HIGHFIELD RESOURCES LIMITED — Capital/Financing Update 2015

Apr 30, 2015

ASX Release 1 May 2015

HIGHFIELD RESOURCES COMPLETES POSITIVE K62 POTASH SCOPING STUDY FOR MUGA MINE BY-PRODUCTS

Highlights

•  Scoping Study outlines:

• Post tax, unlevered NPV10 of US$222 million

• Post tax, unlevered IRR of 33.0%

• EBITDA in first full year of production of US$56 million

•  Initial 24-year operational life , based on current DFS life of Muga Mine

•  Proposed installation of a conventional crystallisation plant to treat slimes tailings produced by the Muga Mine’s flotation processing plant

•  Average yearly production of approximately 135k tonnes of granular K62 potash and a by-product of approximately 260k tonnes of high-purity vacuum salt

•  Independent expert spot potash prices, discounted by 10% for contract pricing and sales and marketing fees, to deliver a 2017 Free On Board (“FOB”) Vancouver standard product reference price of US$315 / tonne in real terms

• Capital cost estimated at US$124 million , inclusive of 20% contingency

• Operating margins of approximately 65% in full production

Spanish potash developer Highfield Resources Limited (HFR: ASX) (“Highfield” or “the Company”) has completed a Scoping Study for a proposed slimes crystallisation plant (“K62 Potash Plant”) at the Muga Potash Project.

The Scoping Study outlines opportunities to generate production and revenues in addition to the Definitive Feasibility Study (“DFS”) completed for the flagship Muga Potash Project in March 2015.

The K62 Potash Plant will process the slimes tailings produced at the Muga Mine and produce saleable quality, high purity potash (K62 Muriate of Potash) and vacuum salt (NaCl). The study indicates that the K62 Potash Plant is both technically viable and delivers robust returns on invested capital.

Highfield’s Managing Director Anthony Hall commented:

“This Scoping Study presents an opportunity for us to benefit from the by-products of the Muga Mine. It is an option that will ultimately deliver additional production volumes and revenues to the Muga operations once the initial operations are able to support its development from free cash flow.

Highfield Resources Ltd. Registered Office ACN 153 918 257 C/– HLB Mann Judd ASX: HFR 169 Fullarton Road Dulwich, SA 5065 Issued Capital Australia

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

Issued Capital 252.0 million shares 51.5 million performance shares 43.5 million options

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

We have deliberately focused on the primary by-product which contains a significant percentage of the potash, inevitably lost in flotation processing.

The K62 Project is very attractive and we look forward to further assessing the contribution it can make to the operations of the Muga Mine from both an economic and environmental perspective.”

The Scoping Study is based on a budget information proposal, which included a detailed process flow sheet design prepared by global process engineering firm GEA Messo PT (“GEA”). GEA has constructed over 1,200 crystallisation plants in its 60 year history.

The Study also relies on metallurgical test work completed by German based K-UTEC, to provide an initial assessment of the metallurgical properties of the Muga slimes.

Commencement of construction of the crystallisation processing plant will not occur until the Muga Mine is producing to enable detailed test works to be completed on the slime tailings and to ensure the Capex for the Project can be properly funded from free cash flow.

A summary of the Scoping Study is attached to this release.

For More Information

www.highfieldresources.com.au

Company

Investor Relations Executives

Anthony Hall Simon Hinsley Managing Director APAC Investor Relations Ph: + 34 617 872 100 Ph: +61 401 809 653 Hayden Locke Nuala Gallagher / Simon Hudson Head of Corporate Development UK Investor Relations Ph: +34 609 811 257 Ph: +44 207 920 3150

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 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, or Ore Reserves through the ASX. Mr. José Antonio ZuazoOsinga 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. The information in this release that relates to Mineral Resources Results is based on information prepared by Mr. Leo J. Gilbride, P.E. and Ms. Vanessa Santos, P.G. of Agapito Associates, Inc. (Agapito) of Colorado, United States of America (USA). Mr. Gilbride is a licensed professional engineer in the State of Colorado, USA and is a registered member of the Society of Mining, Metallurgy and Exploration, Inc. (SME). Ms. Santos is a licensed professional geologist in

