HIGHFIELD RESOURCES LIMITED - Capital/Financing Update 2014

ASX Release 20 May 2014

HIGHFIELD RESOURCES DELIVERS COMPELLING PFS FOR JAVIER POTASH PROJECT

Highlights

Post tax NPV10 of US$1.06bn
Post tax, unlevered IRR of 48.4% with EBITDA in first year of full production estimated at $US235m
A high grade resource of 154Mt at 12.9% K2O (21.5% K60 product) prepared by Agapito Associates derived from the 268m tonnes JORC Mineral Resource estimate
Initial 20 year mine life commencing in 2016 with significant potential upside from recent drilling success
An average production target of 860k tonnes of potash (K60 product) per annum
2016 FOB Vancouver potash price reference of $384 per tonne (nominal)
Pre-production capital cost estimated at less than US$250m (from total capital cost estimate of US$307.9m) with 94.5% of physical capital cost estimates supported by Spanish contractor budget pricing

Spanish potash developer Highfield Resources (HFR:ASX) is pleased to report the results of its Preliminary Feasibility Study (PFS) for its initial mine target, the 100% owned Javier Potash Project.

Agapito Associates has prepared an initial high grade resource of 154Mt at 12.9% K2O (21.5% K60 product) derived from the JORC Mineral Resource estimate of 268Mt at 11.2% K2O released on 16 May 2014. This mining target focusses on the two major sylvinite seams in the Project area and importantly is continuous across these seams. The seams remain relatively thick ranging in height from 1.77m to over 3.00m.

A higher grade resource option was considered of 106.9m tonnes at 13.9% K2O (23.2% K60 product).

Work has commenced on the Definitive Feasibility Study (DFS), with a view to making the Project construction ready for early in the 2015 Calendar Year.

Managing Director, Anthony Hall said the results of the PFS demonstrate the significant Project advantages that attach to mine access via a decline; underground conventional mining; flotation circuit processing; First World infrastructure; and close proximity to markets. He commented:

We are extremely fortunate to have a project that has real advantages across all elements of the value chain from the mine to ultimate customer. All elements work together to drive the compelling project economics.

We are now focussed on making the Project construction ready as soon as possible.

Highfield Resources Ltd. ACN 153 918 257 ASX: HFR

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

Head Office Directors Calle Navas de Tolosa, Derek Carter Donald Stephens 5 - 1°B, 31002 Richard Crookes Pamplona, Anthony Hall Spain Owen Hegarty –––––––––––––––––– Pedro Rodriguez

Company Secretary

Issued Capital 135.5 million shares 103 million performance shares 21 million options

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

A detailed overview of the PFS is attached to this release.

For more information: Mr Anthony Hall Mr Simon Hinsley Managing Director Investor Relations Ph: +34 617 872 100 Ph: +61 401 809 653

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ABOUT HIGHFIELD RESOURCES

Highfield Resources is an ASX-Listed potash company with three 100%-owned projects located in Spain.

Highfield’s Javier, Pintano and Sierra del Perdón potash projects are located in the Ebro potash producing basin in Northern Spain covering a project area of about 350km[2] . The Sierra del Perdón project includes two former operating mines. The Company is working on feasibility studies for both the Sierra del Perdón and Javier projects.

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Figure 1: Location of Highfield´s Javier-Vipasca, Pintano and Sierra del Perdón Projects in Northern Spain

Page 2 of 2

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Javier Potash Project Pre-Feasibility Study Overview

Author

Geoalcali S.L 20 May 2014 FINAL

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Contents	Contents
1.	Overview ............................................................................................................................... 2
2.	Key Outputs Summary......................................................................................................... 12
3.	Preparation and Budget Pricing Support ............................................................................ 14
4.	Location Plan and Ownership.............................................................................................. 15
5.	JORC Compliant Mineral Resource Estimate....................................................................... 16
6.	Mining Target and Mining Sequence .................................................................................. 19
7.	Capex ................................................................................................................................... 23
a.	Underground Development ............................................................................................ 23
b.	Processing Plant and Associated Infrastructure .............................................................. 24
c.	Utilities and Logistics ....................................................................................................... 25
d.	Project Delivery and Owners´ Costs ................................................................................ 27
e.	Contingency ..................................................................................................................... 27
f.	Summary and Pre-Production Capex .............................................................................. 28
8.	Opex .................................................................................................................................... 29
a.	Underground Operations ................................................................................................ 29
b.	Above Ground Operations .............................................................................................. 30
c.	Transport ......................................................................................................................... 31
d.	Balance of Opex............................................................................................................... 31
e.	Opex Summary ................................................................................................................ 32
9.	Key Financial Metrics and Notes ......................................................................................... 33
10.	Project Timeline .............................................................................................................. 34
11.	Pintano Potash Project .................................................................................................... 35
12.	Modifying Factors ............................................................................................................ 36
a.	Mining and Geological Considerations............................................................................ 36
b.	Metallurgical and Processing Considerations ................................................................. 37
c.	Infrastructure .................................................................................................................. 38
d.	Economic Considerations ................................................................................................ 39
e.	Marketing Considerations ............................................................................................... 42
f.	Permitting and Approvals ................................................................................................ 42
g.	Legal, Environmental, Social and Governmental ............................................................ 43
13.	Summary ......................................................................................................................... 45

Javier Potash Project – PFS - Overview

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1. Overview

The Project

The Javier Potash Project (the Project) is a project to develop, construct and operate a potash mine in Northern Spain. The Project is owned 100% by the ASX listed Highfield Resources Limited (ASX:HFR) (the “Company”).

The proposed mine is an underground conventional room and pillar operation with mineralisation to be accessed via a decline (a tunnel from the surface to the mineralisation where ore is taken to the surface via a conveyor belt). Significant advantages result from potash mining via decline access and conventional underground operations. Sylvinite will be mined, which is an ore containing a mixture of potash (potassium chloride) and what is commonly referred to as “salt” (sodium chloride).

The Company is building on substantial historical potash exploration information that saw ten drill holes and seven seismic lines completed in the late 1980s. The Company has completed an additional nine drill holes with a further ten drill hole campaign in progress.

Since the Company´s acquisition of the Project in October 2012, considerable development activities have been completed and these have culminated in the completion of a Preliminary Feasibility Study (PFS). The results of this PFS are described in this document.

Potash

The term potash is used to describe various minerals and chemicals valued primarily for their potassium content. The main global source of potash is potassium chloride which includes 63.17% potassium oxide (K2O). Potassium chloride is also referred to as Muriate of Potash (MOP) or K60 / K62. MOP accounts for over 90% of global potash sales.

Potash is a widely used nutrient fertiliser along with nitrogen and phosphorous. Fertiliser use accounts for approximately 95% of total potash consumption.

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Figure 1: Potato Plant Yield with Three Levels of Potash Application (IPI Coordination Project, ´97)

Javier Potash Project – PFS - Overview

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The primary role of potash in plants is to support and improve:

Plant growth;
Water retention;
Nutrient value;
Enzyme activation;
Yield;
Taste; and
Disease resistance.

Potash also helps the milk production process in animals.

The Preliminary Feasibility Study (PFS)

The PFS builds on an internal Scoping Study that was completed in December 2013. The Scoping Study was based on ten historical drill holes and the reinterpretation of seismic profiles completed in the late 1980s.

Project Area

The Project area comprises four permits. The Company has been granted Investigation Permits for three named areas; Goyo, Fronterizo and Muga. The application for the Vipasca permit was submitted in November 2013 and the Company expects to receive this permit in the current Calendar Year.

As at 19 May 2014, nine drill holes have been completed by the Company in late 2013 and early 2014 across three permit areas (five in Goyo, two in Fronterizo and two in Muga). A six drill hole program has recently commenced in the Fronterizo and Muga permit areas. This will be followed by an infill drilling program targeted at areas of proposed initial mine production.

The Company is likely to contract six seismic profiles across the Vipasca and south western section of the Goyo permit areas before initiating a drilling program in these areas. Drilling in these areas is expected to commence later this Calendar Year.

The PFS primarily considers the Goyo and Fronterizo permit areas of the Project. The drill holes completed by the Company in these permit areas have been used as the basis for a JORC Measured and Indicated Mineral Resource estimate necessary for the technical completion and market release of a PFS under the JORC Code (2012).

There would appear to be substantial potential resource upside that could result from the additional drilling campaigns. An example of this is the success of the Company´s first hole in the Muga permit area (J1307) that intersected a 4.5m sylvinite seam that is not included in the Resource estimate nor mining target.

The Company expects the Definitive Feasibility Study (DFS) to benefit from further drilling across the Fronterizo and Muga permit areas.

Javier Potash Project – PFS - Overview

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Main Options Considered

The main options considered in the PFS were:

a. Mining – underground conventional mining versus solution mining;
b. Mineralisation Access – decline access versus shaft access;
c. Underground design – room and pillar versus long wall mining;
d. Mineral Processing – flotation circuit versus crystallisation processing;
e. Product – K60 versus K62 and standard versus granular;
f. Transport – trucking to port and/or mixed mode of short haul trucking and rail to port versus the extension of the rail network to the Project; and
g. Salt by-product credits – de-icing salt versus vacuum salt.

Detailed analysis was completed for each option with decisions for most options being relatively straight forward based on financial and technical considerations. From a mineral extraction perspective the PFS suggests an underground conventional mine accessed via a straight line decline into a room and pillar operation. This in turn enables the Company to process its mineralisation via a flotation circuit producing K60 muriate of potash (MOP or KCl). 50% of this MOP will be compacted into a granular product and 50% will be a standard product. The preferred transport solution is a mixed mode of short haul trucking and rail to port with a total distance of around 300kms.

