HIGHFIELD RESOURCES LIMITED — Capital/Financing Update 2015

Aug 5, 2015

ASX Release 6 August 2015

HIGHFIELD RESOURCES DEFINES SIGNIFICANT EXPLORATION TARGET IN VIPASCA PROJECT AREA

Highlights

• Re-interpretation of historical seismic and drill hole data supports the estimation of a significant Exploration Target* abutting the Company’s flagship Muga Project

• • Exploration Target comprises two distinct areas:

• The Rocaforte Target (60km[2] ), interpreted as one of the most continuous regional structures

• The Osquia Target (31km[2] ), located south of the Loiti Fault within the Osquia Permit

• Drilling to test Exploration Targets expected to commence in Q4 2015

• The Company’s primary focus remains its flagship Muga Mine, with construction on track to commence in Q4 CY2015

Spanish potash developer Highfield Resources (ASX:HFR) (“Highfield” or “the Company”) is pleased to announce an Exploration Target for the Vipasca Project (“Vipasca”), which is located on contiguous permits to the west of its flagship Muga Project (“Muga”).

The total Vipasca Exploration Target* is summarised as follows:

		Range
	**Low **	Base	**High **
Tonnes (million tonnes)	483	1,160	1,838
Grade (% K20)	11.4%	13.3%	15.2%

*The potential quantity and grade of the Exploration Target is conceptual in nature and there has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource.

The Muga Mine approvals process and its associated development remains the Company’s priority, but advancing the exploration pipeline over its projects, particularly those contiguous to the Muga Permit area, is important to Highfield’s longer term strategy. Highfield continues to aspire to becoming a substantial global potash producer utilising the strength of its low capex, high margin targets across its five projects in Spain´s potash producing Ebro Basin.

Highfield’s Managing Director, Anthony Hall, commented:

“The Exploration Target defined for Vipasca provides some further insight into Highfield´s assets and our aspirations to become a significant global potash producer. Based on seismic reinterpretation over the Vipasca area, and on information obtained from a number of drill holes completed at Muga by Highfield, as well as a historical hole completed in the late 1970s, we believe Vipasca has the potential to be one of Highfield’s most compelling assets.

Highfield Resources Ltd. ACN 153 918 257 ASX: HFR Issued Capital 310.3 million shares 51.5 million performance shares 37.3 million options

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

Head Office Directors Avenida Carlos III, Derek Carter Donald Stephens 13 - 1°B, 31002 Richard Crookes Pamplona, Anthony Hall Spain Owen Hegarty –––––––––––––––––– Pedro Rodriguez

Company Secretary

–––––––––––––––––– ––––––––––––––––––

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

Permitting and construction of the Muga Project continues to be our primary focus, however, we are very pleased about that the great potential we see in the Vipasca Project and are prepared to devote some resources to testing the Exploration Target this current year to ensure it remains an exciting component of our exploration pipeline.”

Vipasca Potash Project

The Vipasca Project encompasses the contiguous permit areas to the west of the Company’s flagship Muga Project south of the Loiti Fault, including parts of the Goyo, Vipasca and Borneau investigation permits. Exploration work at Vipasca is targeting three of the sylvinite seams encountered at Muga; the Capa B, Capa 1 and Capa 2 seams. Similar to at the Muga Mine Project, there remains the potential for other seams to be present.

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Figure 1: Map of Highfield´s Spanish Projects showing the Vipasca Project area and the Osquia and Rocaforte Targets

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Exploration Target

The Vipasca Exploration Target has been divided into two smaller potential areas: the Rocaforte Target, which covers an area of approximately 60km[2] ; and the Osquia Target with an area of approximately 31km[2] . The Rocaforte Exploration Target area is limited in its southern extent by the increasing interpreted depth of the evaporite unit (limited for the purposes of the Exploration Targets at 1,500 metres below surface) and to its northern extent by the controlling Loiti fault. The Osquia Exploration Target is limited in its southern extent by a controlling structure.