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South Carolina and Georgia, USA, and is a registered member of the SME. SME is a Joint Ore Reserves Committee (JORC) Code ‘Recognized Professional Organization’ (RPO). An RPO is an accredited organisation to which the Competent Person (CP) under JORC Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, or Ore Reserves through the ASX. Mr. Gilbride is a Principal and Ms. Santos is the Chief Geologist and Senior Associate with Agapito 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. Zuazo-Osinga, 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 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 550km[2] . 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 1: Location of Highfield´s Muga, Vipasca, Pintano, Izaga and Sierra del Perdón Projects in Northern Spain

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K62 Potash Project for Muga Mine By-Products Scoping Study Overview

Author

Geoalcali S.L 1 May 2015

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Contents

1.	Executive Summary.............................................................................................................. 2
2.	Crystallisation Plant Feed...................................................................................................... 9
3.	Metallurgy and Recovery..................................................................................................... 10
4.	Process Plant..................................................................................................................... 12
5.	Other Infrastructure and Utilities........................................................................................... 14
6.	Transport and Logistics....................................................................................................... 15
7.	Markets............................................................................................................................. 15
8.	Capex............................................................................................................................... 16
9.	Opex................................................................................................................................. 20
10.	Economic Analysis............................................................................................................. 22
11.	Next Steps......................................................................................................................... 24

K62 Potash Project for Muga Mine By-Products Scoping Study – Overview

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1. Executive Summary

Background

Highfield Resources Limited (ASX:HFR) (“Highfield” or “the Company”) is an ASX listed potash development company with five 100% owned potash projects in Northern Spain, within close proximity to the Atlantic coast.

The most advanced of these projects is the flagship Muga Potash Mine (“Muga” or “the Mine”), which when in full production will produce in excess of 1.1 million tonnes of K60 muriate of potash (“MOP”) per annum over a minimum life of mine (“LOM”) of 24 years. This was detailed in a Definitive Feasibility Study (“DFS”) that the Company released in March 2015 (refer ASX release 30 March 2015).

The Company has completed a Scoping Study (the “Study”) for the K62 Potash Project for the Muga Mine by-products focussing on the slime tailings (“K62 Potash Project” or “Project”). The results of the Scoping Study are summarised in this document.

The Company is proposing to construct a crystallisation processing plant that has been designed to process the slime tailings produced by the Muga Mine to produce a K62 MOP product and an industrial grade salt (NaCl) product for sale in the global market with specific focus on east coast North American markets.

Commencement of construction of the crystallisation processing plant will not occur until the Muga Mine is producing to enable detailed test works to be completed on the slime tailings and to ensure the Capex for the Project can be properly funded from free cash flow.

Financial Highlights

Total capital expenditure (“Capex”) for the Project is estimated at US$124 million. This delivers a crystallisation plant capable of processing up to 1.3 million tonnes of slimes feed per annum. C3 cash operating cost (“Opex”) in full production is estimated at US$85 per tonne. These estimates deliver strong financial metrics of:

• a post-tax, unlevered, internal rate of return (“IRR”) for the Project of 33.0%; and

• a net present value using a discount rate of 10% (“NPV10”) of US$222 million.

EBITDA in the first full year of production (2019) is estimated at US$56 million.

The Project

The purpose of the Study is to assist the Company in making an early stage assessment as to the technical and economic viability of the installation of a crystallisation plant to process slimes tailings from the Muga Mine and to provide validation of the Company’s intention to move the Project to preliminary feasibility stage.

