.15
8.42
2.79		 2.68
5.44
1.82		 12.76
21.44
0.69
CAPA "B" From 245.60
to
248.30
Thickness: 2.7 m
Complete CAPA"B"		 Average
max. Value
min. Value		 10.78
25.66
1.43		 0.18
0.25
0.08		 29.63
41.79
21.30		 47.33
54.40
40.70		 6.73
8.48
4.31		 4.08
5.18
2.67		 14.96
22.52
8.63
From 245.60
to
246.80
Thickness: 1.2 m
High grade interval
Including 60 cm		 Average
max. Value
min. Value
Average		 16.61
25.66
7.85
22.80		 0.19
0.25
0.12
0.17		 25.73
30.33
21.30
22.01		 46.38
53.80
41.10
42.80		 6.24
7.37
4.31
5.21		 3.83
4.52
2.67
3.21		 14.66
18.89
8.63
18.51
From 235.10
to
248.30
Thickness: 13.2 m
Complete potash interval		 Average
max. Value
min. Value		 8.48
25.66
0.65		 1.94
7.48
0.08		 25.30
41.79
14.96		 43.08
54.40
32.50		 4.45
8.48
2.70		 3.01
5.44
1.82		 20.75
42.37
0.69
Notes:

  1. Max = maximum, Min = minimum 2. ALS conducted assay using inductively coupled plasma (ICP) method. Samples were processed by ALS Sevilla, Camas, Spain and analysed by ALS Loughrea, Galway, Ireland 3. Intervals are cored intervals (versus true thickness intervals).

  2. Composite grades calculated as length-weighted averages

Table 4: Summary of J13-10 Assay Results – Selected Intervals

DDH J13-10 POTASH GRADES (ICP analysis)

K2O(%) MgO(%) Na2O(%) Cl(%) SO4(%) CaO(%) Water
Insolubles
"A" From
239.8
to
244
Thickness: 4.2 m
Complete interval		 Average
max. Value
min. Value		 10.73
22.29
4.43		 0.23
0.61
0.07		 28.57
36.80
21.70		 42.17
50.00
36.10		 4.17
6.02
2.88		 2.70
3.75
1.93		 17.74
23.62
9.70
CAPA From 240.40
to
242.20
Thickness: 1.8 m
selected interval		 Average
max. Value
min. Value		 16.14
22.29
9.46		 0.30
0.61
0.17		 25.38
28.58
21.70		 42.11
49.40
36.60		 3.62
4.97
2.88		 2.42
3.16
1.93		 18.16
23.01
10.06
From 252.10
to
260.80
Thickness: 8.7 m
Complete interval		 Average
max. Value
min. Value		 8.61
17.95
1.29		 0.22
0.51
0.08		 33.15
43.27
23.79		 45.92
54.70
37.70		 5.54
8.90
2.94		 3.05
5.41
1.32		 12.95
23.61
3.87
CAPA "B" From 252.40
to
253.30
Thickness: 0.9 m
upper selected interval		 Average
max. Value
min. Value		 14.29
17.95
9.93		 0.15
0.38
0.08		 31.95
37.20
23.79		 45.68
52.00
38.90		 5.18
6.80
3.75		 2.96
4.03
1.39		 11.95
17.91
4.53
From 259.00
to
260.80
Thickness: 1.8 m
lower selected interval		 Average
max. Value
min. Value		 10.29
15.96
3.23		 0.19
0.25
0.15		 31.05
34.37
28.44		 44.33
54.60
37.70		 5.84
8.90
2.94		 3.44
5.41
1.32		 15.42
22.80
5.95
Notes:

  1. Max = maximum, Min = minimum

  2. ALS conducted assay using inductively coupled plasma (ICP) method. Samples were processed by ALS Sevilla, Camas, Spain and analysed by ALS Loughrea, Galway, Ireland 3. Intervals are cored intervals (versus true thickness intervals).

  3. Composite grades calculated as length-weighted averages

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Appendix

Explanatory Notes to the Exploration Results for the Muga-Vipasca and Pintano Potash Projects

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Property Description

The project area is located in the northern portion of Spain within the Ebro Basin and is situated within the Navarra and Aragón provinces of Spain. The project area is divided into two sub-basins, Javier Basin (as defined here by the Muga and Vipasca leases) and the Pintano Basin, which are separated by an elevated saddle area. The MugaVipasca area occupies the western extent of the property, and the Pintano area is along the eastern extent (Figure 3).

Tenure and Surface Rights

Spanish mining permits are split into three categories: Exploration Permit (PE), Investigation Permit (PI), and Mining Concession. A PE is for desktop studies and lasts for a period of 1 year (it may be rolled over once). A PI is necessary for drilling, allows for the sinking of shafts and driving of declines and lasts for a period of 3 years (it may also be rolled over for multiple three-year periods). For a PI to be granted, an environmental review must be completed by the relevant government. A Mining Concession is for mineral extraction and lasts for periods of 30 years (it may be rolled over two times).

In addition to the above, if a permit sits in two provinces, it must be formally issued by the Central Government in Madrid under Article 71.3 of the Spanish Mining Code.

The Muga-Vipasca property comprises four main permits and two extension permits (Figure 2): Goyo, Fronterizo, Muga, and Vipasca. Goyo and Muga are granted PIs in Navarra. Fronterizo straddles the Navarra and Aragón border and was granted 5 February 2014. Three permits are pending. Vipasca was filed at the end of 2013, and it is not expected to be approved for the upcoming resource estimate. The Goyo Sur PI and Muga Sur PI are new applications. The CPs have reviewed the mineral tenure from documents provided by Highfield Resources (Highfield) (the “Company”) including permitting requirements, but have not independently verified the permitting status, legal status, ownership of the project area, underlying property agreements or permits.

The Pintano property comprises three PI and one PE permits (Figure 3): Molineras 10 (PI), Molineras 20 (PI), and Puntarrón (PI), and Puntarrón (PE). Puntarrón (PI) is pending. The Molineras 20 is under application and pending approval in 2014. For the existing Puntarrón (PE), Highfield has applied for a rollover to extend the exploration period an additional one year. Highfield is relied upon by the CPs for tenure status.

Geology

The Upper Eocene potash deposits occur in the sub-basins of Navarra and Aragón provinces within the larger Ebro Basin (Figure A-1). The Navarrese sub-basin includes the Muga-Vipasca (Javier) and adjoining Pintano deposits. This potash deposit contains a 100-meter (m)-thick Upper Eocene succession of alternating claystone and evaporites (anhydrite, halite, and sylvite). The evaporites accumulated in the elongated basin at the southern foreland of the Pyrenean range (Busson and Schreiber 1997). The evaporites overlie marine deposits and conclude in a transitional marine to non-marine environment with terrigenous influence. Open marine conditions existed in the Eocene-Oligocene epochs progressing to a more restricted environment dominated by evaporation and the deposition of marl, gypsum, halite, and potassium minerals. Later, tectonism and resulting salt deformations formed broad anticlines, synclines and overturned beds, which created outcrops of the evaporite sequence. The possibility exists that basement-related faulting has resulted in repeated (or overturned) mineralised beds.

Two fault systems dominate and bound the Javier Basin, to the north by the extension of the thrusting Loiti Fault and to the south by the Magdalena Fault, both resulting in the cropping out of the evaporite units (Figure A-2). The Basin axis is defined by the Javier-Undues Syncline. To the east, the Basin climbs to the Flexura de Ruesta, a northwest-southeast offset block contemporaneous with evaporite deformation that resulted in a higher saddle area between the Javier-Vipasca and Pintano sub-basins. Approximately vertical faults parallel to the west of the Flexura de Ruesta have been defined by two-dimensional (2D) seismic surveys (Empresa Nacional

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Figure A-1. Regional Geology of the Ebro and Jaca-Pamplona Basins (from University of Michigan 2004)

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Figure A-2. Muga-Vipasca Project Regional Structure and Drill Hole Locations

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Adaro Investigaciones Mineras [e.n. adaro] 1988–1991). Basin continuity to the west-northwest has not been welldefined by drilling programs or seismic surveys so far, but surface expression shows the evaporite outcrop as offset approximate to the Aragón River. Field investigation has shown an overthrust of much younger rocks, but generally lower angle structure than suggested by the offset.

The depositional environment is that of a restricted marine basin, influenced by eustasy, sea floor subsidence, and/or uplift and sediment input. It is suggested that the Basin is a combination of reflux and drawdown. Reflux represents a basin isolated from open marine conditions thereby characterised by restricted inflow, increased density, and increased salinity. Drawdown is simple evaporation in an isolated basin resulting in brine concentration and precipitation, consistent with the classic “bulls-eye” model (Garrett 1996). In this case, the Basin is further influenced by erosion at the basin edges due to contemporaneous and post-depositional uplift resulting in localised shallowing and sediment influx (Ortiz and Cabo 1981).

In the classic “bulls-eye” model, a basin that is cut off from open marine conditions will experience drawdown by evaporation in an arid to semi-arid environment. In the absence of sediment influx, precipitation will proceed from limestone to dolomite to gypsum and anhydrite to halite. Depending on the composition and influences of the brine at that time, the remaining potassium, magnesium, sulfates, and chlorides will progress from potassium and magnesium sulfates to sylvite and then carnallite. It is proposed herein that the formation of carnallite and sylvite be described as primary and secondary, respectively.