The Rocaforte Target covers parts of the Goyo, Vipasca and Borneau Investigation Permits

The Osquia Target is located in the area to the South of the Loiti Fault within the Osquia Investigation Permit. Both areas within the Exploration Target are anticipated to encounter the Capa B, Capa 1 and Capa 2 seams, which are prevalent across the Navarran sub-basin of the broader Ebro Basin.

Grade ranges used in the Muga Exploration Target for seams Capa 1 and 2, and the grade ranges for the Muga drilling campaigns for seam Capa B were used to estimate the Exploration Targets.

Table 1. Rocaforte Exploration Target

MIN BASE MAX LOW BASE HIGH K2O Grade (%) TONNAGE (million tonnes)	MIN BASE MAX LOW BASE HIGH K2O Grade (%) TONNAGE (million tonnes)
64 192 319 128 319 511 128 255 383 319 766 1,213 CAPA B CAPA 1 CAPA 2 TOTAL	9 11 13 12 14 16 12 14 16 11.4 13.3 15.2

Table 2. Osquia Exploration Target

MIN MEDIUM MAX LOW BASE HIGH K2O Grade (%) TONNAGE (million tonnes)	MIN MEDIUM MAX LOW BASE HIGH K2O Grade (%) TONNAGE (million tonnes)
33 99 166 66 166 265 66 133 199 166 398 629 CAPA B CAPA 1 TOTAL CAPA 2	9 11 13 12 14 16 12 14 16 11.4 13.3 15.2

Table 3. Total Exploration Target

MIN BASE MAX LOW BASE HIGH K2O Grade (%) TONNAGE (million tonnes)	MIN BASE MAX LOW BASE HIGH K2O Grade (%) TONNAGE (million tonnes)
97 290 484 193 484 774 193 387 580 484 1,161 1,838 CAPA B CAPA 1 CAPA 2 TOTAL	9 11 13 12 14 16 12 14 16 11.4 13.3 15.2

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Rocaforte Target

The Rocaforte Syncline is interpreted to be one of the most continuous structures in the region based on existing geological knowledge of the area. This is supported by the structural and seismic reinterpretations completed at the Vipasca Project by independent consultants GESSAL. The Muga Mine Resource and Rocaforte Target are divided by the controlling Loiti Fault. The genesis of the fault is as yet undetermined, but it appears reasonable to assume that the Rocaforte Syncline may represent the continuity of the same potash bearing evaporite units encountered at the Muga Project.

Based on the seismic work completed by GESSAL, which incorporates down hole geophysics and lithology from the historical oil and gas drill hole (Sangüesa-1), it appears the Rocaforte Syncline structure plunges along its north-west strike from a depth of approximately 1,000 metres, at the site of the planned drill hole J15-01, to a depth of greater than 1,500 metres in the area directly to the south of the Osquia Target. The syncline structure dips to the south west and, therefore, the northern side of the Rocaforte Target is expected, in general, to be shallower and the southern side deeper.

The seismic interpretations and information from the Sangüesa-1 drill hole confirm the continuity of the potash bearing evaporite horizon, which supports the conclusion that the area has a strong potential for potash mineralisation extending along the length of the structure. The depth of the Exploration Target has been limited to 1,500 metres below surface as this is considered to be the deepest level for economic extraction via conventional underground mining methods in the region based on mining experience at Sierra del Perdón which is less than 40 kms from the Vipasca Project area.

==> picture [440 x 381] intentionally omitted <==

Figure 2: Map of the Vipasca Project Exploration Target highlighting the Rocaforte Exploration Target

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Osquia Target

The second area identified as having strong potential for potash mineralisation is a band situated immediately to the south of the Loiti fault, to the north-west of the Rocaforte Syncline. Based on a number of historical drilling reports which included lithological mapping, including the Lecáun drill hole which intercepted 3 metres of potash, it is anticipated that drilling will confirm the presence of sylvinite seams within the potash bearing evaporite.