Slime tailings are created in the first phase of processing sylvinite ore into K60 potash. This stage is designed to remove insoluble content from the sylvinite ore. As part of the removal of the insoluble content (primarily clay material), potash (“KCl”) and sodium chloride (“NaCl” or “salt”) are also removed. The Project is targeting the high potash content in these slime tailings.

The proposed process plant to extract potash and salt is a conventional crystallisation plant, which is widely used in the potash and industrial salt industries to produce high grade MOP (K62) and vacuum salt.

The process plant contemplated in this Study can be broadly divided in the six discrete sections:

• 1) Dissolving and brine treatment to remove the insoluble materials;

• 2) NaCl crystallisation;

• 3) NaCl drying;

• 4) KCl crystallisation;

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• 5) KCl drying; and

• 6) Utilities.

The first step includes the removal of the insoluble materials and the precipitation of sulphates, magnesium and calcium out of solution, all of which are filtered out of the remaining brine which contains dissolved NaCl and KCl.

The NaCl and KCl products are then preferentially precipitated out of the circulating brine solution by varying its temperature within certain ranges, depending on salt concentrations.

The NaCl and KCl products are dried using the same fluidised bed dryers that are likely to be used in the Muga Mine process plant before shipment to market via the Port of Pasajes or the Port of Bilbao.

The Scoping Study

The Scoping Study utilises work completed by a number of independent consultants working either directly on the Project, such as GEA Messo PT and K-UTEC, or indirectly via their work on the Muga Mine DFS.

The Company engaged specialist engineering consultants GEA Messo PT (“GEA”) to develop the process flow sheet to process the Muga slime tailings and create a scoping study level capital cost estimate, which forms the basis of this document. GEA is a global engineering firm and has over 60 years of experience in the design and construction of crystallisation plants and has designed or constructed more than 1,200 crystallisation plants worldwide.

Based on the designs and equipment specifications provided by GEA and the input cost parameters for energy, labour, reagents and maintenance that the Company has developed as part of the Muga Mine DFS, the Company developed the operating cost estimates for the Project, per tonne of slimes feed, from first principles.

The Company engaged specialist German based independent expert K-UTEC to examine the metallurgical properties of the slimes tailings likely from the Muga Mine process plant. In particular, K-UTEC focused on the separation of the remanent KCl and NaCl crystals from the insoluble materials of the slimes tailings via a washing process, which is considered the key limiting factor to recoveries in this process.

The Scoping Study also relies on work completed by the Company’s experienced management team, primarily in estimating the quantity and composition of the slimes feed that the Crystallisation Plant will process. The estimates are based on the results of the comprehensive metallurgical test work conducted as part of the Muga Mine DFS and the management team’s deep experience in the operation of processing plants similar to the proposed Muga Project.

Project Area

The Project will be part of the broader Muga Mine Project area and a suitable site, which minimises distance between the feed stock, the plant and storage areas, has already been identified and set aside as part of the Muga Mine DFS.

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Figure 1: Crystallisation Plant Site location in broader Muga Potash Mine Site

Environmental Approvals

The Company has not yet commenced the environmental approval process for the Project.

The Company notes, however, that the tailings from the Project Plant are expected to be even more benign than those produced from the Muga Mine, with significantly lower salt (NaCl) which is considered to be an environmental positive.

The Company anticipates that the approval of the crystallisation plant, from an environmental perspective, will be able to rely significantly on the comprehensive work completed to date which was submitted as part of the Environmental and Social Impact Assessment (“ESIA”) for the Muga Mine.

Metallurgy

The Company engaged specialist independent expert K-UTEC to examine the metallurgical properties of the slimes tailings from the Muga Mine. In particular, K-UTEC focused on the separation of the remanent KCl and NaCl crystals from the insoluble materials of the slimes tailings via a washing process, which is considered the limiting factor in metallurgical recoveries for a crystallisation plant.

K-UTEC completed four testing cycles of an identical four stage washing process, varying the quantity of fresh water added in different sections of the process.