The Company has completed considerable work in assessing markets for the processing by-product, salt (sodium chloride (NaCl)). A market assessment and preliminary sales and marketing strategy has been prepared. This sales and marketing strategy is not sufficiently progressed to be included in the PFS.

Preferred Site and Environmental Approvals

A territorial diagnosis has been completed that has identified four potential sites for the above ground facilities. All four sites allow for access to the initial target mine zone via a straight line decline. This has the effect of reducing both capital expenditure (Capex) and operational expenditure (Opex).

The environmental approvals process has commenced with the memoria resumen (preliminary environmental statement of intent) expected to be lodged in the week commencing 19 May 2014. Key studies such as hydrology, geotechnical and socio economic impacts have also been completed to facilitate the lodgement of the memoria resumen.

Reserves and Resources

Independent geological and mining consultants, Agapito Associates Inc prepared the JORC Mineral Resource estimate for the Javier-Vipasca property per Table 1 below.

Javier Potash Project – PFS - Overview

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Table 1. Javier-Vipasca JORC Mineral Resource Estimate

(Effective date 14 May 2014)

Potash Bed	Sylvinite Tonnes In-Place	K2O (wt %)	KCl (wt %)	MgCl2 (wt %)	Insolubles (wt %)
MEASURED P0 2.2 9.7 15.4 1.7 22.2 PAB 9.1 11.7 18.5 0.6 14.0 P1 1.3 9.9 15.7 0.4 13.9 P2 4.8 11.8 18.7 0.5 8.1
TOTAL MEASURED 17.4 11.3 17.9 0.71 13.4
INDICATED P0 9.6 9.3 14.8 1.60 22.9 PAB 80.6 11.6 18.4 0.69 16.2 P1 16.0 9.5 15.0 0.40 13.3 P2 33.6 12.2 19.4 0.44 8.3
TOTAL INDICATED 139.9 11.3 18.0 0.66 14.4
TOTAL MEASURED & INDICATED P0 11.9 9.4 14.9 1.62 22.7 PAB 89.7 11.6 18.4 0.68 16.0 P1 17.3 9.5 15.1 0.40 13.4 P2 38.3 12.2 19.3 0.44 8.3
TOTAL M&I 157.3 11.3 18.0 0.66 14.3

INFERRED P0 5.1 9.1 14.4 1.70 22.4 PAB 65.1 11.4 18.1 0.73 16.8 P1 3.4 9.3 14.7 0.38 12.5 P2 37.6 11.0 17.4 0.42 8.2
TOTAL INFERRED 111.3 11.1 17.6 0.66 14.0

Notes:

Sylvinite is a mechanical mixture of sylvite (KCl) and halite (NaCl). Resource tonnes also include fractional impurities, principally MgCl 2 and insolubles. Average bulk density of sylvinite 2.1 tonnes/m[3] . The resource estimate does not include any out-of-bed dilution.

Measured Resource—sylvinite meeting cut off criteria located within 250m of a modern exploration core hole with assays, except where otherwise limited by geologic boundaries.

Indicated Resource—sylvinite meeting cut off criteria located between 250m and 1,000m of a modern exploration core hole with assays, except where otherwise limited by geologic boundaries.

Inferred Resource—sylvinite meeting cut off criteria located between 1,000m and 2,000m radius of a modern exploration core hole with assays or within 2,000m of an historical exploration core hole, except where otherwise limited by geologic boundaries.

The reader is cautioned that a Mineral Resource is an estimate only and not a precise and completely accurate calculation, being dependent on the interpretation of limited information on the location, shape, and continuity of the occurrence and on the available sampling results. Actual mineralisation can be more or less than estimated depending upon actual geological conditions.

The Mineral Resource statement includes Inferred Mineral Resources. There is a low level of geological confidence associated with Inferred Mineral Resources and there can be no certainty that further exploration work will result in the determination of Indicated or Measured Mineral Resources. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. No Mineral Reserves are being stated.

Javier Potash Project – PFS - Overview

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At the Company´s request, Agapito Associates, Inc. also prepared a resource estimate targeting only high grade composites within beds PAB and P2 for evaluation as a potential mining (production) target. The estimate, summarised in Table 2, represents a higher grade subset of the JORC Mineral Resource described in Table 1. Higher grades are targeted by the Company within the sylvinite seams reported for the JORC Mineral Resource estimate. As such selective mining of those higher grade intersects will be required to deliver the Project´s investment metrics. The higher grade intersects range in height from 1.77m to over 3.00m.

Table 2. Javier-Vipasca High Grade Resource Estimate (Effective date 14 May 2014)

Potash Bed	Sylvinite Tonnes In-Place	K2O (wt %)	KCl (wt %)	MgCl2 (wt %)	Insolubles (wt %)
MEASURED PAB 5.2 13.0 20.7 0.5 12.5 P2 3.9 13.0 20.7 0.5 8.1
TOTAL MEASURED 9.2 13.0 20.7 0.49 10.6
INDICATED PAB 46.4 13.2 20.9 0.55 14.4 P2 27.8 13.6 21.7 0.44 8.3
TOTAL INDICATED 74.2 13.4 21.2 0.51 12.1
TOTAL MEASURED & INDICATED PAB 51.6 13.2 20.9 0.55 14.2 P2 31.7 13.6 21.5 0.45 8.2
TOTAL M&I 83.3 13.3 21.1 0.51 11.9

INFERRED PAB 39.1 12.5 19.8 0.60 15.3 P2 31.6 12.4 19.7 0.42 8.1
TOTAL INFERRED 70.7 12.4 19.8 0.52 12.1

Notes: Sylvinite is a mechanical mixture of sylvite (KCl) and halite (NaCl). Resource tonnes also include fractional impurities, principally MgCl2and insolubles. Average bulk density of sylvinite 2.1 tonnes/m3. The resource estimate does not include any out-of-bed dilution. Resource cut offs: (a) true thickness ≥ 1.5m: grade cutoff ≥ 8.0% K2O, or (b) true thickness < 1.5m: grade-thickness cutoff ≥ 12.0% K2O-m. Resource reduced by 15.0% allowance for unknown geologic anomalies. Inferred Resource—sylvinite meeting cut off criteria located between 1,000m and 2,000m radius of a modern exploration core hole with assays or within 2,000m of an historical exploration core hole, except where otherwise limited by geologic boundaries. Measured Resource—sylvinite meeting cut off criteria located within 250m of a modern exploration core hole with assays, except where otherwise limited by geologic boundaries. Indicated Resource—sylvinite meeting cut off criteria located between 250m and 1,000m of a modern exploration core hole with assays, except where otherwise limited by geologic boundaries.

It is noted that Agapito Associates was not engaged by the Company at this stage to evaluate the minability of the resource. Detailed engineering and mine planning are necessary to determine which areas of the resource are suitable as a mining target for the type of high-productivity, mechanised mining intended by the Company. Portions of the resource may be economically unattractive and, therefore, unsuitable as a mining target depending upon various feasibility considerations.

Minability and estimation of the mining target is addressed by work completed by the Company and its Spanish based mine engineering consultants SADIM.

Javier Potash Project – PFS - Overview

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The person within SADIM who was responsible for the mine design and sequencing was Ms Dulce Vega (MSc Mining - Camborne School of Mines – Exeter University and Mining Engineer - ETSIM de Oviedo – Asturias – Spain). She is currently responsible for the majority of mine engineering projects in Spain for SADIM.

The Company has commenced an additional six hole drilling campaign in the south eastern extension of the Project area. In addition, it expects to complete some infill drilling shortly after the completion of these holes to provide greater certainty in areas where the initial mining is targeted.

As a result of the above, it is expected that the Resource (block model) used for the DFS will be different from the Resource used for the PFS. The mine design and sequencing is also likely to change with SADIM already engaged to update the mine design and sequencing to reflect a likely update of the Resource, block model and mining target. As part of this process, Agapito Associates, Inc. will work with SADIM to finalise the mine design and sequencing for actual mining. It is expected that Agapito Associates, Inc. will upgrade qualifying parts of the Mineral Resource to Mineral Reserves during this process.

It should be noted that the mining target is continuous across the Project area where the JORC compliant Mineral Resource estimate has been calculated (PAB bed shown in Figure 5 below). This is important for mine sequencing and the optimisation of costs associated with underground infrastructure and extraction.

The PFS assumes an extraction ratio of 60%. The JORC Mineral Resource estimate and the resulting mining target includes a 15% reduction for geological uncertainty. Given this the extraction ratio is effectively a net 51% (60% less 15%).

The mine plan includes 46% Inferred Mineral Resource (70.7m / 154.0m). The Company believes it is reasonable to assume the level of Inferred Mineral Resources given:

Measured and Indicated Resources represent the majority of early years extraction
The Inferred Resource grade of 12.4% K2O reduces the average grade from 13.3% K2O to 12.9% K2O
The total JORC Mineral Resource estimate for the Project is 268.5m tonnes that includes 157.3m tonnes of Measured and Indicated Resources
Resource upside is expected from further drilling campaigns across the Project area

For financial modelling purposes, the Company has elected to assume an average constant grade of 12.9% throughout the entirety of the initial 20 year mine life. Annual actual assumed grade will be modelled in the DFS which is likely to present some upside in the resulting financial metrics.