Potash is used to describe any number of potassium salts. By and large, the predominant economic potash is sylvite: potassium chloride (KCl) usually occurring mixed with halite to form the rock sylvinite which may have a potassium oxide (K2O) content of up to 63%. Carnallite, a potassium magnesium chloride (KCl•MgCl2•6H2O) is also abundant, but has K2O content only as high as 17%. “Carnallite” is used to refer to the mineral and the rock interchangeably, although “carnallitite” is the more correct terminology for the carnallite and halite mixture. Besides being a source of lower grade potassium, carnallite involves a more complex production process, so it is less economically attractive than is sylvite.

The regional stratigraphy is dominated by open and restricted marine conditions (Figure A-3). Evaporitic sedimentation (Guendulain Formation) directly overlies the fine marine offshore sediments (Pamplona Marls) (Ortiz and Cabo 1981; Orti et al. 1984). Both drill hole data and outcrop observations assign an average thickness of about 150m to the saline formation, which displays the following sequence from bottom to top:

  • a) Basal sulfate member (basal anhydrite).

  • b) Lower salt member (sal de muro or “bottom salt”), medium to very coarse recrystallised halite, medium grey to black and lower part may be brown and sandy as described below.

  • c) Multiple sylvinitic beds lower member and a carnallitic upper member. The potash is characterised as fine to coarse granularity, typically light to medium orange-red in colour, of crystalline structure with high insolubles and interbedded halite. The upper unit exhibits brecciated structure suggesting recrystallisation after carnallite formation. Carnallite formation is limited in the Muga-Vipasca Project area and more commonly occurring in the Sierra del Perdón Project area.

  • d) Upper saline member (sales de techo or “top salts”), alternating halite and clay layers, some of which exhibit deformation.

  • e) Top marl member (margas fajeadas or “banded marls”) with intercalated anhydrite layers.

Overlying the salt is a siliciclastic detrital unit, made up of the Oligocene Galar Sandstone, Javier-Pintano hard layers, the Oligocene-Miocene Rocaforte Formation and, locally, the Igaza Conglomerates (Uncastillo Formation). This unit is capped by Quaternary and Oligocene sediments. The Quaternary is made up of alluvium, glacial till and debris (Orti et al. 1986).

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Figure A-3. Regional Stratigraphy of the Ebro Basin

These units have been simplified in the geologic modelling database as:

  • Unidad del Oligoceno (UO) for Lutitas y Limolitas

  • Unidad Detritica (UD) for Areniscas de Galar / Belsúe and (MF) as Margas Fajeadas (MF)

  • Unidad Evaporitica (UE) for Sales de Techo (ST) and Sal Muro (SM) or Sal (S)

In the Muga-Vipasca Project area, the mineralogy is dominated by sylvinite, which is medium red-orange and white, largely coarse crystalline in bands and in heavily brecciated beds containing high levels of insoluble material,

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largely fine-grained clays, anhydrite, and marl. The upper potash beds transition to finely banded light brown marls and clays. The salts just below the potash tend to dark grey to black. In some lower beds, halite becomes brownish, sandy to coarsely granular sand and sandstone as sediment influx from the Basin edges. In portions of the halite beds, sediment influx from the Basin edges is seen as sandy to coarsely granular sands and sandstones. The lower salt is banded, exhibits very large cubic crystals and, in some cases, high angles and folding indicative of recrystallisation and structural deformation. The literature denotes this salt as the “sal vieja” or “old salt” (Ortiz and Cabo 1981). The evaporite beds and bands, in general, are separated by fine to very coarse crystallised and recrystallised salts, generally grey, sometimes light-to-medium honey brown or white, with anhydrite blebs, nodules, and clasts.

Exploration and Methodology

Extensive exploration was carried out originally by Potasas de Subiza, S.A. (POSUSA) through 1987 and later by e.n. adaro (1989–1991) in the late 1980s and early 1990s. e.n. adaro, the state-owned group tasked with exploration and development of Spain’s mineral resources, produced detailed reports and “reserve” studies of the Muga-Vipasca and Pintano areas. The drilling program completed in 1989–1990 was outlined in detail in reports that are referenced herein.

Muga-Vipasca Property

Potash mineralisation occurs in five principal sylvinite beds (descending 0, A, B, 1 and 2), ranging in depth from approximately 100m to more than 1,000m. The 8 October 2013 maiden Mineral Resource estimate for the MugaVipasca property was independently developed by USA geology and mining consultants AAI based on the results of documented geological studies, 2D seismic analysis, exploration drilling, electric logging (elogs), and chemical analyses on core from exploration holes drilled during the 1980s by POSUSA (1987).

Eleven drill holes were drilled in the 1980s (see Table A-1) (one was drilled to replace an incomplete well), and, in early 1991, detailed lithology logs and assays were completed. Fourteen new holes (see Table A-2) have been drilled and cored since 2013 by Geoalcali Sociedad Limitada (Geoalcali) for a total of 25 holes on the property.

The second phase of drilling in the Muga-Vipasca Project area is ten holes for infill drilling and resource extension. Detailed evaluation of this second phase will be part of the upcoming updated resource estimate. Assays for drill holes J13-01, J13-07, and J13-08, and J13-10 are presented with this press release. No assays for completed drill holes J13-04 or J13-11 will be performed.

The potash beds have been correlated using a combination of assays, core photos, and lithological and geophysical logs. The beds vary in grade and thickness and can be discontinuous. From top to bottom, the principal beds begin with potash “zero” or P0. P0 is newly defined with this drilling program and is typically of a lower grade, averaging less than 6% K2O where present. The bed designated as P0 is a transitional zone generally marked by low-grade orange sylvinite and halite interbedded with light- to medium-grey and thinly bedded clay and marls exhibiting some cross-cutting veining and recrystallisation near the top of salt. In J13-09, P0 is well developed with an approximate 2.7m true thickness (adjusted from apparent dip) averaging 11.7% K2O, based on provisional bed correlations. P0 is of low grade in JP-4.

The main beds are PA and PB, which are generally the thickest, of highest grade, and most continuous across the Basin. PA generally exhibits the highest degree of recrystallisation and brecciation, and is likely the geologic equivalent of the carnallite bed in the Sierra del Perdón Basin to the northwest. PA and PB are typically separated by about 1m or less of halite and, consequently, are treated as a combined single bed (PAB) for correlation purposes. PAB is typically of 9% to 13% K2O grade and has a thickness averaging about 3.6m true thickness where present. Thicknesses in this report are generally reported as true thickness, corrected from measured thickness.

Page 13 of 38

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Table A-1. Muga-Vipasca Historic Drill Holes

Drill Hole
ID		 Easting
(m)
Northing
(m)
Elevation MSL
(m)

Date of
Drilling
Campaign
Total
Depth
(m)
Coordinates ETRS89*
Javier-2
Javier-3
JP-1
JP-2
JP-3
JP-3D (re-drill)
JP-4
Las Nogueras (NGR)
Molinar (MLN)
Undues Lerda (UDL)
La Vistana(VST)		 646902
4715320
506
896
pre-1987
647567
4717718
500
592
pre-1987
648035
4717117
475
731
1989-1990
648825
4716665
515
556
1989-1990
649528
4716734
574
455
1989-1990
649528
4716734
574
455
1991
649826
4715223
539
466
1989-1990
650403
4715811
605
402
pre-1987
648698
4714996
520
771
pre-1987
649905
4714120
622
616
pre-1987
649347
4716428
537
466
pre-1987

Note: ETRS89 = European Terrestrial Reference System 1989; MSL = mean sea level. *Pre-1987 drill-hole locations could not be relocated and are taken from maps.

Table A-2. Highfield Resources Muga-Vipasca 2013–2014 Drilling Campaign

Drill Hole
ID
Start
Date
End
Date		 Easting
(m)
Northing
(m)
Elevation MSL
(m)
Investigation
Permit
Coordinates ETRS89
Total
Depth
(m)
J13-01
1-May-14
15-May-14
J13-02
13-Mar-14
31-Mar-14
J13-03
5-Aug-13
25-Sep-14
J13-04
30-May-14
8-Jul-14
J13-05
28-Sep-13
6-Nov-13
J13-06
12-Sep-13
9-Oct-13
J13-07
22-Apr-14
6-May-14
J13-08
13-May-14
23-May-14
J13-09
15-Nov-13
12-Dec-13
J13-10
30-May-14
5-Jun-14
J13-11
14-Jun-14
10-Jul-14
J13-12
11-Mar-14
19-Mar-14
J13-13
11-Nov-13
3-Dec-13
J13-14
14-Nov-13
23-Dec-13
J13-15
ND
J13-16
ND
J14-01
ND
J14-02
ND
J14-04
ND
J14-05
ND
J14-07
ND
J14-08
ND
J14-10
ND		 651037
4715317
659
313
P.I. Muga
651271
4716794
752
306
P.I. Fronterizo
648952
4717328
554
421
P.I. Goyo
649629
4714046
624
650
P.I. Muga
648001
4716310
492
893
P.I. Goyo
646435
4717937
444
861
P.I. Goyo
651348
4714113
629
335
P.I. Muga
652948
4715331
855
318
P.I. Muga
647246
4716540
471
1,093
P.I. Goyo
652972
4714581
799
283
P.I. Muga
654064
4714167
885
402
P.I. Muga
649480
4716153
553
482
P.I Muga
646993
4718223
485
756
P.I. Goyo
646972
4715501
515
1,222
P.I. Goyo
647869
4718223
575
P.I. Goyo
645900
4717542
440
P.I. Goyo
648782
4715781
517
PI Fronterizo
651824
4716032
P.I. Muga
652600
4713998
820
P.I. Muga
651762
4714717
720
P.I. Muga
651627
4713310
740
P.I. Muga
653264
4713178
870
P.I. Muga
646635
4716219
530
P.I. Goyo

Note: ND = not drilled. IP = in progress.