The test work indicated that the slimes material is amenable to washing and based on the testing completed to date K-UTEC anticipate that at least 90% of the contained KCl and 95% of the contained NaCl will be successfully liberated for dissolution in the primary washing stage.

These recovery rates have been used for the analytical purposes in this Study.

Slimes Feed

The crysallisation plant is designed to receive feed comprised of the slimes tailings of the Muga Mine.

The tailings or waste streams from the Muga Mine will include NaCl of varying quality and grade, and a stream of slimes composed primarily of insoluble materials (in the form of clays or lutites, and some minor quartz, magnesite etc), NaCl, KCl and a number of other trace elements including calcium sulphate and magnesium chloride.

The Muga Mine is currently expected to operate for a minimum mine life of 24 years, processing approximately 140 million tonnes of ROM ore over its life of mine (“LOM”). This will result in slimes tailings

4 K62 Potash Project for Muga Mine By-Products Scoping Study – Overview

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production of between 25 and 35 million tonnes over this period which can be used as feed stock for the Project.

The metallurgical recovery rate for the Muga Mine process plant is expected to average 84% LOM with the remaining 16%, or approximately 204,000 tonnes per annum of KCl, being lost in the process circuit via either the salt or slimes tailings, or as part of the process brines purging.

Initial analysis suggests that over 70% of KCl lost within the Muga Mine process circuit is contained within the slimes material and that most of what is remaining is found within the salt (NaCl) tails.

For the purposes of analysis, the Company has used the following base case slimes composition:

Item	Composition
Insolubles/Clays	43.5%
NaCl	21.0%
KCl	11.5%
CaSO4	6.7%
**MgCl2 **	0.3%
**H2O **	17.0%

The Company has run sensitivities based on changes in KCl and NaCl grade of the slimes feed stock to show the impact of variation of these key inputs on financial metrics, which can be found in the economic analysis section of this document.

Production

The crystallisation plant processes slimes tailings from the Muga Mine and is expected to have a minimum operational life of 24 years at approximately 1.3 million tonnes of feed per annum.

Based on the chemical composition, it is expected that the plant will produce approximately 135,000 tonnes of K62 MOP product and approximately 259,000 tonnes of high purity NaCl product per annum during the life of the Muga Mine.

Construction

Construction is estimated to take 24 months and will benefit from the infrastructure and site preparation work that will already be complete as part of the Muga Mine development.

Product and Markets

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). MOP can be further divided into K60 and K62 products, with K62 being a higher purity product (comprising over 98.1% potassium). MOP accounts for around 90% of global potash sales by volume.

Potash is a widely used nutrient fertiliser along with nitrogen and phosphorous and this use accounts for approximately 95% of total potash consumption. While K62 is suitable for use as a fertiliser, there are some industrial applications for the higher grade MOP that offer a premium pricing. However, the market is small

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relative to the global fertiliser market and the Company has not considered these niche markets for the purpose of this study.

Salt

Salt (NaCl) has over 14,000 commercial applications but over 80% is consumed in four main markets, with the largest market segment being Chloralkali production.

• Chloralkali production (38%);

• Soda ash production (21%);

• Road de-icing (13%);

• Food/food processing (10%); and

• Others (18%).

Of the global salt market, which is close to 300 million tonnes per annum, de-icing salt is typically the lowest value due to the low grade and high levels of impurities in the product. The Project will produce very high purity NaCl which is expected to be sold into the highest value industrial salt market segments.

Tailings Management

The Project produces a filter cake tailings stream which is comprised primarily of insoluble materials (lutites) with a small quantity of calcium sulphate and other trace elements.

The Project is benefitted from an environmental perspective by the fact that the filter cake tailings from the crystallisation plant is likely to be far more benign than that which is produced from the Muga Mine process plant, with up to 95% less salt content.

The Muga Mine design includes a significant tailings storage facility (“TSF”) for the storage of salt (NaCl) and slimes based tailings generated by the Muga Mine.