Production

The base case considered in the PFS is an owner operated mine that produces 860k tonnes of K60 potash per annum over a 20 year period. The operation ramps up from an initial 430k tonnes per annum to full production over an 18 month period.

In steady state production, 4.73m tonnes of sylvinite ore will be processed via a conventional flotation circuit estimated to deliver an 84.6% recovery rate. The recovery rate of 84.6% was estimated by Canadian based potash process engineering consultancy, Engcomp.

Javier Potash Project – PFS - Overview

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The processing plant has a design capacity of 600 tonnes per hour with a peak capacity of 690 tonnes per hour. A utilisation rate of 90% at 600 tonnes per hour has been assumed. This equates to 7,884 hours per annum at the design capacity.

Metallurgy

Initial metallurgical testing has been completed showing relatively coarse grades of ore for processing. This is encouraging for, and may result in, higher recovery rates and lower use of reagents in actual production.

Construction

Construction is estimated to take 15 months and benefits from straight line decline access to relatively shallow sylvinite mineralisation. The timeline also benefits from processing via a conventional flotation circuit as opposed to crystallisation based processing.

Product and Markets

50% of the potash produced will be pink granular K60 product targeted at the Brazilian market. The remaining 50% will be pink standard K60 product targeted at the North Western European market (Spain, Portugal and France in particular form part of this market).

The PFS assumes no sales of de-icing salt. The Company has completed a market assessment and preliminary sales and marketing strategy to enter the de-icing salt market. The sales and marketing strategy is not sufficiently progressed to be included in the PFS. Sales of de-icing salt is an upside that will likely be included in the DFS.

Tailings Management

The initial 12 months production of tailings will be stored above ground in an environmentally friendly manner that ensures no leaching of salt into the surrounding area.

After some 12 months there will be sufficient voids in the underground mining operations to cater for the backfilling of tailings into the mine. This has two significant advantages; 1, it increases extraction ratios as tailings provide additional geotechnical support for mined areas; and 2, it reduces the negative above ground environmental impacts of tailings dams.

PFS Preparation

The PFS was prepared internally by the Company with support from various Spanish and international consultants and contractors. Key management personnel have developed and operated underground conventional mines in Spain and as a result elected to utilise this experience and critical in country relationships to complete the PFS.

Peer Review

The Company retained Spanish based engineering specialist, IDOM, to peer review the balance of the PFS with the exception of the underground development and machinery. IDOM has considerable Spanish project management and construction experience and is currently acting as prime contractor for the expansion of a potash operation in Cataluña, located in the eastern part of the same potash producing basin as the Highfield projects.

IDOM estimated a total budget of €188.927m inclusive of contingencies. The Company has estimated €185.162m which represents a 2.0% difference. The Company elected not to change its estimates as they are based primarily on actual budget pricing from relevant Spanish contractors.

Javier Potash Project – PFS - Overview

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Exchange Rate

All pricing was prepared in Euros and has been converted to USD at an exchange rate of EUR0.75:USD1.00. An exchange rate sensitivity analysis has been prepared and is included in this document.

Capex and Opex Estimates

Capex and Opex have been estimated on an owner operator basis with the exception of transport from the plant to the port.

Capex is estimated at US$307.9m (CY2014 prices). The Company has budget pricing support for over 90% of the physical costs comprising the Capex estimate (excluding EPCM, owners´ costs and contingency).

C1 Opex is estimated at US$144.59 per tonne (CY2014 prices). C2 Opex is estimated at US$162.48 per tonne. C3 Opex is also estimated at US$162.48 per tonne (marketing fees have been factored into the net potash price assumption for revenue purposes).

Contingency

The Company has added a 20% contingency to all Capex estimates. A 20% contingency has also been added to mining, processing and transport Opex estimates.

The Company has elected to use the mid point of the recommended contingency range for a preliminary feasibility study of 15% to 25%. The Company believes there may be some upside given it has budget pricing support for a majority of the Capex estimate. In addition, the budget pricing support for the processing plant is at a +/– 15% level and this represents close to 40% of the overall estimate.

Potash Pricing Assumption

Potash price assumptions are based on FOB Vancouver prices for standard K60 MOP prepared by UK based independent fertiliser consultants, Integer Research. A 5% sales commission has been applied to these prices for financial modelling purposes. CFR Brazil prices are also net of a US$15 per tonne shipping cost from FOB Bilbao (escalated from CY14).

Table 3. Forecast Potash Prices per metric tonne of MOP

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Javier Potash Project – PFS - Overview

Modelled potash prices are:

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Table 4. Nominal Potash Price Forecasts used in PFS (per metric tonne)

	2016	2017	2018	2019	2020
FOB Vancouver Reference	384	398	407	410	408
CIF NW Europe	445	460	471	475	474
CFR Brazil	438	453	463	467	466
Average of NW Europe and Brazil	441.50	456.50	467.00	471.00	470.00
Less
Shipping from Spain to Brazil (50%)	7.96	8.20	8.44	8.69	8.96
Sales Commission (5%)	22.08	22.83	23.35	23.55	23.50
Average Nett Price	411.47	425.48	435.21	438.76	437.54

Financial Metrics

The financial model works on an after tax unlevered basis. The Project delivers an after tax, unlevered IRR of 48.4%. Initial discussions with European commercial banks suggest there is likely to be European commercial bank project finance support for the Project.

The NPV at a 10% discount rate is US$1,061m.

The financial model assumes 22 periods of one year with the first commencing on 1 January 2015. 60% of the upfront Capex is expended in the first period (2015 Calendar Year) and 40% in the second period (2016 Calendar Year).

The Project benefits from an accelerated depreciation regime enabling Capex to be depreciated within the first 10 years (Regimen Especial de Impuestos en el Sector Minero). The financial model assumes straight line depreciation of 25% per annum for tax purposes over the first four years of production.

Spanish tax law enables 15% of tax paid to be applied against future capital expenditure. The PFS assumes no money from this fund is expended on the Project. This may ultimately provide upside for complementary operations at the Pintano Potash Project.

The Project also benefits from delayed Capex attaching to ramping up production and early cash flows from operating activities. Pre-production Capex is estimated at US$249.5m (€187.1m).

EBITDA in 2018 is estimated at US$234.4m (€175.8m).

Javier Potash Project – PFS - Overview

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Progression to Definitive Feasibility Study

The PFS demonstrates sufficient potential Project viability for the Company to move into the preparation of a DFS. Key next steps involve:

a. Completion of the additional six hole drilling campaign and up to an additional six hole infill drilling campaign;
b. Completion of metallurgy tests to inform detailed process plant design and reagent use;
c. Acquisition of surface sites;
d. Detailed underground engineering; and
e. Lodgement of mining concession applications including the environmental impact assessment.

Javier Potash Project – PFS - Overview

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2. Key Outputs Summary

The key mine and process plant parameters are:

Table 5. Summary of Mine Parameters

	Key Design Elements	Response
	Mineralisation	Sylvinite
	Annual ore extraction Ramp up Initial mine depth to surface Mine access Life of mine	4.73m tonnes per annum 2.365m tonnes per annum ramping to 4.73m tonnes per annum over an 18 month period 315m 2,100m length decline at a gradient of 15% and a section of 28m2 20 years






	Measured and Indicated Resources	83.3M tonnes @ 13.3% K2O
	Inferred Resources	70.7M tonnes @ 12.4% K2O
	Average grade	12.9% K2O (21.5% K60 product)
	Process recovery rate	84.6%
	Average annual production (K60)	860k tonnes
	Product composition Process plant size Utilisation rate Logistics solution Operating assumption	50% pink K60 granular, 50% pink K60 standard 600 tonnes per hour design capacity with an ability to process 690 tonnes per hour. 90% or 7,884 hours per annum at 600 tonnes per hour 50% to port of Bilbao by 50km road haulage and 250km rail 50% road haulage to domestic markets of Spain, France and Portugal Mine and processing plant as owner operator. Transport solution outsourced.

Table 6. Summary of Estimated Capital Expenditure in CY2014 dollars

Components	Euros (´m)	USD (´m)	Budget Pricing %
Underground development and machinery	36,048	48,064	97.20%
Process plant and associated infrastructure	121,059	161,412	100.00%
Utilities and Logistics	18,157	24,209	55.00%
Sub Total	175,264	233,685	94.50%
Mining permits	936	1,248
EPCM and owners costs	16,224	21,631
Sub Total	192,424	256,565
Contingency (20% on all costs)	38,485	51,313
Total	230,908	307,878

Javier Potash Project – PFS - Overview

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Table 7. Summary of Estimated Operational Expenditure per tonne of product in CY2014 dollars

Components	Euros (t)	USD (t) 50.05 45.30 26.96 122.31 13.33 8.95 144.59 17.89 144.59 162.48 - 162.48 162.48
C1 Costs
- Mining	37.54
- Processing	33.98
- Transport	20.22
- Sub Total	91.74
- G&A	10.00
- Sustaining Capex	6.71
Total C1 Costs	108.44
C2 Costs
- Depreciation	13.42
- C1 Costs	108.44
Total C2 Costs	121.86
C3 Costs
- Royalties	-
- C2 Costs	121.86
Total C3 Costs	121.86

Table 8. Summary of Key Additional Financial Model Assumptions

	Table 8. Summary of Key Additional Financial Model Assumptions
	Assumption Item
	Marketing Fee 5% of sales price
	Pricing Year 2014 Escalation 3% on expenses from 2015 3% on revenue from 2021 Corporate Tax Rate 30%



	Tax Depreciation Rate 25% per annum
	Exchange Rate EUR0.75 : USD1.00
	Remediation Costs 10% of full upfront capex escalated

Table 9. Summary of Key Financial Metrics

	Metric	Output
	Unlevered Post Tax IRR	48.4%
	NPV10	US$1,062m (€796.4m)
	EBITDA in first year of full production	US$234.4m (€175.8m)
	Pre-production Capex	US$249.5m (€187.1m)

Javier Potash Project – PFS - Overview

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3. Preparation and Budget Pricing Support

The PFS was prepared by the Company working with a combination of local and international consultants and contractors.