Page 14 of 38

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P1 and P2 are generally thinner and more discontinuous than the overlying beds. Grade is variable in both beds and may be as high as 19% (in one 0.5m intercept) but typically averages about 2m thick and 8.7% K2O. P1 or P2 are usually more banded in appearance than PAB and appear to represent earlier potash deposition in a deeper part of the Basin. P2 may exhibit a pink colour with decimated white anhydrite nodules and steep bedding.

The core in most holes exhibits sylvinite bands separated by minor beds and bands of orange salt, which, themselves are bound by larger salt-brecciated bands. High-angle folding is occasionally evident in the core, suggesting variable steep structure and/or local deformation above the brecciated potash beds caused by secondary recrystallisation.

In drill hole J13-08, bed P0 is present over a 2.1m interval interbedded with characteristic light coloured and thinly laminated beds of clays and marls. The bed is separated from the underlying PAB bed by 1.4m of sediment. PAB shows typical dark brecciated mineralisation with minor banding over an interval of approximately 7.8m. Assay results to confirm thickness and grade are pending. J13-08 lies close to the northern Basin edge, but a welldeveloped thickness of PAB suggests the area was a depositional low.

Drill hole J13-01 intersected bed P0 and what is interpreted as the PAB bed. P0 and PAB show considerable thinning at approximately 0.1m and 1.0m thickness, respectively, suggesting a local depositional high.

Exploration drilling results for earlier holes are summarised in Highfield’s 1 May 2014, 12 May 2014 , and 5 June 2014 ASX releases.

Additional lower beds in the depositional center of the Basin may exist, as suggested in the logs from drill holes JP09 and JP13-13, but there is insufficient information to confirm whether these are new beds or repeated beds in the lower salt layers. Potash (and salts) are plastic and mobilise with faulting, folding, and recrystallisation processes. In some cases, faulting is “basement” derived and can produce faulted or thrusted beds which attenuate up geologic sequence through the salt beds. Additional drilling will help to determine the nature of these beds.

J13-01 intersected 0.9m of sylvinite mineralisation starting at depths from 285.6m.

Infill drilling of J13-04 near Undues de Lerda has confirmed the low-grade mineralogy seen in Undues de Lerda. Additional work is necessary to interpret this environment.

J13-07 intersected 5.1m of sylvinite mineralisation starting at depths from surface of 281.8m. The 5.1m included 1.5m at 14.5% K2O from 285.7m and 1.8m at 9.1% K2O from 287.2m. J13-10 intersected sylvinite mineralisation including 1.8m at 15.2% K2O from 240m and 0.9m at 14.3% K2O from 252m.

J13-08 in the central western part of the Basin intersected 13.2m of mixed sylvinite and carnallite mineralisation starting at depths from surface of 235.1m. The 13.2m included 4.5m at 11.6% K2O from 239.0m and 1.2m at 16.6% K2O from 245m. The carnallite mineralisation appeared restricted to the A bed.

Positive mineralisation was reported in J13-10 but not in J13-11. J13-11 is the westernmost hole approaching the saddle area that separates the Muga-Vipasca Project from the Pintano Basin. J13-11 did not intersect potash mineralisation and has served to define the extent of mineralisation between the Muga and Pintano Projects.

Pintano Property

Eight potash exploration holes were drilled (one was drilled to replace an incomplete well) on the Pintano property (Figure 3) between the 1980s and 1991 (see Table A-3) by POSUSA (1987) and e.n. adaro (1989–1991). P13-01 is the first modern hole drilled on the Pintano property (Table A-4). The lithologies are similar to

Page 15 of 38

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Table A-3. Pintano Historic Drill Holes

Drill Hole
ID		 Easting
(m)
Northing
(m)
Elevation MSL
(m)

Coordinates ETRS89
Total
Depth
(m)
Date of
Drilling
Campaign*
PP-1
PP-2
PP-2B (re-drill)
PP-3
PINTANO-1
PINTANO-2
PINTANO-3
MAGDALENA		 656008
4713006
768
381
1989
659016
4711519
684
550
1990
659016
4711519
684
550
1990
660723
4710642
632
871
1990
659920
4711165
660
694
pre-1987
662324
4713579
750
700
pre-1987
660259
4713154
635
670
pre-1987
658223
4710282
800
381
pre-1987

Note: ETRS89 = European Terrestrial Reference System 1989; MSL = mean sea level. *Pre-1987 drill-hole locations could not be relocated and are taken from maps.

Table A-4. Highfield Resources Pintano 2014 Drilling Campaign

Drill Hole
ID
Start
Date
End
Date		 Easting
(m)
Northing
(m)
Elevation MSL
(m)

Coordinates ETRS89
Total
Depth
(m)
Investigation
Permit
P13-01
9-Apr-14
8-May-14
P13-02
5-May-14
IC
P13-03
ND
P13-04
ND
P13-05
ND
P13-06
ND
P13-07
ND
P13-08
ND		 659872
4711004
644
714
P.I. Molineras 10
662183
4710758
732
IC
P.I. Molineras 10
661333
4712596
P.I. Molineras 10
660222
4709702
P.I. Molineras 10
663158
4710346
P.I. Molineras 20
658456
4711796
P.I. Molineras 10
663156
4711876
P.I. Molineras 20
663188
4709099
P.I. Molineras 20

Note: ND = not drilled. IP = in progress. IC=Incomplete

those in Muga-Vipasca and the potash beds are correlatable to beds in Muga-Vipasca, including an 8.9m mineralised zone (depth 640m) selected for assay. Additional intervals have been selected for assay, and confirmation of correlations is in process. P13-02 is incomplete and will be kicked-off or redrilled.

Potash mineralisation occurs in the same stratigraphic sequence described for the Muga-Vipasca property. The 20 November 2013 maiden Inferred Mineral Resource estimate for the Pintano property was independently developed by AAI based on the historical data produced by POSUSA (1987) and e.n. adaro (1989–1991).

Seismic Surveys and Structure

A 2D high-resolution seismic survey was run for POSUSA in August–October 1988 by Compagnie Generale de Geophysique (CGG) over the Muga-Vipasca property. This consisted of 9 lines totalling 55 kilometers (km). An additional 2D seismic survey was performed at an (unknown) later date, increasing the total available seismic survey data to 16 lines covering the majority of the Muga-Vipasca and Pintano properties, totalling 87.3km (RPS Energy Canada Limited [RPS] 2013). The resulting structure maps for both the top ( techo ) and bottom ( muro ) of salt (Figure A-4) were developed by CGG in combination with the regional seismic, field maps, satellite imagery and drill hole data.

Page 16 of 38

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Figure A-4. Seismic Detected Faults on Top and Bottom of Salt (after CGG)

RPS (formerly RPS Boyd Petrosearch) of Calgary, Alberta, Canada completed a re-interpretation in 2013 of the 2D historical seismic lines and profiles on behalf of Highfield. The re-interpretation program was designed to review the overall accuracy of the historical data in terms of good correlation to drill hole data and geological intersections, as well as identify any sub-surface structures that may adversely affect the salt-bearing strata. A total of 16 seismic survey lines were reviewed and were tied to wells with historical wireline data. The paper copies of the seismic profiles were digitized as the original tapes were unavailable. RPS interpreted that there is no indication of widespread salt removal due to faulting or dissolution. Deep structural features are noted across the Muga and Pintano Project areas, but only poor quality seismic data exist over these features.

The CPs used these structural data, but upon their review concluded they had more confidence in the original interpreted seismic structure map produced by CGG, which provided more complete detail.

Two surfaces are defined in the current geologic/computer model: 1) the base of the salt and 2) top of the Pamplona Marls. The potash-bearing zones lack any velocity/density contrasts within the salt, so it is not possible to detect potash or map the structure of the zone directly. Seismic interpretation does not extend to the northwest part of the Basin.

For the Muga-Vipasca Project area, depositional basin bounds are defined to the west at the east-southeast/northnorthwest trending Rocaforte Syncline near the margin of the Aragón River. Associated with this syncline is the Sierra de Leyre anticlinal structure that overthrusts the Pamplona Marls Formation. This thrust and two reverse faults run approximately east-west. The first fault is within the Pamplona Marls over Yesa turbidites and the second which makes the Yesa turbidites coincident with the Liedena Sandstone.

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Along the south of the Muga-Vipasca property, the basin is bound by the La Magdalena Anticline and Fault, characterised by beds steepening to periclinal structure at the crest and then to overturned beds resulting from thrusting to the east, exhibited at the surface in sandstones of the Muga-Vipasca Formation. The Magdalena anticline is sub-parallel to the Javier-Undues Syncline in the western portion of the basin with gentle dipping on the northern flank; the southern flank dips increasingly to vertical and is overturned from Undues de Lerda to the Flexura de Ruesta. The Flexure is marked by a series of bounding normal and transverse faults to define the eastern basin edge as it climbs to a saddle area between the Muga-Vipasca and Pintano Basins. The Pintano Syncline trends in the east-west direction for about 20km and can be considered the continuation of the Javier eastern syncline.