Based on the reintperetation of seismic data by GESSAL, it is expected that the potash bearing evaporite unit to commence from 250 metres below surface on northern edge of the Osquia Target. The southern extent, which is limited by a controlling structure, extends to a maximum depth of approximately 1,000 metres below surface.

==> picture [439 x 420] intentionally omitted <==

Figure 3. Map of the Vipasca Project Exploration Target highlighting the Osquia Exploration Target

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Estimation Basis and Methodology

The Exploration Targets are based on and supported by a number of factors including historical drilling, lithological logs, geophysical studies, downhole geophysics and structural reinterpretations.

Rocaforte Exploration Target

• 1) Proximity to the Muga Mine Project which has, in general, exhibited good continuity of potash mineralisation especially of the Capa 1, Capa 2 and Capa B seams within the potash bearing evaporite;

• 2) The separation from the Muga Mine Project by the controlling Loiti Fault which is believed to have occurred post mineralisation, indicating the Rocaforte Syncline may be the south western extension of the mineralised horizons encountered at the Muga Mine Project; and

• 3) Lithological logs and down hole geophysics from an historical oil and gas drill hole, Sangüesa-1, located in the centre of the Rocaforte Target area, which encountered an evaporitic unit consistent with the above view which was used to correlate the interpretation of the evaporite unit within the seismic lines on the Rocaforte Target.

• a. Seismic line PP-22, which was interpreted by GESSAL to show continuity of the evaporite in the western extent of the Rocaforte Syncline at depths ranging between 750 metres and 1,000 metres below surface; and

• b. Seismic lines SA-01 and SA-02, in the eastern extent of the Rocaforte Target, which GESSAL believes shows continuity of the evaporite unit.

Osquia Exploration Target

• 1) Proximity to the Muga Project and the strong potential to be an extension of those mineralised horizons;

• 2) Lithological logs of 5 historical drill holes near the Osquia Target including the Lecáun drill hole, which intercepted 3 metres of potash mineralisation within the evaporite bearing potash mineralisation, on what is interpreted to be the periphery of the potash bearing structure; and

• 3) Reinterpretation of data from three seismic lines (PP-4, PP-02 and PP-02A) by GESSAL which show continuity of the evaporite unit over the target area at depths ranging from 250 metres to 1,000 metres below surface.

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Seismic and Structural Interpretation

Spanish based expert GESSAL was recently commissioned to complete structural reinterpretation of the Vipasca Project area and its surrounds, which identified the different geological units including the main evaporite unit and the main structures that affect them at depth.

The reinterpretation was based on 30 historical 2D-seismic lines shot at the Project, in combination with a deep hole drilled for oil and gas exploration purposes in the 1960s (“Sangüesa-1”), and 8 diamond holes drilled by Adaro in the 1970s. The results of this work have been factored into the formation of the Exploration Target.

Based on this work, GESSAL believes the primary potash bearing evaporite unit should continue into the Rocaforte Syncline and in an area situated to the south of the Loiti Fault within the Osquia Permit. The PP22 profile (refer Figure 5), in particular, shows the good continuity of the key horizons in the project area, especially the evaporite horizon. It also provides a better understanding of the primary and secondary structures in the deeper parts of the deposit.

==> picture [471 x 334] intentionally omitted <==

Figure 4: Vipasca Project area regional structure and historical drill hole locations

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Structural Geology

The structural geology in the area is defined by three main regional structures:

• Izaga Syncline with an ellipsoidal basin shape, which was formed by Eocene to Miocene sediments.

• Loiti Fault with a NW-SE bearing, which is consistent with the regional trend. It is a fragile structure with crustal reach, and different movements during the geological history in the region, including during the sedimentation.