Spain has a long and deep mining heritage, especially in the coal mining sector. In addition to this, two potash mines operate within 300kms of the Project area. With coal mining and potash mining being similar the Company is confident that Spanish consultants and contractors have sufficient expertise to ensure the preparation of a robust PFS, especially given that local firms will ultimately construct the mine and process plant.

A list of key consultants and contractors is presented below. The Company believes it has chosen a credible mix of local and international consultants and contractors with a blend of in country construction and in country and global potash experience.

Table 10. Summary of Key Consultants and Contractors

	Table 10. Summary of Key Consultants and Contractors
	Component Who	Base
	JORC Mineral Resource Estimate Agapito Associates, Inc	USA
	Mine Engineering SADIM	ESP
	Process Engineering Advanced Mineral Processing	ESP
	Process Engineering Peer Review EngComp	CAN
	PFS Peer Review (ex Underground) IDOM	ESP
	Metallurgical Testing AGQ Mining	ESP
	Assay Lab ALS Global	IRE
	Transport Study IDOM	ESP
	Environmental Studies Provodit / CRN	ESP
	Buildings and Facilities Bovis Lend Lease	ESP
	Potash Market Research Integer	GBR
	Socio Economic Study IDOM	ESP

Javier Potash Project – PFS - Overview

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4. Location Plan and Ownership

Highfield´s 100% owned Javier Project covers an area of 97km[2] in Northern Spain. It is less than 40kms from Highfield´s Sierra del Perdón Project. Depths from surface to initial potash mineralisation is less than 300m.

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Figure 2: Javier Project Location Map in Relation to Highfield´s Three 100% Owned Projects

The Javier Project comprises four permits. Three of the four permits are granted and the final permit application was lodged on 6 November 2013 following positive drilling results from the Company´s drilling campaign. All permits are Investigation Permits and are issued for a period of three years. Application may be made to roll over these permits for additional three year periods or alternatively to convert the permits to mining concessions. The Table below provides permit details.

Table 11. Interests in Mining Permits Held by the Company

Region	Permit Name	Permit Type	Applied	Granted	Ref #	Area (km	Holder	Structure
Navarra	Goyo	Investigation	19/07/2011	24/12/2012	35780	27.72	Geoalcali SL	100%
Navarra	Vipasca	Investigation	6/11/2013	pending	35900	38.92	Geoalcali SL	100%
Aragón	Fronterizo	Investigation	21/06/2012	5/02/2014	3502	9.8	Geoalcali SL	100%
Aragón	Muga	Investigation	29/05/2013	9/04/2014	3500	20.4	Geoalcali SL	100%

Note: Geoalcali SL is a 100% owned Spanish subsidiary of Highfield Resources Limited.

Javier Potash Project – PFS - Overview

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5. JORC Compliant Mineral Resource Estimate

Independent geology and mining consultants Agapito Associates, Inc. issued a JORC Measured and Indicated Mineral Resource estimate of 157.3 million tonnes (Mt) of sylvinite at an average grade of 11.3% K2O (18.0% KCl equivalent) based on an 8.0% K2O composite cut off grade at a minimum 1.5m bed true thickness (Table 1). The estimate also includes beds thinner than 1.5m where the grade-thickness product exceeds 12.0% K2O-m, thus satisfying 8.0% K2O grade equivalency at 1.5m.

The estimate includes an additional 111.3 Mt of Inferred Mineral Resource at an average grade of 11.1% K2O (17.6% KCl equivalent) based on the same thickness and grade cut offs.

The Mineral Resource occurs in four potash beds (P0, PAB, P1, and P2) over an 18 km[2] area (Figure 3). The estimate follows the completion and assaying of 8 exploration core holes drilled by the company between September 2013 and March 2014.

The estimate has an effective date of 14 May 2014. The estimate and the accompanying report were released to the ASX on 16 May 2014.

The JORC Resource does not include the results from J13-07 that was completed on 6 May 2014. Refer to ASX release dated 12 May 2014.

The Mineral Resource estimate does not include any out-of-bed dilution.

The Mineral Resource estimate is reduced by 15% as an allowance for areas expected to be rendered unmineable due to unknown geologic features.

The Mineral Resource has reasonable prospects for eventual economic extraction, in accordance with JORC standards. This is supported by preliminary high-level economic analysis which assumes a base case mining scenario with multiseam room-and-pillar mining and processing by conventional crushing and flotation. Room-and-pillar mining was conducted successfully at Posusa/Adaro’s Navarra and Subiza potash mines at Sierra del Perdon from the 1970s through 1990s.

The high-level economic analysis supports positive returns on investment over a realistic, wide range of capital and operating costs, and a trailing-5-year range of potash prices. A positive return on investment is considered a minimum for justifying reasonable prospects for eventual economic extraction and designation as a Mineral Resource, but does not necessarily represent an economically attractive mining opportunity depending upon the desired minimum return on investment. For this reason, not all parts of the Mineral Resource are necessarily suitable for inclusion in a production target or upgradeable to a Mineral Reserve. Detailed engineering and mine planning are required to determine which parts of a Mineral Resource are suitable for mining for a specific project, including this PFS.

Javier Potash Project – PFS - Overview

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Table 12. Javier-Vipasca JORC Mineral Resource Estimate (Effective date 14 May 2014)

Potash Bed	Sylvinite Tonnes In-Place	K2O (wt %)	KCl (wt %)	MgCl2 (wt %)	Insolubles (wt %)
MEASURED P0 2.2 9.7 15.4 1.7 22.2 PAB 9.1 11.7 18.5 0.6 14.0 P1 1.3 9.9 15.7 0.4 13.9 P2 4.8 11.8 18.7 0.5 8.1
TOTAL MEASURED 17.4 11.3 17.9 0.71 13.4
INDICATED P0 9.6 9.3 14.8 1.60 22.9 PAB 80.6 11.6 18.4 0.69 16.2 P1 16.0 9.5 15.0 0.40 13.3 P2 33.6 12.2 19.4 0.44 8.3
TOTAL INDICATED 139.9 11.3 18.0 0.66 14.4
TOTAL MEASURED & INDICATED P0 11.9 9.4 14.9 1.62 22.7 PAB 89.7 11.6 18.4 0.68 16.0 P1 17.3 9.5 15.1 0.40 13.4 P2 38.3 12.2 19.3 0.44 8.3
TOTAL M&I 157.3 11.3 18.0 0.66 14.3

INFERRED P0 5.1 9.1 14.4 1.70 22.4 PAB 65.1 11.4 18.1 0.73 16.8 P1 3.4 9.3 14.7 0.38 12.5 P2 37.6 11.0 17.4 0.42 8.2
TOTAL INFERRED 111.3 11.1 17.6 0.66 14.0

Notes:

Measured Resource—sylvinite meeting cut off criteria located within 250m of a modern exploration core hole with assays, except where otherwise limited by geologic boundaries. Indicated Resource—sylvinite meeting cut off criteria located between 250m and 1,000m of a modern exploration core hole with assays, except where otherwise limited by geologic boundaries. Inferred Resource—sylvinite meeting cut off criteria located between 1,000m and 2,000m radius of a modern exploration core hole with assays or within 2,000m of an historical exploration core hole, except where otherwise limited by geologic boundaries.

Javier Potash Project – PFS - Overview

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Figure 3: Javier Project Location Map Showing JORC compliant Mineral Resource estimate

Javier Potash Project – PFS - Overview

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6. Mining Target and Mining Sequence

Drill hole composites in the PAB and P2 beds were limited to thinner intervals within the wider composite intervals used in the JORC Mineral Resource estimate for the purpose of maximizing composite K2O grade with a minimum of 150 Mt of resource, per the Company’s specification. As noted above, these thinner intervals ranged in height from 1.77m to over 3.00m. The high grade composites were applied using the same block modelling method as the JORC Mineral Resource and with the same resource cut offs to estimate tonnes and grade. The high grade resource estimate is summarized in Table 13.