The northern part of the Muga-Vipasca Basin is defined by the extension of the Loiti Fault which also corresponds to the synsedimentary line between marine sediments within the basin to the Eocene-Oligocene continental sediments at the thrust front, resulting in cropping out of the evaporites.

The first deposits in the region, occurring at the end of the Cretaceous period, were characterised by a regressive period with reddish continental deposits. The Eocene is marked by the beginning of tectonic compression, causing formation of subsiding basins parallel to the Pyrenees Mountains with emersion and erosion in some parts.

The different basins are separated by orogenic events developing in the north and south as turbidite basin carbonate platforms. Towards the end of the Eocene epoch, the sedimentation axis migrated south to the JacaPamplona Basin, on which the Oligocene materials were deposited. The pre-evaporitic basin sedimentation occurs in a context of continuous tectonic compression during the Eocene and Oligocene epochs, as synsedimentary tectonics of the end of the orogeny, with pronounced sediment influx. The influence of the turbidites towards the end of the Eocene epoch in the Bartoniense series, are sourced from the east initially into the Pintano Basin and contained by the Flexura de Ruesta and then from the northwest into the basin as the Belsue Formation, indicative of continued subsidence.

The formation of the evaporites is further influenced by the basin restriction, and paleo highs and lows which are perhaps defined by block faulting as well as the main structural basin bounds.

A detailed interpretation of structure is in progress for the Pintano property.

Quality Control and Data Confirmation

The 2013–2014 drilling program has been operated by Highfield personnel. Details of the sampling techniques and oversight of the quality control program are summarised in Table A-5.

The CPs reviewed the available historical geophysical logs to compare estimated K2O from natural gamma and/or spectral gamma logs versus the assayed values. Comparisons show good agreement, indicating that gamma can be a good indirect measure of K2O content.

Highfield and ALS Global (ALS), the primary contract laboratory, maintained quality control procedures of standards, duplicates, and blanks. Highfield made multiple Standard or Certified Reference Material-type (SRM or CRM) samples representing low-, medium-, and high-grade (LG, MG, HG) potassium material, but the insertion rate is insufficient to determine repeatability and calibration of the target instrumentation. SRM samples, blanks, and duplicates were inserted, both by Highfield personnel during sample preparation and by ALS as part of their own quality assurance/quality control (QA/QC) program. ALS inserted commercial standards BCR-113 and BCR114, both potash fertilizer materials, muriate of potash (MOP) and sulfate of potash (SOP), respectively, as well as their own internal standard, SY-4, a diorite gneiss used as a blank material. The insertion rate is one blank, one SRM, and one laboratory duplicate per 20 samples or batch.

ALS assayed samples both by inductively coupled plasma (ICP) and X-ray fluorescence (XRF). In general, the ICP and XRF techniques show reasonable agreement with the XRF method exhibiting modestly elevated K2O values over the ICP method.

Page 18 of 38

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Duplicates were submitted to ALS, and ICP results show good internal agreement. Check samples were tested at Saskatchewan Research Council Laboratory (SRC). In general, SRC reports K2O values lower than reported by ALS. Because ALS and SRC show good internal agreement, the bias suggests a calibration issue.

Supporting analytical details appear in Highfield’s 1 May 2014 ASX release.

Additional Work

Additional drilling and geological modelling is ongoing to continue to define and expand the resource.

A regional Transient Electromagnetic Sounding (TEM) geophysical program has been completed in the Goyo area to define the continuity of the salt package. International Geophysical Technology, SL (IGT) has prepared a report which is being evaluated for possible expansion of the program to the south and east. Combined with data obtained from the drill holes by Vertical Electrical Soundings (VES), the program is intended to define the regional thickness and extent of the evaporite layer using resistivity. Data resolution may be limited to a depth range of 1000m which would limit the usefulness in the deeper parts of the basin.

References

Busson, G. and B. C. Schreiber (Eds.) (1997). Sedimentary Deposition in Rift and Foreland Basins in France and Spain (Paleogene and Lower Neogene) . Columbia University Press, 480 pp.

e.n. adaro (1988-1991). Investigación y Evaluación de Mineral en el Area de Javier-Los Pintano Memoria, informe para Potasas de Subiza S.A, Departamento de Yacimientos Sedimentarios (internal document).

Garrett, D. E. (1996). Potash Deposits, Processing, Properties and Uses . London: Chapman & Hall.

Geoalcali S.L. (2012). “Navarra-Aragón Basin Potash Deposits Assessment Spain.” Internal document.

Highfield Resources (2013). “Highfield Resources Delivers Maiden Inferred JORC Resource of 163.2 Mt of Sylvinite at Javier.” ASX press release, 08 October, 6 pp.

International Plant Nutrition Institute (2014). Website assessed by V. Santos 5 May, http://www.ipni.net/publication/nss.nsf/0/8FBD66599EAB433F852579AF00741710/$FILE/NSS-03%20Potassi umChloride.pdf.

Joint Ore Reserves Committee (JORC) (2012). “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.” Effective 20 December 2012 and mandatory from 01 December 2013, 44 pp.

Moore, P. (2012, June). “Potash from Iberia.” Retrieved January 2013 from Info Mine: http://www.infomine. com/library/publications/docs/InternationalMining/Moore2012u.pdf.

Ortiz, L. R. and F. R. Cabo (1981). “The Saline (Potash) Formation of the Navarra Basin (Upper Eocene, Spain).” Petrology, Revista del Instituto de Investigaciones Geologicas Diputacion Provincial . Universiad de Barcelona, Voy 35-1981/82 (72–121).

Orti Cabo, F., L. Rosell Ortiz, and J. J. L. y Pueyo Mur (1984). “Cuenca Evapor. (Potásica) Surpir. del Eoc. sup. Aportac. para una Interpr. Deposic. Libro Homenaje a L. Sánchez de la Torre.” Publicaciones de Geología , nº 20. Universitat Autónoma de Barcelona, pp. 209–231.

Orti, F., J. M. Salvany, L. Rosell, J.J. Pueyo, and M. Ingles (1986). “Evaporitas Antiguas (Navarra) y Actuales (Los Monegros) de la Cuenca del Ebro.” Guia de las Excursiones del XI Congreso Español de Sedimentología , Barcelona.POSUSA, (1987). “Recursos Minerales Reservas ‘Javier-Los Pintano’ y ‘Monreal,’ (internal document) .

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RPS Energy Canada Limited (2013). “Javier-Pintano 2D Seismic Project Preliminary Interpretation.” Report prepared for Highfield Resources, January.

Stirrett, T. and K. Mayes (2013). “JORC Mineral Resource Estimate of the Javier-Pintano Project Area, Spain.” Internal report prepared for Highfield Resources Ltd., 25 April.

University of Michigan (2004). “Geologic Map of the Pyrenees.” Website available at http://wwwpersonal.umich.edu /~jmpares/Pyrenees-Trip.html.

Page 20 of 38

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Table A-5. JORC Checklist of Assessment and Reporting Criteria

Section 1 Sampling Techniques and Data

Criteria **JORC ** **Code explanation ** Commentary Commentary
Sampling Nature and quality of sampling (e.g. cut channels, Eleven historic drill holes (see Table A-1) (one was drilled to replace an incomplete
techniques random chips, or specific specialised industry well) were drilled in the 1980s and in early 1991. detailed lithology logs and assays
standard measurement tools appropriate to the on core were completed. Fourteen new holes (see Table A-2) have been drilled,
minerals under investigation, such as down hole cored, and assayed in 2013 and early 2014 by Geoalcali Sociedad Limitada
gamma sondes, or handheld XRF instruments, (Geoalcali) for a total of twenty-five holes on the Muga-Vipasca property. A second
etc.). These examples should not be taken as phase of drilling of ten holes has begun for infill drilling and resource extension to
limiting the broad meaning of sampling. be used in the upcoming resource estimate. Geoalcali is a 100% owned Spanish
Include reference to measures taken to ensure subsidiary of Highfield Limited (Highfield or the “Company”).
sample representivity and the appropriate The historical drilling program resulted in compiled reports which are referenced in
calibration of any measurement tools or systems Appendix—Explanatory Notes to the Exploration Results for the Muga-Vipasca
used. (formerly Javier-Vipasca) Potash Project. The historical programs, in general, were
Aspects of the determination of mineralisation that well-documented.
are Material to the Public Report. The new drill holes have been geologically logged, photographed, and assayed.
In cases where ‘industry standard’ work has been Some of the holes were geophysically logged through the mineralised zone.
done this would be relatively simple (e.g. ‘reverse Following logging and photographing, samples are marked and numbered for
circulation drilling was used to obtain 1 m samples
from which 3 kg was pulverised to produce a 30 g
charge for fire assay’). In other cases more		 assay. Core is sawed with hydraulic oil as the lubricating agent; half core is
retained and shrink-wrapped, and samples to be assayed are bagged and secured
with plastic ties and boxed for shipping to ALS Global (ALS) for crushing, grinding
explanation may be required, such as where there and splitting. Cored samples are assayed by inductively coupled plasma-optical
is coarse gold that has inherent sampling emission spectrometry (ICP-OES) and X-ray fluorescence (XRF) by ALS. Sample
problems. Unusual commodities or mineralisation
types (e.g. submarine nodules) may warrant
disclosure of detailed information.		 preparation is in Seville, Spain and assay work is completed in Loughrea, County
Galway, Ireland. ALS has a documented methodology and quality
assurance/quality control (QA/QC) protocol.
The historical holes contributed to a maiden Joint Ore Reserves Committee
(JORC) Inferred Resource in September 2013 (Stirrett and Mayes 2013). Of the
historical holes, a comparative study to re-assay to test the quality and accuracy of
the historical assays showed moderate agreement. Re-sampling of three
mineralised drill holes was completed by independent advisor North Rim
Exploration Ltd(North Rim). The re-sampled assayresults for J-3,Nogueras