For this reason, the Company anticipates that following the completion of the requisite studies and approvals process that the filter cake tailings from the Project will be suitable for storage in the facility with no additional treatment or work required.

Scoping Study Preparation

The Scoping Study was prepared internally by the Company with support from domestic and international specialist consultants.

GEA’s Capex estimate was provided on a turn-key EPC basis, which the Company used as its starting point for the Project Capex estimate. The Company believes it likely that savings could be generated due to existing internal capabilities regarding engineering, architecture and project management and by relying on shared infrastructure – such as electricity, roads and civil works – that will have been completed as part of the Muga Mine development.

GEA’s Capex estimate was for a plant with processing capacity of 1.9 million tonnes per annum. The Company factorised GEA’s estimate to account for the smaller plant size in accordance with the rules of thumb outlined in the Cost Estimation Handbook 2012, which are suitable for a scoping study stage estimate.

Exchange Rate

All pricing was prepared in Euros and has been converted to USD at an exchange rate of EUR 0.95 : USD 1.00. An exchange rate sensitivity analysis has been prepared and is included in this document to show the impacts of movements in exchange rate, both downwards and upwards, on Project financial returns.

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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, for which the Company has assumed an outsourced solution.

Capex for the Project is estimated to be US$123.8 million (CY2015 prices). The Company based its Capex estimate on work completed for it by GEA including a proposal to build, via a turn-key EPC contract, the full project.

	Capex Estimate Summary Component Crystallisation Plant	Eur (millions) USD (millions) 82.6 87.0
	Buildings and Civil Works	11.2 11.8
	Sub Total	93.8 98.7
	Associated Permits	0.5 0.5
	Corporate Costs	3.8 3.9
	Contingency (20%)	19.6 20.6
	Total	117.6 123.8

C1 Opex is estimated at US$59.70 per tonne (CY2015 prices). C2 Opex is estimated at US$85.18 per tonne. C3 Opex is also estimated at US$85.18 per tonne (marketing fees and transport costs from Port of Pasajes to target markets have been factored into the net potash/salt price assumption for revenue purposes), reflecting the fact that there are no royalties (public or private) associated with the Project.

	Operating Cost Summary Components Euros / t (Product) USD / t (Product)
	C1 Cost
	- Crystallisation Plant 27.70 29.15
	-Transport 17.43 18.35
	Sub Total 45.13 47.50
	- G&A 4.00 4.21
	- SustainingCapital 7.59 7.99
	Total C1 Costs PRE-CONTINGENCY 56.72 59.70
	20%Contingencyon Mining,Processingand Transport 9.03 9.50
	C1 Costs Including Contingency 65.74 69.20
	C2 Costs
	- Depreciation 15.18 15.98
	-C1Costs 65.74 69.20
	Total C2 Costs 80.92 85.18
	C3 Costs
	- Royalties 0.00 0.00
	-C2Costs 80.92 85.18
	Total C3 Costs 80.92 85.18

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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 lower end of the recommended contingency range for a scoping study of 20% to 35% due to the quality of the EPC turn-key proposal it received from GEA. GEA has 60 years of experience in designing and constructing crystallisation plants and the proposal was well within the required accuracy limits of a scoping study as defined in the Cost Estimation Handbook 2012.

Potash and Salt Pricing Assumption

Potash Pricing

The price assumed for the K62 product is the same that has been used for K60 pricing for the Muga Mine DFS and the Sierra del Perdón Scoping Study, as is summarised below:

Table 1: Potash Price Assumptions per metric tonne of product

	2016	2017	2018	2019	2020
FOB Vancouver Reference	350.00	374.00	385.00	393.00	379.00
Ave. CIF NW Eur and CFR Brazil	396.90	421.65	434.20	443.75	430.72
Less:
Sales Commission (5%)	19.85	21.08	21.71	22.19	21.54
Contract Price Discount (5%)	19.85	21.08	21.71	22.19	21.54
Average Nett Price	357.20	379.49	390.78	399.37	387.64

Salt Pricing

Major salt producers operating in North America and Europe have achieved long-term average prices received of US$140-160 per tonne, delivered to customer.