Table 13. Javier-Vipasca High Grade Resource Estimate (Effective date 14 May 2014)

Potash Bed	Sylvinite Tonnes In-Place	K2O (wt %)	KCl (wt %)	MgCl2 (wt %)	Insolubles (wt %)
MEASURED PAB 5.2 13.0 20.7 0.5 12.5 P2 3.9 13.0 20.7 0.5 8.1
TOTAL MEASURED 9.2 13.0 20.7 0.49 10.6
INDICATED PAB 46.4 13.2 20.9 0.55 14.4 P2 27.8 13.6 21.7 0.44 8.3
TOTAL INDICATED 74.2 13.4 21.2 0.51 12.1
TOTAL MEASURED & INDICATED PAB 51.6 13.2 20.9 0.55 14.2 P2 31.7 13.6 21.5 0.45 8.2
TOTAL M&I 83.3 13.3 21.1 0.51 11.9

INFERRED PAB 39.1 12.5 19.8 0.60 15.3 P2 31.6 12.4 19.7 0.42 8.1
TOTAL INFERRED 70.7 12.4 19.8 0.52 12.1

Notes:

Resource cut offs: (a) true thickness ≥ 1.5m: grade cutoff ≥ 8.0% K 2O, or (b) true thickness < 1.5m: grade-thickness cutoff ≥ 12.0% K 2O-m. Resource reduced by 15.0% allowance for unknown geologic anomalies. Measured Resource—sylvinite meeting cut off criteria located within 250m of a modern exploration core hole with assays, except where otherwise limited by geologic boundaries. Indicated Resource—sylvinite meeting cut off criteria located between 250m and 1,000m of a modern exploration core hole with assays, except where otherwise limited by geologic boundaries. Inferred Resource—sylvinite meeting cut off criteria located between 1,000m and 2,000m radius of a modern exploration core hole with assays or within 2,000m of an historical exploration core hole, except where otherwise limited by geologic boundaries.

Javier Potash Project – PFS - Overview

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Detailed engineering and mine planning are necessary to determine which areas of the resource are suitable as a mining target for the type of high-productivity, mechanised mining intended by the Company. Portions of the resource may be economically unattractive and, therefore, unsuitable as a mining target depending upon various feasibility considerations, including continuity (or isolation) of mining blocks, depth, geology, groundwater, bed dip, ground conditions, minimum mining height, dilution, run-of-mine grade variation, access, development requirements, scheduling, multiseam mining interaction, ventilation, surface subsidence, and other technical concerns.

Agapito Associates, Inc. was not engaged by the Company at this stage to evaluate the minability of the resource. Minability and estimation of the mining target is addressed by work completed by the Company and its Spanish based mine engineering consultants, SADIM.

The mine design and sequence for the PFS was prepared by Spanish based mine engineering consultancy, SADIM. SADIM was created in 1999, but has a history dating back to 1967 with HUNOSA and coal mining. The person within SADIM who was responsible for the mine design and sequencing was Ms Dulce Vega (MSc Mining - Camborne School of Mines – Exeter University and Mining Engineer - ETSIM de Oviedo – Asturias – Spain). She is currently responsible for the majority of mine engineering projects in Spain for SADIM.

Figure 4 shows the grade / tonnage curve for the high grade resource estimate across beds PAB and P2.

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Figure 4: Grade / Tonnage Curve for the Javier-Vipasca High Grade Resource Estimate

Javier Potash Project – PFS - Overview

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The figures below show a diagrammatical representation of the mine sequence from the point of the proposed decline to mineralisation. The following table shows the annual composition of the mining target broken down by Measured, Indicated, and Inferred resource categories and the average grade of mineralisation in K2O content and resulting K60 product.

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Figure 5: Diagrammatic Representation of the PAB Bed Block Model

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Figure 6: Diagrammatic Representation of Proposed Mine Sequence and Decline Access Point

Javier Potash Project – PFS - Overview

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Table 14. Mine Sequence Showing Annual Composition of Resource Category and Average Grade of the Mining Target

Year	Months	ROM	Resource	Ave K2O Grade	M&I Inferred	Cumulative Resource	Tonnes of K60	Cumulative K60 Product
1	1 to 9	1.76	2.93	13.61%	2.93 -	2.93	338	338
	10 to 12	0.88	1.47	13.61%	1.47 -	4.40	169	507
2	1 to 2	0.81	1.35	13.61%	1.35 -	5.75	155	662
	3 to 6	0.96	1.60	12.65%	1.60 -	7.35	171	833
	7 to 12	2.35	3.92	12.65%	3.92 -	11.27	419	1,252
3	1 to 2	0.87	1.45	12.65%	1.45 -	12.72	155	1,408
	2 to 7	2.81	4.68	14.09%	4.68 -	17.40	558	1,966
	7 to 12	1.02	1.70	12.72%	1.70 -	19.10	183	2,149
4	1 to 6	2.59	4.32	12.72%	4.32 -	23.42	465	2,613
	6 to 11	1.55	2.58	13.98%	2.58 -	26.00	306	2,919
	11 to 12	0.56	0.93	13.25%	0.93 -	26.93	105	3,023
5	1 to 1	0.05	0.08	13.25%	0.08 -	27.02	9	3,033
	1 to 12	4.64	7.73	12.36%	7.73 -	34.75	809	3,841
	12 to 12	0.02	0.03	12.67%	0.03 -	34.78	4	3,845
6	1 to 12	4.70	7.83	12.67%	7.83 -	42.62	840	4,685
7	1 to 2	0.73	1.22	12.67%	0.73 -	43.83	130	4,815
	2 to 12	3.97	6.62	13.04%	3.97 -	50.45	730	5,545
8	1 to 11	4.26	7.10	13.04%	7.10 -	57.55	783	6,328
	11 to 12	0.44	0.73	13.71%	0.73 -	58.28	85	6,413
9	1 to 12	4.70	7.83	13.71%	4.70 -	66.12	909	7,322
10	1 to 8	3.22	5.37	13.71%	3.22 -	71.48	622	7,944
	8 to 12	1.52	2.53	14.47%	1.52 -	74.02	310	8,255
11	1 to 12	4.70	7.83	14.47%	4.70 -	81.85	959	9,213
12	1 to 1	0.20	0.33	14.47%	0.20 -	82.18	41	9,254
	1 to 3	0.96	1.60	16.07%	0.96 -	83.78	218	9,472
	4 to 12	3.54	5.90	12.45%	- 3.54	89.68	621	10,093
13	1 to 12	4.58	7.63	12.45%	- 4.58	97.32	804	10,897
	12 to 12	0.12	0.20	13.12%	- 0.12	97.52	22	10,919
14	1 to 12	4.70	7.83	13.12%	- 4.70	105.35	869	11,789
15	1 to 2	0.72	1.20	13.12%	- 0.72	106.55	133	11,922
	2 to 12	3.71	6.18	11.95%	- 3.71	112.73	625	12,547
	12 to 12	0.27	0.45	12.73%	- 0.27	113.18	48	12,596
16	1 to 9	3.64	6.07	12.73%	- 3.64	119.25	653	13,249
	10 to 12	1.06	1.77	13.44%	- 1.06	121.02	201	13,450
17	1 to 6	2.56	4.27	13.44%	- 2.56	125.28	485	13,935
	6 to 9	0.91	1.52	13.95%	- 0.91	126.80	179	14,114
	10 to 12	1.23	2.05	12.19%	- 1.23	128.85	211	14,325
18	1 to 4	1.82	3.03	12.19%	- 1.82	131.88	313	14,638
	4 to 12	2.88	4.80	12.02%	- 2.88	136.68	488	15,126
19	1 to 2	1.08	1.80	12.02%	- 1.08	138.48	183	15,309
	2 to 8	2.63	4.38	11.76%	- 2.63	142.87	436	15,745
	9 to 12	0.99	1.65	11.80%	- 0.99	144.52	165	15,910
20	1 to 6	2.53	4.22	11.80%	- 2.53	148.73	421	16,331
	6 to 12	2.17	3.62	12.05%	- 2.17	152.35	369	16,700
21	1 to 6	1.53	2.55	12.05%	- 1.53	154.90	260	16,960
TOTAL		92.94	154.90	12.94%

Javier Potash Project – PFS - Overview

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7. Capex

a. Underground Development

The underground development assumes straight line decline access into a conventional underground room and pillar operation. The Capex estimate includes the first year of galleries required for mineral extraction. After the initial year this infrastructure is included in underground Opex.

Table 15. Capex Estimate Detail for Underground Development

Expenditure Item	Euros (´m)	USD (´m)
Surface Infrastructure (electric equipment, air supply installation, access, temporary fill)	0.647	0.863
Decline Construction (2,100m at 28m2, combination of drill and blast and roadheader)	6.689	8.919
Primary Underground Infrastructure (conveyor belt in decline and in initial galleries, first gallery infrastructure,	5.653	7.537
Initial Ventilation Raise (356m constructed by raise boring)	0.706	0.941
Initial Services Installations (electricity, pumping, air supply, communications and safety)	0.639	0.852
Machinery – Phase 1 (four roadheaders for sylvinite extraction, one roadheader for infrastructure, 23 underground trucks)	13.115	17.487
Machinery – Phase 2 (two roadheaders sylvinite extraction, four trucks)	4.177	5.569
Machinery – Phase 3 (two roadheaders for sylvinite extraction, four trucks)	4.422	5.896
TOTAL	36.048	48.064

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Figure 7: Virtual Image of Proposed Decline Access to Underground Operations

Javier Potash Project – PFS - Overview

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b. Processing Plant and Associated Infrastructure

The processing plant is a conventional flotation circuit. It will be built progressively over a 30 month period with the initial capacity being 300 tonnes an hour ramping to 600 tonnes per hour over an 18 month period. The associated infrastructure includes site works, perimeter protection, a tailings dam for the initial 12 months of production, and buildings for the processing plant, administration personnel and employee welfare.