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Criteria **JORC ** **Code explanation ** Commentary Commentary
(NGR), La Vistana (VST) individually showed large degrees of variation from the
historical results, but with an average difference of 3.68% K2O overall. The results
are documented in an internal report to Highfield (Stirrett and Mayes 2013) and
discussed in more detail in the “Quality of Assay” section here. The report is
referenced herein.
Geophysical logs available on four historical holes (JP-1, -2, -3, and -4) were
compared to the assay results to test the validity of those data. The Javier Pintano
Project area is abbreviated as “JP.”
Drilling Drill type (e.g., core, reverse circulation, open-hole
Drilling procedures are unknown from historical Javier holes drilled prior to 1987
techniques hammer, rotary air blast, auger, Bangka, sonic, including drill holes J-2, J-3, VST, NGR, Molinar (MLN), and Undues de Lerda
etc.) and details (e.g., core diameter, triple or (UDR).
standard tube, depth of diamond tails, face-
sampling bit or other type, whether core is
oriented and if so, by what method, etc.).		 The drilling program completed in 1989–1990 was outlined in detail by Empresa
Nacional Adaro Investigaciones Mineras (e.n. adaro 1989–1991). e.n. adaro, the
state-owned group tasked with exploration and development of Spain’s mineral
resources, produced detailed reports and “reserve” studies of the Muga-Vipasca
area.
Historical drilling was completed with the Mayhew 1500 drill rig from June to August
1989. During this time, JP-1 through JP-4 were completed. Holes were drilled
open hole to core point. The tricone bit used for open hole drilling was reduced
through stages from 12 1/4-inch to 5 7/8-inch diameter. Upon completion, the hole
was abandoned and cemented through the 8 1/2-inch diameter drill hole.
Approximately 2,208m were drilled in Javier, not accounting for some re-drilling in
JP-3 and JP-4. For JP-3 and JP-4, the mineralised zone was drilled into and not
cored for assay. Both holes were re-drilled through the salt section to take the
appropriate cores. No record of a re-drilled hole is available for JP-4; two assay
sets were available for JP-3, listed as JP-3 and JP-3D. JP-3D was the re-drilled
hole and was completely cored. Limited deviation data are available for JP-1, JP-2,
JP-3, JP-3D, and JP-4 for the lower half/salt section and were used in the model. If
no deviation surveys were found, then the holes were considered to be vertical.
In 2013, a drilling program was initiated in Javier. In some cases, holes were cored
from surface, and in others, the holes were open holes drilled to the top of salt.
When thetop ofsalt isreached,themudisre-formulatedto a super-saturated brine

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Criteria JORC Code explanation Commentary Commentary
to eliminate or diminish dissolution of the highly soluble evaporite minerals. In the
second phase of the 2014 program, procedural changes have been adapted to
open hole drill and case above the salt and core only beginning in the banded
marls and through the salt. This should decrease the time to complete each hole
and reduce the risk of drilling problems that result in reducing hole diameter and
smaller core diameter. Drilling is contracted to Geonor Servicios Tecnicos S.L. of
Galicia, Spain using a Christensen CS3000 and Forida Golden Bear and Sondeos
y Perforaciones Industriales del Bierzo (SPI) (J13-09, SPRDrill 260). Drilling was
supervised by Highfield geologists.
Drill sample Method of recording and assessing core and chip Detailed information on core recovery for the historical program is not available, but
recovery sample recoveries and results assessed. the assay data are largely complete over the mineralised zones.
Measures taken to maximise sample recovery and
Core recovery on the 2013–2014 drilling campaign averaged greater than 95% in
ensure representative nature of the samples. the mineralised zones although some samples show dissolution due to
Whether a relationship exists between sample
recovery and grade and whether sample bias may
have occurred due to preferential loss/gain of
fine/coarse material.		 undersaturated brine mud. Typically these samples are thought to under-report the
target potassium mineralogy because of the highly soluble nature of those
minerals, but it is also possible that less desirable or deleterious mineralogy (i.e.
MgO) may also under-report in this situation.
Core sampling procedure is well-documented in the 2013–2014 drilling program.
Logging Whether core and chip samples have been Lithology logs were completed for the historical drilling programs. The 1989–1990
geologically and geotechnically logged to a level drilling program included Javier and Pintano wells: JP-1 to JP-4, PP-2/2B, and
of detail to support appropriate Mineral Resource PP-3. The sample intervals were comparable to industry standards (generally <30
estimation, mining studies and metallurgical centimetres [cm]) but the methodology is unknown. Thirty centimetres is typically
studies. used for a maximum sample length for potash in order to assure samples are not
Whether logging is qualitative or quantitative in
nature. Core (or costean, channel, etc.)
photography.		 diluted and confidence in mineralogy is maintained over the interval. Assay
intervals for the unknown (pre-1987) drilling program used a much larger sampling
interval (up to 2.44m) for NGR, VST, and J-3.
The total length and percentage of the relevant
intersections logged.		 In the modern program, cuttings were collected and core was logged,
photographed, sampled, and assayed in approximately 0.3m lengths. Core point, if
not coring from surface, was generally within the banded marls above the salt and
was completed at the base of the salt at the anhydrite marker bed to ensure
complete coring through the salts and the mineralised zones.

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Criteria **JORC ** **Code explanation ** Commentary Commentary
Sub-sampling If core, whether cut or sawn and whether quarter, On the historical holes, grooved samples were taken for assay through the potash
techniques half or all core taken. mineralisation. These samples were produced by sawing a shallow channel into
and sample
preparation		 If non-core, whether riffled, tube sampled, rotary
split, etc. and whether sampled wet or dry.		 the core surfaces. This is not usually considered good practice, but is sometimes
used to keep the core intact. Independent technical advisor North Rim (Stirrett
and Mayes 2013) conducted a re-assay of available holes to test the validity of the

For all sample types, the nature, quality and
appropriateness of the sample preparation
technique.
Quality control procedures adopted for all sub-
sampling stages to maximise representivity of
samples.		 historic data, as discussed below in “Quality of assay data and laboratory tests.”
On the 2013–2014 drilling campaign core holes, samples were halved and
quartered, with a quarter sent for assay. This sampling methodology is the modern
industry standard. The sample intervals of approximately 0.3m in length were
taken over the length of the mineralised interval. Cores were usually PQ (85
millimeter [mm]), but in the case of difficult drilling conditions, coring was reduced
to HQ (63.5mm) as was the case for J13-13 (at 642m depth below the mineralised
Measures taken to ensure that the sampling is zone) and J13-09 (from 484m depth) and J13-06 (at 458m). J13-08 and J13-05
representative of the in situ material collected, were HX cored through the mineralised zone. This smaller core diameter is not
including for instance results for field ideal for assay as some duplicates have shown variability. In all cases, hole size
duplicate/second-half sampling. was reduced to continue drilling in difficult hole conditions (lost circulation or kick-
Whether sample sizes are appropriate to the grain
size of the material being sampled.		 off) and is not part of normal procedure. The program forward has made
procedural changes to reduce the risk of the need to downsize hole diameter.
Quality of The nature, quality and appropriateness of the Geochemical results are available for the 1989–1990 drilling campaign, complete
assay data assaying and laboratory procedures used and with 570 assays. The results were obtained through the internal Potasas de
and laboratory whether the technique is considered partial or Subiza S.A. (POSUSA) lab and were analysed for KCl, MgCl2, NaCl, insolubles,
tests total. and clay. The intervals listed for these samples reflect the thickness of the sample
For geophysical tools, spectrometers, handheld
XRF instruments, etc., the parameters used in
determining the analysis including instrument		 as measured in the drill core; however, true thicknesses for the sample intervals is
outlined in the historical strip logs to account for structural dip of the intervals.
Samples were typically limited to 30cm or less to maintain good sample resolution.
make and model, reading times, calibrations No original assays are available for the pre-1987 drilling program. Results for P-1,
factors applied and their derivation, etc. J-3, VST, and NGR are summarised from the e.n. adaro comprehensive reports
Nature of quality control procedures adopted (e.g.
standards, blanks, duplicates, external laboratory
checks) and whether acceptable levels of		 (e.n. adaro 1989–1991). These drill holes were only analysed for KCl, and
therefore lack results pertaining to MgCl2 (to determine carnallite content) or
insolubles. UDR was not assayed and its mineralisation is reported to be of
“insignificant grade.” In this case, mineralisation was interpreted to be <5% K2O in
thePAB mainbed, asrepresentative of the sampling cutoffat thetime, based ona