• Rocaforte Syncline which has an elongated shape and NW-SE fold axis of 25km long and subhorizontal plunge to the NW. This structure is continuous and shows a slight asymmetry as the northern limb is steeper than the southern one. The Northern limb is very continuous and mostly parallel to the Loiti fault.

The sedimentary sequence in the Vipasca Project is analogous to that in the Company’s flagship Muga Project under development.

Profile PP-22 is significant to the understanding of the structural interpretation of the region. It shows a collection of reflectors interpreted as the roof of the evaporite sequence at a depth of approximately 1,000 metres within the Rocaforte Syncline area.

==> picture [370 x 411] intentionally omitted <==

Figure 5: Southern part of seismic profile PP-22 showing the different interpreted reflectors including the potash bearing evaporite unit

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The conclusion of the structural report by GESSAL is that the extension of the evaporite unit is highly likely to extend in several areas of the Vipasca Project area at depths of less than 1,500 metres. This hypothesis will be tested with further exploration drilling and geological fieldwork.

Planned Exploration

The Company anticipates commencing an exploration campaign in the coming months, with initial drilling results to test the Rocaforte Target expected in Q4 CY2015. The first hole to be drilled is planned to be J15-01, as marked in Figures 2 and 3. The results from this drill hole will be used to determine the locations of a wider drilling campaign scheduled to be commenced later in the current calendar year or early in calendar year 2016.

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 Ore Reserves, Mineral Resources, Exploration Results and Exploration Targets is based on information prepared by Mr. José Antonio Zuazo Osinaga, Technical Director of CRN, S.A.; Mr. Jesús Fernández Carrasco. Managing Director of CRN, S.A. and Mr Manuel Jesus Gonzalez Roldan, Geologist of CRN, S.A. Mr. José Antonio Zuazo and Mr. Jesús Fernández, are licensed professional geologists in Spain, and are registered members of the European Federation of Geologists, an accredited organisation to which the Competent Person (CP) under JORC Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, Ore Reserves or Exploration Targets through the ASX. Mr. José Antonio Zuazo-Osinaga has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a CP as defined in the 2012 Edition of the JORC Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves

For more information:

Company

Anthony Hall Managing Director Ph: + 34 617 872 100

Investor Relations Executives

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

Hayden Locke Head of Corporate Development Ph: +34 609 811 257

Nuala Gallagher / Simon Hudson UK Investor Relations Ph: +44 207 920 3150

www.highfieldresources.com.au

Page 9 of 15

ABOUT HIGHFIELD RESOURCES

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

Highfield’s Muga, Vipasca, Pintano, Izaga and Sierra del Perdón potash projects are located in the Ebro potash producing basin in Northern Spain covering a Project area of over 550Km2. The Sierra del Perdón project includes two former operating mines.

The Company has recently completed a definitive feasibility study for its flagship Muga Project and is working towards commencing construction in the fourth quarter of 2015.

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Figure 6: Location of Highfield´s Muga, Vipasca, Pintano, Izaga and Sierra del Perdón Projects in Northern Spain

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Section 1 Sampling Techniques and Data

Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
Sampling		Nature and quality of sampling (e.g. cut		Exploration Diamond Core (DD) drilling was completed. Core was recovered and
techniques		channels, random chips, or specific		sampled on 0.3 metre downhole intervals. Each segment of core was logged,
		specialised industry standard		photographed and, following being marked and number, each sample was halved,
		measurement tools appropriate to the		with a quarter core sent to be assayed.
		minerals under investigation, such as down hole gamma sondes, or handheld		Drilling was completed using a saturated brine to limit core loss as a result of water based fluid contact with the salt horizons.
		XRF instruments, etc.). These examples
		should not be taken as limiting the broad
		meaning of sampling.
		Include reference to measures taken to		Drill hole locations were surveyed using GPS, and by a professional surveyor prior to
		ensure sample representivity and the		commencement and post the completion of drilling.
		appropriate calibration of any measurement tools or systems used.		Certified Reference Materials (CRM) are inserted on a ratio of 1:20 and blanks are inserted on a ratio of 1:50 into sample streams to assess the accuracy, precision and
				methodology of the external laboratories used. In addition, duplicate samples were
				inserted on a ratio of 1:20 for Quality Assurance purposes.
				ALS laboratories undertook their own duplicate, CRM and blank sample insertion.
				Examination of the QA/QC sample data indicates satisfactory performance of field
				sampling protocols and assay laboratories providing acceptable levels of precision
				and accuracy.
		Aspects of the determination of		Core is sawed using hydraulic oil as the lubricating agent to minimise core loss. Half
		mineralisation that are Material to the		core is retained and shrink wrapped to ensure it is well preserved should further
		Public Report. In cases where ‘industry		assaying be required.
		standard’ work has been done this would be relatively simple (e.g. ‘reverse 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		Quarter core for assaying was bagged and secured with plastic ties for shipping to external laboratory for assaying. Samples were crushed, ground and split in Seville, Spain prior to being shipped to ALS Labs in Galway, Ireland. Cored samples were assayed using inductively coupled plasma-optical emission spectrometry and X-ray fluorescence (XRF).
		explanation may be required, such as
		where there is coarse gold that has
		inherent sampling problems. Unusual
		commodities or mineralisation types
		(e.g. submarine nodules) may warrant
		disclosure of detailed information.
Drilling		Drill type (e.g., core, reverse circulation,		Drilling was completed by DD method.
techniques		open-hole hammer, rotary air blast,
		auger, Bangka, sonic, etc.) and details
		(e.g., core diameter, triple or standard
		tube, depth of diamond tails, face-
		sampling bit or other type, whether core
		is oriented and if so, by what method,
		etc.).
Drill sample		Method of recording and assessing core		Core was boxed at the rig and transported to the core shed at Beriain for logging,
recovery		and chip sample recoveries and results		photographing, halving and shrink wrapping. Sample quality and recovery were
		assessed.		considered to be suitable.
		Measures taken to maximise sample		The drilling was completed using HQ core to maximise core recovery.
		recovery and ensure representative nature of the samples		Drilling through the evaporite horizon was conducted with a saturated brine drilling mud, which aims to minimise dissolution due to the use of water based drilling fluids.
		Whether a relationship exists between		The core recovery is of an acceptable level and no bias is expected from any sample
		sample recovery and grade and whether		losses.
		sample bias may have occurred due to
		preferential loss/gain of fine/coarse
		material.
Logging		Whether core and chip samples have		Core has been logged for lithology, alteration, mineral assemblage and structure.
		been geologically and geotechnically
		logged to a level of detail to support
		appropriate Mineral Resource