Table 16. Capex Estimate Detail for Processing Plant and Associated Infrastructure

Expenditure Item	Euros (´m)	USD (´m)
Processing Plant (feeding and crushing, grinding, desliming, flotation, de-watering, drying, storage, compacting, auxillary installations, steel buildings, construction preliminaries)	84.543	112.724
Civil Works and Site Preparation (grading and perimeter security)	6.481	8.641
General Site Infrastructure (auxiliary buildings, carparking and site roads)	4.221	5.628
Storage Facility (primary, secondary and tertiary storage facilities)	15.955	21.273
Waste Management (tailings dam and waste water treatment)	9.859	13.145
TOTAL	121.059	161.412

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Figure 8: Virtual Image of a Process Plant Installation in Javier Project Area

Javier Potash Project – PFS - Overview

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c. Utilities and Logistics

The Project operations will require a mixture of electricity and natural gas to serve its energy requirements. A majority of the energy will come from Spain´s national electricity grid. Natural gas will primarily be used for product drying. Additional utility connections are water and telecommunications. In all instances distribution networks are within 10 kms of the Project.

Table 17. Capex Estimate Detail for Utilities

Expenditure Item	Euros (´m)	USD (´m)
Electrical Supply and Installation	5.678	7.571
Natural Gas Supply and Installation	1.068	1.424
Water Supply and Installation	0.858	1.144
Offsite Drainage	0.067	0.089
Voice and Data Connections	0.100	0.133
TOTAL	7.771	10.361

The PFS proposes a mixed mode transport solution of road and rail haulage. The proposed processing plant is located 7kms from a dual national highway with speed limits of 120kms / hour. It is 43kms on this highway to the rail freight terminal that will be used to transport product to coast. The Port of Bilbao is located 255kms by rail from this freight terminal.

Table 18. Capex Estimate Detail for Logistics

Expenditure Item	Euros (´m)	USD (´m)
Road Connections to Existing Highways	0.930	1.240
Local Road Improvements	1.482	1.976
Rail Freight Terminal Improvements	0.440	0.587
Rail Freight Terminal Staff Accommodation	0.534	0.712
Upgrade to Port Facilities	7.000	9.333
TOTAL	10.386	13.848

Javier Potash Project – PFS - Overview

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Figure 9: Pictures of Highway and Freight Terminal

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Figure 10: Pictures of Port of Bilbao

Javier Potash Project – PFS - Overview

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d. Project Delivery and Owners´ Costs

Project delivery will be by a combination of EPCM outsourcing and direct owner construction management. Industry EPCM rates in Spain generally range from 4% to 6%. Owners´ costs include difference in condition contract works insurance and other relevant insurances.

Table 19. Capex Estimate Detail for Project Delivery and Owners´ Costs

Expenditure Item	Euros (´m)	USD (´m)
Engineering, Procurement and Construction Management (6% of all construction costs less machinery)	9.213	12.284
Owners Costs (4% of all construction costs)	7.011	9.347
Permit Fees	0.936	1.248
TOTAL	17.160	22.879

e. Contingency

The Company has assumed a 20% contingency on all costs.

Table 20. Capex Estimate Detail for Contingency

Expenditure Item	Euros (´m)	USD (´m)
Under Ground (20% of all costs)	7.210	9.613
Above Ground (20% of all costs)	24.212	32.282
Utilities and Logistics (20% of all costs)	3.631	4.842
Project Delivery and Owners Costs (20% of all costs)	3.432	4.576
TOTAL	38.485	51.313

Javier Potash Project – PFS - Overview

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f. Summary and Pre-Production Capex

The headline Capex estimate is US$307.9m. This represents the total estimated capital required to construct an operation capable of extracting and processing 600 tonnes of sylvinite per hour 90% of the time (4.73m tonnes per annum).

The operations commence at 300 tonnes per hour and ramp to 600 tonnes per hour over an 18 month period. This results in some staged Capex that can be offset against earnings from initial production.

The estimated pre-production Capex is US$249.5m.

Table 21. Capex Estimate Summary

Components	Euros (´m)	USD (´m)	Budget Pricing %
Underground development and machinery	36,048	48,064	97.20%
Process plant and associated infrastructure	121,059	161,412	100.00%
Utilities and Logistics	18,157	24,209	55.00%
Sub Total	175,264	233,685	94.50%
Mining permits	936	1,248
EPCM and owners costs	16,224	21,631
Sub Total	192,424	256,565
Contingency (20% on all costs)	38,485	51,313
Total	230,908	307,878

Javier Potash Project – PFS - Overview

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8. Opex

a. Underground Operations

Proposed mineral extraction is via underground conventional mine accessed by a decline. The proposed mine is a conventional room and pillar operation. A contingency of 20% has been added to estimated underground Opex.

Table 22. Opex Estimate Detail for Underground Operations in $ per tonne of ROM

Expenditure Item	Euros (t of ROM))	USD (t of ROM)

Underground Infrastructure (main galleries, ore access galleries, ongoing transport drift)	1.96	2.61
Services (pumping, compressed air supply, communication, safety)	0.40	0.53
Labour (Production, infrastructure, transport and auxiliary jobs workforce)	1.05	1.40
Electricity Consumption (all vehicles electrified)	2.26	3.01
Miscellaneous (topography)	0.02	0.03
Sub Total	5.69	7.59
Contingency (20% of all costs)	1.14	1.52
Per Tonne of Product TOTAL	37.54 6.83	50.05 9.10

Javier Potash Project – PFS - Overview

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b. Above Ground Operations

The processing plant is a standard flotation circuit that is the predominant processing means for global potash production. A contingency of 20% has been added to estimated above ground Opex.

Table 23. Opex Estimate Detail for Above Ground Operations in $ per tonne of ROM

Expenditure Item	Euros (t of ROM))	USD (t of ROM)

Labour (plant operations, maintenance, laboratory)	0.61	0.81
Electricity Consumption (processing plant)	2.09	2.79
Gas consumption (drying)	0.57	0.76
Water consumption (processing)	0.04	0.05
Flotation reagent consumption (desliming and flotation)	1.09	1.45
Operations and Maintenance (plant)	0.72	0.96
Waste water treatment (residual brines and purged waters)	0.03	0.04
Sub Total	5.15	6.87
Contingency (20% of all costs)	1.03	1.37
Per Tonne of Product TOTAL	33.98 6.18	45.30 8.24

Javier Potash Project – PFS - Overview

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c. Transport

The proposed transport solution sees both road and rail haulage outsourced. A contingency of 20% has been added to estimated transport Opex.

Table 24. Opex Estimate Detail for Transport to Port in $ per tonne of Product

Expenditure Item	Euros (t)	USD (t)
Road Transportation (50kms to Rail Freight Terminal)	5.19	6.92
Rail Transportation (255kms to Port of Bilbao)	8.66	11.55
Port Charges and Taxes (Port of Bilbao charges and taxes)	1.50	2.00
Port Incidentals (personnel and handling charges)	1.50	2.00
Sub Total	16.85	22.47
Contingency (20% of all costs)	3.37	4.49
TOTAL (per tonne of product)	20.22	26.96

d. Balance of Opex

The balance of estimated Opex comes from sustaining capex, G&A costs and depreciation.

Importantly there is no allowance for royalties as Spain does not have a royalty regime over and above corporate taxation.

Table 25. Opex Estimate Detail for Sustaining Capex, G&A and Depreciation in $ per tonne of Product

Expenditure Item	Euros (t)	USD (t)
Sustaining Capex (2.5% per annumof initial capex)	6.71	8.95
G&A (€10 per tonne of product)	10.00	13.33
Depreciation (5% per annum)	13.42	17.89
TOTAL	30.13	40.17

Javier Potash Project – PFS - Overview

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e. Opex Summary

Estimated Opex is provided at C1, C2 and C3 levels.

Table 26. Opex Estimate Summary

Components	Euros (t)	USD (t) 50.05 45.30 26.96 122.31 13.33 8.95 144.59 17.89 144.59 162.48 - 162.48 162.48
C1 Costs
- Mining	37.54
- Processing	33.98
- Transport	20.22
- Sub Total	91.74
- G&A	10.00
- Sustaining Capex	6.71
Total C1 Costs	108.44
C2 Costs
- Depreciation	13.42
- C1 Costs	108.44
Total C2 Costs	121.86
C3 Costs
- Royalties	-
- C2 Costs	121.86
Total C3 Costs	121.86

The Company has elected to factor in a sales and marketing fee of 5% against its potash price assumption.

Javier Potash Project – PFS - Overview

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9. Key Financial Metrics and Notes

Table 27. Key Financial Metrics

Table 27. Key Financial Metrics
Metric	Euros (´m)	USD (´m)
Post Tax Unlevered IRR	48.4%
NPV (10% discount rate)	796.44	1,061.92
Forecast Steady State EBITDA in first year of full production	175.83	234.43

Financial model notes include:

Amounts are shown in Calendar Year 2014 Euro or $ as indicated;
Exchange Rate assumption is EUR0.75:USD1.00;
All expenses are escalated at 3% per annum from CY2015;
Potash price assumptions are nominal through to CY2020 and then escalated at 3% per annum;
Transport Opex assumes road and rail haulage is outsourced;
Tax depreciation is 25% per annum consistent with current Spanish tax laws that allow for accelerated depreciation (Regimen Especial de Impuestos Para el en Sector Minero);
Full production is estimated at 4.73m tonnes of sylvinite per annum at an average grade of 12.9% K2O (21.5% K60 product);
At a recovery rate of 84.6% full production produces 860k tonnes of saleable potash (K60) per annum;
An average grade of 12.9% K2O is assumed across all years of production; and
Life of mine assumption is 20 years with end of mine works estimated at 10% of initial Capex (escalated).