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Criteria JORC Code explanation Commentary Commentary
accuracy (i.e. lack of bias) and precision have review of e. n. adaro’s assay results. This will be changed in the forthcoming
been established. resource estimation to reflect the new data from J13-04.
The “grooving” technique on the historical assay sampling was used to minimise
destruction of core and may not be representative. The method of geochemical
analyses used for both the 1989–1990 drilling campaign and the pre-1987 drilling
program is unknown as is the identity of the lab that conducted the geochemical
analyses.
A resampling program was carried out by North Rim (Stirrett and Mayes 2013).
Re-sampling on VST, NGR, and J-3 was carried out at the Litoteca de Sondeos in
Spain, the state-run core lab. North Rim noted that large intervals of core were not
present or missing for both VST and NGR, and thus could not be re-sampled.
North Rim attempted to duplicate the historical sample intervals; their methodology
is described below:
o For the re-sampling of historical core samples, the start and end of each
sample was identified using blue corrugated plastic to ensure the proper
intervals were selected for slabbing. For each sample, a line was drawn
across the top after the core was fit together. Once the sample intervals were
determined, one-quarter of the core was cut for sampling. A hand-held circular
saw with a diamond-tipped blade was used to cut the core. Once the entire
interval was cut, the cut surface was wiped down with a damp cloth to remove
any rock powder generated by cutting. The quarter core was divided into
individual samples by drawing straight lines across the core diameter in
permanent black marker as identified by the blue plastic markers. The
determination of individual samples was based entirely on the historical
sample intervals. No additional sampling was completed. As the samples
were chosen, they were labelled using a numbering scheme that incorporated
both the drill hole number and a sample number (i.e., J3-583RS). An “RS”
was incorporated at the end of the sample to indicate “re-sample.” Each
sample and its corresponding sample tag were placed into a waterproof,
plastic sample bag and stapled to enclose the sample within the bag. Samples
were placed into sturdy cardboard boxes and packed with styrofoam. Shipping
sheetswere completedthat includedwell information, box numbers, sample

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Criteria JORC Code explanation Commentary
numbers, and contact information and accompanied the samples to the
Saskatchewan Research Council (SRC) Laboratories in Saskatoon,
Saskatchewan, Canada.
o In the re-assayed sampling program, the correlation plot between the historical
samples and their re-analysed equivalents has an average difference of 3.68%
K2O overall. The results indicate a general over-estimation of grade within the
historical samples, with 87% of the historical samples having higher K2O grade
than the re-sampled analyses indicate. This is not a systematic difference, but
instead indicates that the variation is more likely due to sampling technique
rather than a problematic analytical technique or procedure.
o In the 2013–2014 sampling program, assay was by ICP-OES and XRF.
o Highfield and ALS, the primary contract laboratory, maintained quality control
procedures of standards, duplicates and blanks. SRM, blanks and duplicates
were inserted, both by Highfield personnel during sample preparation and by
ALS as part of their own QA/QC program.
o ALS inserted commercial standards BCR-113 and BCR-114 both potash
fertilizer materials, a MOP (Muriate of Potash) and SOP (Sulfate of Potash),
respectively, as well as their own internal standard as a blank material SY-4, a
diorite gneiss.
o Duplicates were submitted to ALS and show good internal agreement.
o Highfield made multiple Standard or Certified Reference Material-type (SRM or
CRM) samples representing low-, medium-, and high-grade (LG, MG, HG)
potash material, but the insertion rate is insufficient and outside round-robin
testing is too limited to make reasonable conclusions as to accuracy and
precision. Insertion rate is one blank, one SRM, and one lab duplicate per 20
samples or batch.
o Check samples were tested at SRC. In general, SRC reports K2O values
lower than ALS reports. Because ALS and SRC show good internal
agreement, this suggests a calibration issue.

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Criteria **JORC ** **Code explanation ** Commentary Commentary
Verification of The verification of significant intersections by The re-sampling program of historical cores was carried out under the supervision
sampling and either independent or alternative company of North Rim and documented in a report to Highfield. The goal of the geochemical
assaying personnel. re-sampling program was to acquire sufficient confidence in the historical assay
The use of twinned holes. data to develop a JORC Code-compliant Mineral Resource estimate. Only three
drill holes with cored intervals containing potash mineralisation were available for
re-sampling within the project area: VST, NGR, and J-3.
Documentation of primary data, data entry
procedures, data verification, data storage
(physical and electronic) protocols.		 AAI reviewed the available historical geophysical logs (run by Schlumberger) to
compare estimated K2O from natural gamma and/or spectral gamma logs versus
the assayed value, which showed very good agreement.
Discuss any adjustment to assay data. ALS assayed samples both by ICP and XRF. In general, ICP analysis shows
adequate agreement with assays by XRF, which report, consistently, slightly higher
values of K2O. Other holes showed similar bias, thereby substantiating testing
precision. The ICP method is the base method used for resource estimation.
Highfield receives all assay data in .xls or .csv format from the laboratories and one
person is responsible for transferring those data into a master database and
maintaining the QA/QC monitoring. AAI independently graphed the QA/QC data.
A database was built from the historical drill hole information by Highfield and
checked by AAI against the historical reporting of assays and intervals listed on the
lithologic logs.
The master database was checked against the ALS-issued Certificates of Analysis
(COA).
Location of Accuracy and quality of surveys used to locate drill
Historical collar locations were re-located in most cases and re-surveyed. Some
data points holes (collar and down-hole surveys), trenches, historical collars could not be located as many were drilled on agricultural land.
mine workings and other locations used in Mineral Historical drill hole location maps consistently show locations and so suggest
Resource estimation. confidence in the hole coordinates. Specifically JP-1, JP-2, MLN, and Javier 3

Specification of the grid system used.
Quality and adequacy of topographic control.		 could not be relocated. Historical data and maps are referenced to the European
Datum 50 (ED50) and have been updated to the European Terrestrial Reference
System 1989 (ETRS89) datum for compatibility with modern survey information.
All new locations from the 2013–2014 drilling program are surveyed before and
after drilling by a licensed surveyor.

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Criteria **JORC ** **Code explanation ** Commentary Commentary
Data spacing Data spacing for reporting of Exploration Results. Exploration drill hole spacing is illustrated on the scaled maps in Figures 2 and 3.
and
distribution		 Whether the data spacing and distribution is
sufficient to establish the degree of geological and
grade continuity appropriate for the Mineral		 Samples have been composited over the thickness of identified potash beds for the
reporting of exploration results. Potash bed names are provisional pending
regional correlations.
Resource and Ore Reserve estimation Data spacing and distribution adequacy will be discussed in the context of the
procedure(s) and classifications applied. pending Mineral Resource estimate when reported.
Whether sample compositing has been applied.
Orientation of Whether the orientation of sampling achieves Some deviation data were available in the 2013–2014 drilling program. In building
data in unbiased sampling of possible structures and the the new database, apparent bed dips from the lithology logs were incorporated
relation to extent to which this is known, considering the from historical and new holes to attempt to correct to true bed thickness.
geological
structure		 deposit type.
If the relationship between the drilling orientation		 Historical holes were assumed to be vertical in the absence of deviation surveys.
Deviation data show relatively vertical trajectories in surveyed holes. Data on bed
and the orientation of key mineralised structures is orientation were incorporated into the database to calculate apparent true
considered to have introduced a sampling bias, thickness.
this should be assessed and reported if material. The regional structure is discussed in more detail in “Geology”, but the Basin
structural dip is interpreted from regional the CGG “base of salt” map and new drill
hole control. The deposit is bedded, but the historical seismic maps show mostly
vertical faults parallel to the Flexura de Ruesta, propagating to the west as well as
up through the top of salt. An historical structure map with fault offsets is used for
the interpretation of bed orientation. Further, it is well known that the northern Loiti
Fault System and the south Magdalena system and anticline result in cropping out
and overturning of the evaporites, and steep dips are interpreted to be in parallel to
these structures, again in conjunction with drill hole data where available. In the
case of J13-02, the salt bed thins considerably and potash mineralisation is absent;
this is interpreted as a basin high or the basin edge. J13-12, drilled in 2014, shows
good geologic agreement with the nearby historical holes La Vistana and JP 3-D.
P0 shows weak mineralisation but PAB shows 12% grade of composited K2O in a
4.3m true thickness, P1 is 17.5% grade with a 0.6m thickness, and P2 contains
very low grades. This compares to La Vistana PAB at 11.1% grade and 4.5m
thickness, P1 is 12.1% grade of K2O at 1.7m thickness, P2 shows 10.4% K2O and
2m thickness.

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Criteria **JORC ** **Code explanation ** Commentary Commentary
Sample The measures taken to ensure sample security. In the 2013–2014 drilling program, Highfield personnel maintained effective chain
security of custody procedures for the samples. Core was picked up at the drill site and
brought to the secured warehouse for detailed logging and sampling. Following
sampling (see sections on sampling herein), sample bags and boxes were secured
with zip ties for shipping to the laboratory.
Audits or The results of any audits or reviews of sampling Besides the re-sampling program carried out by North Rim, AAI compared
reviews techniques and data. historical assay data to estimate K2O from geophysical records. In addition, ALS
assayed samples both by ICP and XRF and these values were compared as
discussed in “Verification of sampling and assaying data.”