For the purposes of this study the Company has assumed a selling price of US$125 per tonne at Pasajes which allows $15-35 transport costs from port to customer. From Pasajes most global markets are likely to be accessible given the comparatively high value of product, but the Company believes the East Coast of the United States is a natural market given higher prices in the region. The Company considers this pricing assumption to be in the lower end of likely pricing due to the high purity of the product which is likely to attract a premium price, but prudent given the stage of the project. A 5% selling commission has then been applied to represent selling commissions, and prices are escalated at 2.2% per year to reflect the impact of inflation.

Financial Metrics

The financial model calculates returns on an after tax, unlevered basis. The Project delivers an after tax, unlevered IRR of approximately 33.0%. The US$ Net Present Values at various discount rates are presented below.

Discount Rate	NPV in US$
8%	$285m
10%	$222m
12%	$174m

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Life of operation assumption is 24 years (consistent with the Muga Mine) with end of operation works estimated at 5% of initial Capex (escalated). The Capex is estimated to be spread over eight consecutive quarters starting in the third quarter of CY17. Production is scheduled to commence in July 2019.

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.

EBITDA in the first full year of production (CY2019) is estimated at US$56m.

Progression to Pre-Feasibility Study

The Scoping Study for the Crystallisation Plant demonstrates sufficient technical and economic viability for the Company to progress to the preparation of a detailed PFS and its associated technical studies. Key next steps include:

1. Further analysis of the Muga Mine slimes tailings to further refine the expected composition of the Project feed stock;

2. Detailed metallurgical test work to further refine process design;

3. Environmental and general approvals;

4. Refinement of cost estimates associated with the project; and

5. Detailed study of the K62 and vacuum salt markets.

2. Crystallisation Plant Feed

The plant is designed to receive feed comprised of the slime tailings of the Muga Mine.

The Muga Mine is an underground potash mine which, when in full production, will produce in excess of 1.1 million tonnes of K60 MOP per annum via a conventional KCl flotation circuit.

The tailings or waste streams from the Muga Mine will include NaCl of varying quality and grade and a stream of slimes, which is composed primarily of insoluble materials (in the form of clays or lutites, and some minor quartz, magnesite etc), NaCl, KCl and a number of other trace elements including calcium sulphate and magnesium chloride.

The Muga Mine is currently expected to operate for a minimum mine life of 24 years, processing approximately 140 million tonnes of ROM ore over its life of mine (“LOM”). This will result in slime tailings production of between 25 and 35 million tonnes over this period.

The Muga Mine is expected to achieve an average mined grade of 12.75% K2O over the LOM, or a total of approximately 1.275 million tonnes of KCl extracted from the mine per annum (6.3 million tonnes of ROM ore per annum).

The metallurgical recovery rate for the Muga process plant is expected to average 84% LOM, the remaining 16%, or approximately 204,000 tonnes per annum of KCl, is lost in the process circuit either in the salt or slimes tailings, or via process brine purging.

Initial analysis suggests that the majority of KCl lost within the Muga process circuit is contained within the slimes material and that most of what is remaining is found within the salt (NaCl) tails.

The Company used the results of the detailed metallurgical test work completed as part of the Muga DFS to estimate that, of the approximately 204,000 tonnes per annum of KCl lost from the Muga process,

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approximately 70% will be contained within the slime tailings, which gives a KCl composition within these slimes of 11.5% by weight.

For the purposes of analysis, the Company has used the following base case slimes composition:

Item	Composition
Insolubles/Clays	43.5%
NaCl	21.0%
KCl	11.5%
CaSO4	6.7%
**MgCl2 **	0.3%
**H2O **	17.0%

The Company has run sensitivities based on changes in KCl and NaCl grade of the slimes feed stock, which can be found in the economic analysis section of this document.