Javier Potash Project – PFS - Overview

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10. Project Timeline

The Company acknowledges it has a compressed but achievable Project timeline. Critically the environmental approvals process has been commenced and the Company is well advanced in preparing its environmental impact study.

The current Project timeline sees initial production in 2016 with construction commencing in early 2015.

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Figure 11: Javier Project Timeline

Javier Potash Project – PFS - Overview

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11. Pintano Potash Project

The Project abuts the Pintano potash project which may provide substantial scale upside. Importantly the Javier Project process plant is capable of being expanded to accommodate additional production from the Pintano project. The Company commenced a drilling campaign in the Pintano project area in March 2014 that will build on historical drill holes (drilled in late 1980s) that show thick, relatively high grade sylvinite intersects.

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Figure 12: Location of Javier and Pintano Potash Projects

Table 28. Summary of Historical Drill Hole Results at Pintano Potash Project

Historic DDH Ref	Starting Depth	Thickness	Ave K ~~2~~ O Grade

PP2	517	2.48	15.6%
PP2B	511	3.48	15.4%
P1	638 643	2.46 2.02	12.2% 14.2%
PP3	792 801 807	1.65 2.32 1.72	15.7% 14.7% 15.2%

Javier Potash Project – PFS - Overview

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12. Modifying Factors

a. Mining and Geological Considerations

The Project is strongly advantaged by the geology that sees relatively shallow depths to mineralisation capable of being accessed via a decline. Eighteen drill holes have been completed into the mineralisation with no drill hole encountering the presence of aquifers. In addition to this, hydrology and geotechnical studies have been completed suggesting decline access is viable.

Within the evaporite are four relatively thick sylvinite seams interbedded by halite with substantial halite in both the hanging and foot walls. This suggests underground conventional mining is possible with the sylvinite seams having sufficient height for relatively low cost Opex and the hanging wall and foot wall halite providing good competency for mining.

The PFS assumes mining of the two dominant beds throughout the deposit – PAB and P2.

There is minimal carnallite in the evaporite posing no difficulties for conventional underground mining or simple sylvinite flotation circuit processing.

Mining is challenged by dipping beds as the evaporite extends into the North Western area of the current Resource delineation. Further work on the optimum mining methodology for these areas will be considered in the DFS. Importantly, the early years of mining assumed in the PFS target areas where dips are not as extreme as later years.

Mining heights will range from 1.5m to over 4m and will be determined by the thickness of sylvinite seams.

The PFS assumes an extraction ratio of 60%. The mining resource includes a 15% reduction for geological uncertainty as such the PFS has not included this factor.

The Company explored the option of utilising a shaft and determined a decline was more advantageous for the following reasons:

lower Capex;
quicker lead times to production;
ability to sensibly ramp up production as opposed to building entire scale upfront;
lower risk associated with catastrophic failure as sections of decline can be avoided; and
options in later years of mine in constructing a shaft from the bottom up resulting in lower relative cost

The Company explored long wall mining and determined room and pillar was more advantageous as infrastructure was progressively constructed and as a result it had substantially lower up front Capex.

Javier Potash Project – PFS - Overview

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Figure 13: Virtual Image of Proposed Underground Operations

b. Metallurgical and Processing Considerations

Two types of processing plants tend to be used for potassium salt processing. The conventional flotation circuit is generally used where possible as it has a lower initial Capex, shorter construction timelines and lower ongoing Opex.

Ore extracted via underground conventional means is able to be processed via flotation circuit.

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Figure 14: Simple Process Flow Chart

Javier Potash Project – PFS - Overview

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The main issues considered in metallurgical testwork are

type of potassium salt (with the content of carnallite being important when considering sylvinite processing);
levels of insolubles;
coarseness of ore; and
incursions in the KCl grains.

Preliminary testwork has been completed by the University of Barcelona. The University of Barcelona are experienced in metallurgical testwork for potash processing. It appears the ore is advantaged by having low levels of carnallite, relatively coarse ore and low levels of incursions into the KCl grains (the fines are lower than that found in other potash basins). The ore is disadvantaged by having relatively high levels of insolubles.

The recovery rate of 84.6% has been estimated by Canadian based processing engineering consultant EngComp. Engcomp has substantial experience in potash processing.

Detailed testwork will be completed as part of the DFS process.

c. Infrastructure

Spain has exceptional infrastructure that substantially advantages the Project.

The Company has identified four 50ha sites for the location of a processing plant and associated infrastructure. All four sites are within 10kms of water, electricity and gas networks.

The proposed transport solution sees an upgrading of 7kms of bitumen (metalled) roads before utilising 43kms of dual lane highways to a rail freight terminal. It is 255kms to the Port of Bilbao from the freight terminal. The Port of Bilbao is an LNG Port with considerable infrastructure supporting its operations.

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Figure 15: Diagrammatic Representation of Utilities and Transport Solution for the Project

Javier Potash Project – PFS - Overview

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d. Economic Considerations

Costs

The majority of costs are budget priced from Spanish contractors who have constructed similar operations in Spain.

Operating costs are calculated on a run of mine basis for underground and processing plant. Sustaining Capex is calculated as a percentage of upfront Capex. Ongoing underground infrastructure requirements are classified as underground Opex and not sustaining Capex. G&A and transport costs are calculated on a per tonne of potash basis.

The exchange rate of EUR0.75:USD1.00 is based on the last two years of historical data where the exchange rate has averaged slightly higher than the PFS assumption.

Electricity costs are based on actual quotes from Iberdrola and reagent usage estimates and costings are based on studies completed by EngComp and budget pricing for reagents from Spanish suppliers.

Spain does not have an ongoing system of royalties in addition to corporate taxation. As such, no allowance has been made for royalties.

Revenue

The Company is proposing to produce a pink K60 product. 50% will be granular and 50% standard. These products will be consistent with the Canadian standard.

The calculation of revenue is based on tonnes produced per annum multiplied by the applicable potash price assumption less a 5% sales and marketing fee.

The potash price assumption has been prepared by the UK Based Interger Research Group. Interger has been preparing potash market reports for over 10 years. The price assumptions are current at February 2014.

Table 29. Potash Price Assumptions per metric tonne of product

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Javier Potash Project – PFS - Overview

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Table 30. Actual Net Potash Price Assumption for Company Sales

	2016	2017	2018	2019	2020
FOB Vancouver Reference	384	398	407	410	408
CIF NW Europe	445	460	471	475	474
CFR Brazil	438	453	463	467	466
Average of NW Europe and Brazil	441.50	456.50	467.00	471.00	470.00
Less
Shipping from Spain to Brazil (50%)	7.96	8.20	8.44	8.69	8.96
Sales Commission (5%)	22.08	22.83	23.35	23.55	23.50
Average Nett Price	411.47	425.48	435.21	438.76	437.54

By-Product Credits

The Company believes it is likely to receive some by-product credits resulting from the sale of its sodium chloride by product. This sodium chloride by product is sold as de-icing salt.

The Company has initial research that suggests the total Spanish de-icing salt market is around 500,000 tonnes per annum at an average price of €60 per tonne (US$80 per tonne). Additional addressable markets are likely to include coastal France, Belgium and the Netherlands. The Company has prepared a market assessment and preliminary sales and marketing strategy. At this time it is not sufficiently advanced for inclusion as an assumption in the PFS.

As a result no allowance for these sales has been made in the PFS.

The Company believes by-product credits will be included in its DFS for the Project.

Sensitivity Analysis

Project economics is most sensitive to the potash price assumption. The table below compares key financial metrics in a high and low case. Importantly the potash price assumption in the Company´s financial model is a delivered potash price that assumes an average price between CFR Brazil and CIF North Western Europe.

Javier Potash Project – PFS - Overview

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Table 31. Potash Price Sensitivity Analysis

		Potash Price Assumption(USD)		USD ´m	USD ´m
Case	2016 FOB Vancouver Ref	2016 2017 2018 2019 2020	IRR	NPV	EBITDA (CY18)
+30%	$499	573 537 556 571 568	66.7%	$1,705	$349
+15%	$442	474 491 502 506 505	57.7%	$1,383	$292
Base Case	$384	411 425 435 439 438	48.4%	$1,062	$234
-15%	$326	372 349 360 369 371	38.6%	$740	$177
-30%	$269	302 305 286 295 304	27.8%	$419	$120

Project economics are less sensitive to increases or decreases in Capex due to the low capital intensity of the Project. The table below considers the impact of a 15% and 30% increase and a 15% and 30% decrease in Capex for the Project.

Table 32. Capex Sensitivity Analysis

	Assumption(USD)
Case	Capex	IRR	NPV (USD ´m)
-30%	215,514	65.1%	$1,144
-15%	261696	55.4%	$1,103
	,
Base Case	307,878	48.4%	$1,062
+15%	354059	43.0%	$1,021
	,
+30%	400,241	38.8%	$960

The Project economics are also sensitive to the exchange rate assumption.

Table 33. Foreign Exchange Rate Sensitivity Analysis

	Assumption (USD1.00:EUR___)
Case	USD Value	IRR	NPV (USD ´m)
+30%	0.98	66.7%	$1,306
+15%	086	57.3%	$1,195
	.
Base Case	0.75	48.4%	$1,062
-15%	064	39.0%	$884
	.
-30%	0.53	28.8%	$631

Javier Potash Project – PFS - Overview

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e. Marketing Considerations

The Company has assumed that 50% of its production will be sold into the domestic markets of Spain, Portugal and France with the remaining 50% being sold into Brazil. The Company presently has no potash sales and marketing expertise internally. Given this, it has assumed it will be necessary to pay a third party sales channel a 5% sales and marketing fee.