Section 2 Reporting of Exploration Results (Criteria listed in the preceding section also apply to this section.)

Criteria
**JORC Code explanation **		 Commentary
Mineral
tenement and
land tenure
status

Type, reference name/number, location and
ownership including agreements or material issues
with third parties such as joint ventures,
partnerships, overriding royalties, native title
interests, historical sites, wilderness or national
park and environmental settings.

The security of the tenure held at the time of
reporting along with any known impediments to
obtaining a license to operate in the area.
Property descriptions and land status were obtained from the list of lands as set
forth in the documents provided by Highfield.

The Muga-Vipasca property is comprised of four permits (see Figure 2). Goyo and
Muga are granted Investigation Permits (PI) in Navarra. Fronterizo straddles the
Navarra and Aragón border and its PI was granted 05 February 2014. Vipasca is
a newer application applied for at the end of 2013 and is not expected to be
approved in time for this resource estimate. Goyo Sur PI and Muga Sur PI are
new applications.

The Pintano property comprises three PI and one PE permits (Figure 3):
Molineras 10 (PI), Molineras 20, and Puntarrón (PI), and Puntarrón (PE).
Puntarrón (PI) is pending. The Molineras 20 is under application and pending
approval in 2014. For the existing Puntarrón (PE), Highfield has applied for a
rollover to extend the exploration period an additional one year.

The CPs have reviewed the mineral tenure from documents provided by Highfield
including permitting requirements, but have not independently verified the
permitting status,legalstatus, ownership of the projectarea, underlying property

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Criteria
**JORC Code explanation **		 Commentary
agreements or permits. Therefore, AAI has fully relied upon, and disclaims
responsibility for that information.

Exploration and exploitation of mineral deposits and other geological resources in
Spain are governed by the Mining Law 22/1973, which is further governed by the
Royal Decree 2857/1978. All sub-surface geological structures, rocks, and
minerals are considered the property of the public domain and are categorised into
four sections under the Spanish law (A, B, C, and D), and must have mining
authority authorisation and supervision for commercial exploitation. Section C
covers the minerals of interest for Highfield, and a mining concession would need
to be awarded prior to exploitation which requires the accompaniment of
environmental permits and municipal licenses (electrical, water etc.). Generally
exploration and investigation permits are applied for prior to applying for a mining
concession (not legal obligation), and are aimed at determining the mineral
resource potential of the area through exploration practices (drilling, seismic,
sampling etc.). These are granted through the region’s government/mining
authority where the exploration or investigative work will take place.

Exploration permits (PE) are valid for one year and can be renewed for one
additional year. A PE allows only non-intrusive investigation, which is defined by
the various Spanish regions and can vary.

A PI is good for up to three years and renewable in three-year terms or longer
depending on the scope of the intended work. Investigation permits carry with
them municipal approval as they are publically released for community discussion.
To carry out work under the investigation permit, the permittee must contract with
the individual the landowners to allow for access and occupation of the land during
the exploration.

In order for both types of permits to remain valid, the applicable taxes must be
paid and the permittee must comply with the applicable regulations and
exploration plan approved by the mining authority. Investigation permits require
assessment reporting which requires the permittee to submit working plans,
budgets, and initiate work within certain time allotments. Exploration and
investigationpermits can be transferred in whole or inpart to other thirdparties

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Criteria
**JORC Code explanation **		 Commentary
with enough technical and financial backing, but must be authorised by the proper
mining authorities in Spain.
Exploration
done by other
parties

Acknowledgment and appraisal of exploration by
other parties.
The historical drilling program completed in 1989–1990 was outlined in detail by
e.n. adaro (1989–1991). e.n. adaro, the state-owned group tasked with
exploration and development of Spain’s mineral resources, produced detailed
reports and “reserve” studies of the Javier area.

Potash was first discovered in the Ebro Basin in the Catalonia area in 1912 at
Suria after the potash discoveries in Germany (Moore 2012). Salt was first
discovered through drilling, later followed by four economic potash mining zones
with a combined total thickness of 2.0 to 8.0 m (Stirrett and Mayes 2013). The
potash horizons in the area were identified to cover approximately 160 square
kilometers (km2) at depths of approximately 500m sub-surface, unless they were
brought closer to surface by anticlinal or tectonic structures (Stirrett and Mayes
2013). Several deposits were located in the Catalonia area, including, Cardona,
Suria, Fodina, Balsareny, Sallent, and Manresa. Several of these areas were
developed into mines and are all flanked by anticlinal structures. The potash
deposits in the Navarra region were not located until later, in 1927, through
comparative studies to the deposits found at Catalonia (Stirrett and Mayes 2013).
The exploration efforts later led to the development of a mine near Pamplona and
Beriain.

Production at Pamplona began in 1963 with a capacity of 250,000 tonnes per year
(tpy) of K2O. A thick carnallite member overlies the sylvinite, so in 1970 a refinery
with the capacity for 300,000tpy was built to accommodate for carnallite from the
Esparza (Stirrett and Mayes 2013). Carnallite mining was ceased in 1977.
Inclined ramps for the mine were located near Esparza, reaching the centre of the
mine, with further shafts located at Beriain, Guendulain and Undiano. In 1982, 2.2
million tonnes of sylvinite were extracted with an average K2O grade of 11.7%
(Stirrett and Mayes 2013). The operations in Navarra were closed in the late
1990s.
Geology

Deposit type, geological setting and style of
mineralisation.
The Upper Eocene potash deposits occur in the sub-basins of Navarra and
Aragón provinces within the larger Ebro Basin (Figure A-1). The Navarrese sub-

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Criteria
**JORC Code explanation **		 Commentary
basin includes the Javier and adjoining Pintano deposits, the former being the
subject of this resource estimate. This potash deposit contains a 100m-thick
Upper Eocene succession of alternating claystone and evaporites (sulfate, halite,
and sylvite). The evaporites accumulated in the elongated basin at the southern
foreland of the Pyrenean range. The evaporites overlie marine deposits and
conclude in a transitional marine to non-marine environment with terrigenous
influence. Open marine conditions existed in the Eocene-Oligocene progressing
to a restricted environment dominated by evaporation and the deposition of marl,
gypsum, halite and potassium minerals. Later tectonism and resulting salt
deformations formed broad anticlines and synclines and overturned beds, resulting
in cropping out. The possibility exists that basement-related faulting has resulted
in repeatedly overturned mineralised beds.

Two fault systems dominate (Figure A-2) and bound the basin, to the north by the
extension of the thrusting Loiti Fault and to the south by the Magdalena Fault, both
resulting in the cropping out of the evaporite units, resulting in alteration to
gypsum. The basin axis is defined by the Javier-Undues Syncline. To the east,
the basin climbs to the Flexura de Ruesta believed to be a northwest-southeast
offset block resulting in a higher saddle area between the Javier and Pintano sub-
basins. Basin continuity to the west-northwest is not well-defined by drilling or
seismic survey.

A 2D high-resolution seismic survey was run for POSUSA in August–October
1988, by CGG over most of what is now the project area. This consisted of 9 lines
totalling 55km (Geoalcali 2012). The resulting structure maps for both the top
(techo) and bottom (muro) of salt were developed by CGG in combination with the
regional seismic, field map, satellite imagery, and drill hole data.

The surface, defined as the base of the salt and top of the Pamplona Marls, will be
used in the new geologic/computer model. The potash-bearing zones lack any
velocity/density contrasts within the salt; it is not possible to detect potash or map
the structure of the zone directly. Coverage of the seismic interpretation does not
extend to the northwest part of the basin.

Potash is used to describe any number of potassium salts. By and large, the
predominant economicpotash is sylvite: a KCl usuallyfound mixed with salt to

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Criteria
**JORC Code explanation **		 Commentary
form the rock sylvinite which may have a K2O content of up to 63% in its purest
form. Carnallite, a potassium magnesium chloride (KCl•MgCl2•6H2O), is also
abundant, but has K2O content only as high as 17%. “Carnallite” is used to refer to
the mineral and the rock interchangeably, although “carnallitite” is the more correct
terminology for the carnallite and halite mixture. Besides being a source of lower
grade potassium, carnallite involves a more complex production path, so it is less
economically attractive.

The depositional environment is that of a restricted marine basin, influenced by
eustasy, sea floor subsidence, and/or uplift and sediment input. It is suggested
that the basin is a combination of reflux and drawdown. Reflux represents a basin
isolated from open marine conditions thereby restricting inflow, increasing density,
and increasing salinity. Drawdown is simple evaporation in an isolated basin
resulting in brine concentration and precipitation. This is the classic “bulls-eye”
model (Garrett 1996). In this case, the basin is further influenced by erosion at the
basin edges due to contemporaneous and post-depositional uplift, resulting in
localised shallowing and sediment influx (Ortiz and Cabo 1981). In that classic
model, a basin that is cut off from open marine conditions will experience
drawdown by evaporation in an arid to semi-arid environment. In the absence of
sediment influx, precipitation will proceed from limestone to dolomite to gypsum
and anhydrite to halite. Depending on the composition and influences of the brine
at that time, the remaining potassium, magnesium, sulfates, and chlorides will
progress from potassium and magnesium sulfates to sylvite and then carnallite.
The formation of sylvite and carnallite are proposed herein as secondary and
primary, respectively.