3. Metallurgy and Recovery

The Company engaged specialist independent expert K-UTEC to examine the metallurgical properties of the slimes tailings from the Muga Mine. In particular, K-UTEC focused on the separation of the remnant KCl and NaCl crystals from the insoluble materials of the slimes tailings via a washing process.

The Company provided K-UTEC with a 1.15kg sample of material from the metallurgical test work programs completed for the Muga Mine DFS, which it expects to be representative of the slimes tailings that will comprise the feed stock for the crystallisation plant.

K-UTEC completed a chemical analysis of the sample material using a D2 X-Ray diffractometer to accurately analyse its true chemical composition. This is used as a base line from which to measure the efficacy of the washing process in liberating the NaCl and KCl.

Test Work Overview

K-UTEC completed four testing cycles of an identical four stage washing process. The only variation in each test was in the amount of fresh water added in certain sections of the process. This testing was designed specifically to ascertain the response of the slimes to washing in fresh water, with respect to the liberation of the KCl and NaCl.

Each of the four testing cycles comprised the following stages:

• 1) Leaching

• Leach 100g of the slimes tails in fresh water at a temperature of 50[o] C with continuous stirring for 45 minutes. The amount of water varied depending on test from 87g in Test 1 to 72.6g in Test 4. The slurry is then filtered and a leach liquor and filter cake are obtained.

• 2) Filter cake washing

• The filter cake obtained from Step 1 is washed in the filter press with fresh water at 50[o] C. The amount of fresh water added ranges from 45g in Test 1 down to 40g in Test 3. This results in a washed filter cake and a wash filtrate solution.

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3) Suspension washing

The washed filter cake from Step 2 is mixed with fresh water at 50[o] C and stirred for 45 minutes continuously. In Tests 1 – 3 87g of fresh water is added, while in Test 4 100g of fresh water is added. As in Step 1, the slurry is filtered to obtain a leach liquor and filter cake.

4) Filter cake washing

Step 2 is repeated using 40g of fresh water in all test cases.

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Figure 2: Schematic Design of K-UTEC Testing Process 1 for Slimes Washing

Test Work Summary

Following the completion of the test cycles outlined above, K-UTEC completed chemical analysis of the filter cake residue to ascertain the remaining NaCl and KCl content.

The analysis suggests that a significant proportion of the original NaCl and KCl is removed into the leaching solution during the washing process.

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Based on the test work completed, K-UTEC estimate that the Company will recover approximately 90% of the KCl and 95% of the NaCl within the slimes feed stock. This recovery has been used for the purposes of economic analysis. GEA’s theoretical analysis suggested higher recoveries than these and the Company will conduct further test work to confirm its metallurgical performance as part of the pre-feasibility study.

4. Process Plant

The Company engaged expert consultant GEA Messo PT (“GEA”) to develop the process flow sheet to process the Muga slime tailings and create a scoping study level capital estimate. GEA is a global engineering firm and has over 60 years of experience in the design and construction of crystallisation plants and has designed or constructed more than 1,200 crystallisation plants worldwide.

The scope of work was to provide a plant capable of processing 240 tonnes per hour of slimes feed stock, or 1.9 million tonnes per annum assuming 90% capacity utilisation, with feed stock comprising the slime tailings of the Muga Mine. Subsequent test work indicates that the Muga Mine will produce approximately 1.3 million tonnes per annum or a plant process rate of 161 tonnes per hour. The Company has factorised the Capex estimates relating to the processing plant to account for the smaller expected capacity of the plant.

The plant was designed to produce two streams of saleable materials being K62 (Muriate of Potash (“MOP”) with purity greater than 98.1%) and vacuum quality NaCl (standard salt) of at least 99.95% purity, as well as a tailings material comprised primarily of insoluble clays and lutites, minor calcium sulphate and other trace elements.