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Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
		estimation, mining studies and
		metallurgical studies.
		Whether logging is qualitative or		Logging is qualitative in nature. All core was photographed and remaining half core
		quantitative in nature. Core (or costean,		shrink wrapped for preservation.
		channel, etc.) photography
		The total length and percentage of the		Core was logged and photographed at 0.3 metre intervals.
		relevant intersections logged.
Sub-		If core, whether cut or sawn and whether		Half core was shrink wrapped and retained in storage.
sampling techniques and sample		quarter, half or all core taken.	 	Quarter core was sent for assaying. Quarter core was retained for metallurgical testing purposes.
preparation
		If non-core, whether riffled, tube		Not applicable.
		sampled, rotary split, etc. and whether
		sampled wet or dry.
		For all sample types, the nature, quality		Samples were quarter core taken at 0.3 metre intervals downhole. All samples were
		and appropriateness of the sample		sent to an external laboratory for preparation and assaying.
		preparation technique.
		Quality control procedures adopted for		Sawing of core was conducted using oil based lubricant to minimise dissolution.
		all sub-sampling stages to maximise
		representivity of samples.
		Measures taken to ensure that the		Duplicate samples were taken on a 1:20 basis and submitted to the laboratory with the
		sampling is representative of the in situ		other samples. These showed acceptable levels of variation and repeatability.
		material collected, including for instance
		results for field duplicate/second-half
		sampling.
		Whether sample sizes are appropriate to		Samples are appropriate for the mineralisation type.
		the grain size of the material being
		sampled.
Quality of		The nature, quality and appropriateness		Assaying was conducted using ICP-OES and XRF, which are modern industry
assay data		of the assaying and laboratory		standards
and laboratory		procedures used and whether the technique is considered partial or total.		These are considered to be total mineral measurements.
tests
		For geophysical tools, spectrometers,		No handheld devices were used to estimate the grade or mineralogical composition of
		handheld XRF instruments, etc., the		the assays for the purposes of this release.
		parameters used in determining the
		analysis including instrument make and
		model, reading times, calibrations
		factors applied and their derivation, etc.
		Nature of quality control procedures		Both Highfield and ALS maintained independent QA/QC programs including the
		adopted (e.g. standards, blanks,		insertion of Certified Reference Material (CRM), duplicates and blanks.
		duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.	 	In addition, check samples were submitted to an “umpire” laboratory – Saskatoon Research Centre (SRC) Duplicates showed acceptable levels of internal agreement.
				Accuracy and precision of the CRM, duplicate and blanks are within acceptable levels.
Verification		The verification of significant		DD core limits potential for in hole contamination.
of sampling and assaying		intersections by either independent or alternative company personnel.		ALS assayed all samples using both the ICP-OES methodology and XRF. These methods showed acceptable levels of agreement to support the precision of the testing program.
		The use of twinned holes.		No holes were required to be twinned in this program.
		Documentation of primary data, data		Highfield receives all assay data directly from the laboratories in electronic format (xls
		entry procedures, data verification, data		or csv). This is transferred to a master database and is monitored for QA/QC
		storage (physical and electronic)		purposes.
		protocols.

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Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
		Discuss any adjustment to assay data.		No adjustments were made to assay data.
Location of		Accuracy and quality of surveys used to		All new locations were surveyed before and after drilling by a licenced surveyor.
data points		locate drill holes (collar and down-hole
		surveys), trenches, mine workings and
		other locations used in Mineral
		Resource estimation.
		Specification of the grid system used.		Grid systems used were European Datum 50, updated to European Terrestrial
				Reference System 1989 (ETRS89) for compatibility with modern survey information.
		Quality and adequacy of topographic		All new locations were surveyed before and after drilling by a licenced surveyor.
		control.
Data		Data spacing for reporting of Exploration		The results reported are within 500 metres of other drilling and are considered to be
spacing and		Results.		“infill” in nature.
distribution
		Whether the data spacing and		Not applicable.
		distribution is sufficient to establish the
		degree of geological and grade
		continuity appropriate for the Mineral
		Resource and Ore Reserve estimation
		procedure(s) and classifications applied.
		Whether sample compositing has been		Samples have been composited over the thickness of the identified potash bed for
		applied.		reporting purposes.
Orientation		Whether the orientation of sampling		The general strike of geology in the basin is NW-SE orientation.
of data in relation to geological		achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.		Drilling was conducted vertically, logging noted the orientation of the structure to ensure adjustments were made to determine “true thickness”.
structure
		If the relationship between the drilling		Drilling was vertical. This was taken into account to calculate the “true thicknesses” of
		orientation and the orientation of key		the mineralisation intersected.
		mineralised structures is considered to
		have introduced a sampling bias, this
		should be assessed and reported if
		material.
Sample		The measures taken to ensure sample		Chain of custody is managed by Highfield. Core is boxed at the rig and transported to
security		security.		a secure facility for logging, photographing and quartering. Following this, samples for
				assay were bagged and secured with zip locks to be shipped to ALS.
Audits or		The results of any audits or reviews of		Audits and reviews are ongoing. These consistently show the methods applied by the
reviews		sampling techniques and data.		Company are acceptable.