In the Muga-Vipasca Project areas, the mineralogy is dominated by sylvinite,
appearing as medium red-orange and white, largely coarse crystals in bands and
in heavily brecciated beds with high insoluble material, largely fine-grained clays,
anhydrite and marl. Mixed sylvinite and carnallite was noted in J13-08 in the PA
bed. The upper potash beds transition to finely banded light brown marls and
clays. The salts just below the potash tend to dark grey to black. In some lower
beds, halite becomes brownish, sandy to coarsely granular sand and sandstone
as sediment influx from the basin edges. In portions of the halite beds, sediment
influx from the basin edges is seen as sandyto coarsely granular sands and

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Criteria
**JORC Code explanation **		 Commentary
sandstones. The lower salt is banded, exhibits very large cubic crystals and, in
some cases, high angles and folding indicative of recrystallisation and structural
deformation. The literature denotes this salt as the “sal vieja” or “old salt” (Ortiz
and Cabo 1981). The evaporite beds and bands, in general, are separated by fine
to very coarse crystallised and recrystallised salts, generally grey, sometimes light
to medium honey brown or white, with anhydrite blebs, nodules and clasts.
Drill hole
information

A summary of all information material to the
understanding of the exploration results including a
tabulation of the following information for all
Material drill holes:
o easting and northing of the drill hole collar
o elevation or RL (Reduced Level—
elevation above sea level in metres) of the
drill hole collar
o dip and azimuth of the hole
o down hole length and interception depth
o hole length.

If the exclusion of this information is justified on the
basis that the information is not Material and this
exclusion does not detract from the understanding
of the report, the Competent Person should clearly
explain why this is the case.
Table A-1 shows the historical drill holes and Table A-2 shows the drill holes from
the 2013–2014 drilling program including planned holes defined for the second
phase of Muga-Vipasca exploration drilling.
Data
aggregation
methods

In reporting Exploration Results, weighting
averaging techniques, maximum and/or minimum
grade truncations (e.g. cutting of high grades) and
cut off grades are usually Material and should be
stated.

Where aggregate intercepts incorporate short
lengths of high grade results and longer lengths of
lowgraderesults,the procedure usedforsuch
Composites by weighted average were made from the geochemical data to
optimise grade and thickness of the mineralised seams in both the new and
historical data. Composites were summarised by bed and hole in Table A-3 in
Upgraded JORC Compliant Resource Estimate For Javier Project 16 May 14.

This press release includes some picks that are preliminary and further drilling will
add confidence. Some potash zones could not be correlated across the basin.

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Criteria
**JORC Code explanation **		 Commentary
aggregation should be stated and some typical
examples of such aggregations should be shown in
detail.

The assumptions used for any reporting of metal
equivalent values should be clearly stated.
All potassic values are in K2O percent. Most cations are reported as oxides and
water-soluble material on a percent basis. ICP and XRF testing reports are in
elemental values, but the industry standard is to report in oxides.
Relationship
between
mineralisation
widths and
intercept
lengths

These relationships are particularly important in the
reporting of Exploration Results.

If the geometry of the mineralisation with respect to
the drill hole angle is known, its nature should be
reported.

If it is not known and only the down hole lengths
are reported, there should be a clear statement to
this effect (e.g. ‘down hole length, true width not
known’).
Some deviation data were available in the 2013–2014 drilling program. In building
the new database, apparent bed dips from the lithology logs were incorporated
from historical and new holes to attempt to correct to true vertical bed thickness.
In some cases, high-angled bedding is noted within the potash beds, but may be
an indication of recrystallisation of carnallite to sylvinite, resulting in a volume
reduction largely by the hydrous component of carnallite. In those cases, apparent
dip was reduced to reflect the bed below or above the potash which in most cases
was less steep.

In the absence of deviation surveys, historical holes were assumed to be vertical.
Data on bed orientation were incorporated into the database to calculate apparent
true thickness.
Diagrams

Appropriate maps and sections (with scales) and
tabulations of intercepts should be included for any
significant discovery being reported. These should
include, but not be limited to a plan view of drill
hole collar locations and appropriate sectional
views.
Figures 1 and 2 illustrate Highfield’s Muga-Vipasca and Pintano properties
showing the current JORC Mineral Resource footprints.

Figure A-4 shows the Muga-Vipasca regional structure and location of drill holes.
Balanced
reporting

Where comprehensive reporting of all Exploration
Results is not practicable, representative reporting
of both low and high grades and/or widths should
be practiced to avoid misleading reporting of
Exploration Results.
Detailed exploration drilling results from individual holes appear in Highfield’s 1 May
2014 ASX release. Updated assay results are presented in subsequent news ASX
news releases here and previously dated Highfield’s 1 May 2014, 12 May 2014,and
5 June 2014 ASXreleases.
Other
substantive

Other exploration data, if meaningful and material,
should bereportedincluding (but not limitedto):
A 2D high-resolution seismic survey was run for POSUSA in August–October
1988, by CGG over mostof what isnow the projectarea. This consisted of9lines

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Criteria
**JORC Code explanation **		 Commentary
exploration
data
geological observations; geophysical survey
results; geochemical survey results; bulk
samples—size and method of treatment;
metallurgical test results; bulk density,
groundwater, geotechnical and rock
characteristics; potential deleterious or
contaminating substances.		 totalling 55km (Geoalcali 2012). An additional 2D seismic was run at a later date
(unknown) increasing the total available seismic to 16 lines, totalling 87.3km (RPS
2013).

RPS of Calgary, Alberta, Canada completed a re-interpretation of the 2D historical
seismic lines and profiles on behalf of Highfield. The re-interpretation program
was designed to review the overall accuracy of the historical data in terms of good
correlation to drill hole data and geological intersections, as well as identify any
sub-surface structures that may adversely affect the salt-bearing strata within the
project area. A total of 16 lines were reviewed and were tied to wells with
historical wireline data from the 2D seismic RPS. The paper copies of the seismic
were digitized as the original tapes were unavailable.

RPS interpreted that there is no indication of widespread salt removal due to
faulting or dissolution. Deep structural features are noted across the project area,
and only poor quality seismic data exist over these features. A large-scale
structural high is present between the Javier and Pintano areas, separating them
geologically.

The surface defined as the base of the salt and top of the Pamplona Marls was
used in the current geologic/computer model. The potash-bearing zones lack any
velocity/density contrasts within the salt; it is not possible to detect potash or map
the structure of the zone directly. Coverage of the seismic interpretation does not
extend to the northwest part of the basin.
Further work

The nature and scale of planned further work (e.g.
tests for lateral extensions or depth extensions or
large-scale step-out drilling).

Diagrams clearly highlighting the areas of possible
extensions, including the main geological
interpretations and future drilling areas, provided
this information is not commercially sensitive.
Drilling is ongoing to continue to define and expand the resource. J13-07 was
completed in the central western part of the basin and intersected a potash bed
estimated to be 4.5m thick at 282m depth. New Muga-Vipasca holes are the
subject of this release and results presented here include J13-01, J13-07, J13-08,
J13-10 as are preliminary information on J13-04 and J13-11 (see Figure 2).
J13-01 is located north and slightly west of J13-07, and southeast of Nogueras.
J13-08 lies in the central western part of the Basin. Both holes demonstrate
mineralisation continuity to the east. J13-10 and J13-04 did not have
mineralisation intersections.

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Criteria JORC Code explanation Commentary Commentary
The second phase of drilling in the Muga-Vipasca Project area is ten holes for infill
drilling and resource extension. Detailed evaluation of this second phase of
drilling will be part of the upcoming updated resource estimate.
P13-01 has been completed and is the first modern hole drilled in the Pintano
Project area (see Figure 3). P13-02 is incomplete and will either be kicked-off or
redrilled.
J13-01 intersected P0, and what is interpreted as PAB, but shows considerable
thinning at 0.1m, and less than 1.0m thickness, respectively, suggesting a
depositional high.
Bed P0 is present over a 2.1m interval interbedded with the characteristic light
coloured and thinly laminated beds of clays and marls. It is separated from the
underlying PAB bed by 1.4m of sediment. PAB shows the typical dark brecciated
mineralisation with minor banding over an interval of about 7.8m. Assay results
and downhole geophysical review to confirm thickness, grade, and correlations are
pending.
Drill hole P13-01 has been completed and intersects lithologies and correlatable
beds similar to those in Muga-Vipasca, including an 8.9m mineralised zone
selected for assay. Additional intervals have been selected for assay. Depths of
beds are from 620m to 652m.
A regional transient electromagnetic sounding (TEM) geophysical program has
been completed in the Goyo area as planned to define the continuity of the salt
package. International Geophysical Technology, SL (IGT) has prepared a report
which is being evaluated for possible expansion of the program to the south and
east. Combined with data obtained from the drill holes by Vertical Electrical
Soundings (VES), the program is intended to define the regional thickness and
extent of the evaporite layer using resistivity. Data resolution may be limited to a
depth range of 1000m which would limit the usefulness in the deeper parts of the
basin.

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Section 3 Estimation and Reporting of Mineral Resources No new information regarding the estimation and reporting of mineral resources is presented. The reader is directed to the 16 May 2014 ASX release.

Section 4 Estimation and Reporting of Ore Reserves No mineral reserves are reported.

Page 38 of 38

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