According to the International Fertiliser Association (IFA), the Company´s target markets imported the following amounts of potash in calendar years 2011 to 2013.

Table 34. French, Spanish and Portuguese Potash Imports by Calendar Year

	2013	2012	2011	Average
France	673	690	723	695
Spain*	258	178	198	211
Portugal	64	73	49	62
Total	995	941	970	969

* Market is serviced in part by some in country production

Table 35. Brazilian Potash Imports by Calendar Year

	2013	2012	2011	Average
Brazil	8,230	7,696	7,321	7,749

The Company believes it has a transport advantage into all of its target markets and is likely to commence formal off take discussions later this Calendar Year.

f. Permitting and Approvals

Spain has a legislated approvals process where two principal approvals are required to construct and operate a mine. Environmental approvals are a subset of mining concession approvals.

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Figure 16: Diagrammatic Representation of Spanish Approvals Process for Mining Activities

Javier Potash Project – PFS - Overview

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The initial step required to receive environmental approvals to construct and operate a mine and processing facilities in Spain is the lodging of a memoria resumen. The submission of this document initiates the environmental administrative process. The content of this document is similar to an environmental impact assessment but is less exhaustive. It is generally referred to as a preliminary environmental impact assessment. The Company expects to lodge the memoria resumen in the week commencing 19 May 2014.

The Company anticipates lodging the mining concession application in the September 2014 Quarter.

Construction approval applications will be lodged in 2015 following granting of the mining concession.

g. Legal, Environmental, Social and Governmental

Legal and Government

The Company holds a 100% interest in the Project. There are no agreements with third parties to share in any Project revenues.

The Company is not aware of any potential legal issues that will delay the granting of environmental approvals and mining concessions. In November 2013 the Spanish Parliament passed legislation reducing environmental approvals timelines from a maximum of 18 months to six months.

The Project lies between the provinces of Navarra and Aragón. Both provinces will have involvement in the Project with the ultimate referral authority being the Central Government in Madrid.

The Project area extends to 97km[2] and includes five municipalities. The total population of these municipalities in 2012 was 5,666 with over 90% of the population being located in the municipality of Sangüesa.

Javier Potash Project – PFS - Overview

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Environment and Social

A socio economic report has been prepared by Spanish based global consultants IDOM. The Project is likely to be a significant contributor to province GDP (>1.2%). The provinces of Navarra and Aragón have stronger employment than the national average of over 25%, with 16.2% and 18.6% respectively. The tables below detail the likely employment and economic stimulus benefits to Navarra. A total of over 10,000 man years of employment will be created over the 20 year life of the Project.

Table 36. Summary Table of Economic Impact During the Construction Phase (€ m and full time jobs)

							ANNUAL TOTAL	ANNUAL TOTAL
2015-2016	DIRECT		INDIRECT		INDUCED
									CONSTRUCTION PHASE TOTAL

	2015	2016	2015	2016	2015	2016	2015	2016

PRODUCTION	117.82	114.39	50.81	49.33	15.57	15.11	184.20	178.83	363.03

ADDED VALUE	42.01	40.79	23.69	23.00	5.75	5.58	71.45	69.37	140.82

INCOME	7.35	7.14	5.86	5.69	2.35	2.29	15.57	15.11	30.68

EMPLOYMENT	200	250	788	765	411	399	1,399	1,414	2.813

Table 37. Summary Table of Economic Impact During the Operational Phase (€ m and full time jobs)

							OPERATION PHASE TOTAL	OPERATION PHASE TOTAL
2017-2034	DIRECT		INDIRECT		INDUCED

	ANUAL	TOTAL	ANUAL	TOTAL	ANUAL	TOTAL	ANUAL	TOTAL
PRODUCTION	6.66	119.95	3.28	59.01	0.84	15.06	10.78	194.02

ADDED VALUE	2.54	45.74	1.52	27.42	0.33	5.92	4.39	79.07

INCOME	0.35	6.31	0.36	6.47	0.13	2.28	0.84	15.06

EMPLOYMENT	342	6,158	50	902	27	484	419	7,544

The Company has completed a territorial diagnosis that has considered 12 different social and environmental constraints. Four sites have been identified without constraints.

The Company is particularly aware of the importance of appropriate community engagement as a subset of broader corporate responsibility. The Company has employed an environmental scientist and a head of corporate affairs who are both charged with ensuring the proper focus on obtaining a social licence to operate.

More broadly, the Company has created its headquarters in Pamplona and has a team comprising 15 people, the majority of which are Spanish nationals.

Javier Potash Project – PFS - Overview

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13. Summary

The Project

Potash

Potash is a widely used nutrient fertiliser along with nitrogen and phosphorous. Fertiliser use accounts for approximately 95% of total potash consumption.

Preferred Site and Environmental Approvals

Production

Javier Potash Project – PFS - Overview

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Construction

Product and Markets

Capex and Opex Estimates

Capex and Opex have been estimated on an owner operator basis with the exception of transport from the plant to the port.

Capex is estimated at US$307.9m (in CY2014 prices). The Company has budget pricing support for over 90% of the physical costs comprising the Capex estimate (excluding EPCM, owners´ costs and contingency).

C1 Opex is estimated at US$144.59 per tonne (in CY2014 prices). C2 Opex is estimated at US$162.48 per tonne. C3 Opex is also estimated at US$162.48 per tonne (marketing fees have been factored into the net potash price assumption for revenue purposes).

Financial Metrics

The NPV at a 10% discount rate is US$1,061m.

The Project also benefits from delayed Capex attaching to ramping up production and early cash flows from operating activities. Pre-production Capex is estimated at US$249.5m (€187.1m).

EBITDA in 2018 is estimated at US$234m (€176m).

Progression to Definitive Feasibility Study

The PFS demonstrates sufficient potential Project viability for the Company to move into the preparation of a DFS. Key next steps involve:

a. Completion of the additional six hole drilling campaign and up to an additional six hole infill drilling campaign;
b. Completion of metallurgy tests to inform detailed process plant design and reagent use;
c. Acquisition of surface sites;
d. Detailed underground engineering; and
e. Lodgement of mining concession applications including the environmental impact assessment.

Javier Potash Project – PFS - Overview

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Competent Persons’ Statement

This document was prepared by Mr. Anthony Hall, Managing Director of Highfield Resources. The information in this release that relates to the JORC Mineral Resource Estimate 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, U.S. Mr. Gilbride is a licensed professional engineer in the State of Colorado, U.S. 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, U.S., 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 the Vice President of Engineering 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.

ABOUT HIGHFIELD RESOURCES

Highfield Resources is an ASX-Listed potash company with three 100%-owned projects located in Spain (Figure 17 below).

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Figure 17: Location of Highfield´s Javier-Vipasca, Pintano and Sierra del Perdón Projects in Northern Spain

Javier Potash Project – PFS - Overview

AI assistant

HIGHFIELD RESOURCES LIMITED — Capital/Financing Update 2014

65048_rns_2014-05-19_fd0ef50d-ee19-4f7a-8b93-fb2ad6fb4dea.pdf

HIGHFIELD RESOURCES DELIVERS COMPELLING PFS FOR JAVIER POTASH PROJECT

Highlights

ABOUT HIGHFIELD RESOURCES

Javier Potash Project Pre-Feasibility Study Overview

1. Overview

The Project

Potash

The Preliminary Feasibility Study (PFS)

Project Area

Main Options Considered

Preferred Site and Environmental Approvals

Reserves and Resources

Notes:

Production

Metallurgy

Construction

Product and Markets

Tailings Management

PFS Preparation

Peer Review

Exchange Rate

Capex and Opex Estimates

Contingency

Potash Pricing Assumption

Financial Metrics

EBITDA in 2018 is estimated at US$234.4m (€175.8m).

Progression to Definitive Feasibility Study

2. Key Outputs Summary

3. Preparation and Budget Pricing Support

4. Location Plan and Ownership

5. JORC Compliant Mineral Resource Estimate

Notes:

6. Mining Target and Mining Sequence

Notes:

7. Capex

a. Underground Development

b. Processing Plant and Associated Infrastructure

c. Utilities and Logistics

d. Project Delivery and Owners´ Costs

Table 19. Capex Estimate Detail for Project Delivery and Owners´ Costs

e. Contingency

f. Summary and Pre-Production Capex

8. Opex

a. Underground Operations

b. Above Ground Operations

Table 23. Opex Estimate Detail for Above Ground Operations in $ per tonne of ROM

c. Transport

d. Balance of Opex

e. Opex Summary

9. Key Financial Metrics and Notes

10. Project Timeline

11. Pintano Potash Project

12. Modifying Factors

a. Mining and Geological Considerations

b. Metallurgical and Processing Considerations

c. Infrastructure

d. Economic Considerations

Costs

Revenue

By-Product Credits

Sensitivity Analysis

e. Marketing Considerations

f. Permitting and Approvals

Legal and Government

Environment and Social

13. Summary

The Project

Potash

Preferred Site and Environmental Approvals

Production

Construction

Product and Markets

Capex and Opex Estimates

Financial Metrics

EBITDA in 2018 is estimated at US$234m (€176m).

Progression to Definitive Feasibility Study

Competent Persons’ Statement

HIGHFIELD RESOURCES LIMITED Capital/Financing Update 2014