Section Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	JORC Code explanation			Commentary
Mineral		Type, reference name/number, location		The Muga tenement was issued as an Investigation Permit (PI) by the Spanish
tenement		and ownership including agreements or		authorities under reference number 3500 on 7/04/2014. Muga Sur is a pending
and land		material issues with third parties such as		application.
tenure status		joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and		Highfield owns the rights 100%. There are no JVs, partnerships, royalties or other relating to the Investigation Permit.
		environmental settings.
		The security of the tenure held at the		Highfield has completed a legal review which concluded its tenure to be secure.
		time of reporting along with any known
		impediments to obtaining a license to
		operate in the area.

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Criteria	JORC Code explanation	JORC Code explanation		Commentary
Exploration		Acknowledgment and appraisal of		Historical exploration was completed by E.N. Adaro in 1989-1990, however, potash
done by		exploration by other parties.		was first discovered as early as 1927.
other parties				Historical production occurred at the Potasas de Subiza and Potasas de Navarra
				mines, located close to the Sierra del Perdón Project.
Geology		Deposit type, geological setting and		The deposit is an evaporite or chemical sedimentary type deposit. Its genesis is that
		style of mineralisation.		of a restricted marine sedimentary basin influenced by eustacy, sea floor subsidence
				and/or uplift of sedimentary units.
				The potash deposits are Upper Eocene, with evaporites accumulating in an elongated
				basin, trending NW-SE, at the southern foreland of the Pyrenean mountain range. The
				deposit includes thick zones of alternating claystone (marls) and evaporite with well-
				formed footwall and hanging wall salts.
				Potash mineralisation is predominantly in the form of sylvinite (KCl + NaCl) with some
				minority carnallite (KCL.MgCl2.6H20). It is typically founded interbedded with halite
				(NaCl) and insoluble materials in the form of lutite.
Drill hole		A summary of all information material to
information		the understanding of the exploration results including a tabulation of the		Holes are drilled at vertically
		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.
Data		In reporting Exploration Results,		Composites by weighted average were made from the geochemical data to optimise
aggregation		weighting averaging techniques,		grade and thickness of the mineralised seams in both the new and historical data.
methods		maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut off grades are usually Material		All grades are presented in percentage of K20 over a selected interval, which is industry standard.
		and should be stated.
		Where aggregate intercepts incorporate
		short lengths of high grade results and
		longer lengths of low grade results, the
		procedure used for such 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.
Relationship		These relationships are particularly		All drill holes are drilled vertically as this is the best orientation to intersect the
between		important in the reporting of Exploration		expected mineralisation in a perpendicular manner.
mineralisati on widths and		Results.		Data on bed angle and orientation were incorporated into geological database to calculate the true thickness of the beds intersected.

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Criteria	JORC Code explanation	JORC Code explanation			Commentary
intercept		If the geometry of the mineralisation with
lengths		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’).
Diagrams		Appropriate maps and sections (with		Appropriate maps and diagrams are included in the body of this release.
		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.
Balanced		Where comprehensive reporting of all		All results are included in the body of this release.
reporting		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.
Other		Other exploration data, if meaningful and		Not applicable.
substantive		material, should be reported including
exploration		(but not limited to): geological
data		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.
Further work		The nature and scale of planned further		One further drill hole, for geotechnical purposes, that is expected to intersect the
		work (e.g. tests for lateral extensions or		evaporite horizon, will be completed in the Project area.
		depth extensions or large-scale step-out drilling).		Ongoing exploration work is planned for the interpreted extensional areas of the deposit, which are in the north western extent of the Muga Project and in the Vipasca
		Diagrams clearly highlighting the areas		Project area.
		of possible extensions, including the
		main geological interpretations and
		future drilling areas, provided this
		information is not commercially
		sensitive.

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