Based on operating parameters provided by GEA such as electricity demand, energy consumption for heating and reagent usage the Company developed an operating cost estimate from first principles.

Process Flow Sheet

The process plant can broadly be divided into six discrete sections:

• 1) Dissolving and brine treatment to remove the insoluble materials;

• 2) NaCl crystallisation;

• 3) NaCl drying;

• 4) KCl crystallisation;

• 5) KCl drying; and

• 6) Utilities.

Based on the expected composition of the slimes feed, provided by the Company, GEA propose the following process flow sheet:

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Figure 3: Process Flow Sheet Muga Crystallisation Plant

The most important step, in terms of increasing recovery, is the first step (dissolving and brine treatment) which liberates the KCl and NaCl grains from the slimes material via dissolution and agitation. Once the KCl and NaCl are in solution, the recoveries from the crystallisation steps are typically very high – in the order of 98% to 99%.

Process Description

The first step of the process is to mix the slimes tailings with water to suspend the insoluble solid materials, while dissolving as much of both the sodium chloride (NaCl) and potassium chloride (KCl) as possible, to obtain a slurry with solids in suspension of approximately 20% to 25%.

The slurry is then fed to a lamella clarifier for thickening and to remove particulate material from the solution.

Following the first clarification stage, calcium hydroxide in solution (Ca(OH)2) is added to the brine which precipitates both the sulphates and magnesium from the back flowing brine solution. This is followed by a further clarification stage using membrane filter presses to remove the precipitants.

Sodium carbonate (Na2CO3) in solution is then added which causes the calcium to precipitate from solution. This is again followed by a clarification stage using membrane filter presses to remove the precipitated calcium from solution.

The final brine, which contains only KCl and NaCl, is sent to a dedicated storage tank awaiting the crystallisation process.

Potash is soluble, and solubility is much more dependent on temperature than salt: at low temperature potash is much less soluble than at high temperature, while salt has a significantly more constant behavior in this regard. Due to this difference it is possible, when starting from a low concentration of potash compared to salt, to crystallise salt at elevated temperature with potash remaining dissolved. Temparature is then reduced which causes only the potash to crystallise due to its decreasing solubility, while remaining salt is maintained in solution (due to the addition of a small amount of water). The result of this process is that both products are obtained practically 100% pure.

Both the NaCl and KCl products are dried using fluidised bed driers, similar to those installed at the Muga Mine process plant, to achieve the required levels of humidity.

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5. Other Infrastructure and Utilities

The Crystallisation Plant will be located within close proximity to the Muga Mine project and, as such, will benefit from infrastructure already in place as part of the Muga Mine development including site roads, utilities (electricity, gas and water), general site drainage and site facilities and offices.

The processing plant will require the construction of three dedicated buildings covering a total of 3,125 m[2 ] (2,000m[2] , 625m[2] and 500m[2] respectively) as well as additional storage for both the NaCl and K62 product covering 4,600m[2] and 2,500m[2] respectively. These buildings also include a small space for offices and workers facilities.

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Figure 4: Site Layout of Muga Potash Project with Crystallisation Plant

From the main entrance to the plant, the Company will extend existing roads to allow truck haulage capacity.

In addition, the crystallisation plant will require minor investment in conveyors to deliver slimes feedstock to the plant and to deliver finished product to the storage facilities.

The filter cake tailings is anticipated to be stored in the tailings storage facility (“TSF”) which has been included in the designs of the Muga DFS. This facility is designed to be suitable for tailings with far higher NaCl content than is expected from the filter cake tailings and, therefore, the Company believes the design will be more than suitable for this purpose.

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6. Transport and Logistics

The Study proposes direct road haulage to the Port of Pasajes for shipment to its core markets for both industrial salt and K62 product. The proposed processing plant is within the broader Muga Project area, which is located within close proximity to a dual national highway with speed limits of 120kms / hour for light vehicles and 90kms / hour for HGVs. The road connections to this transport route will already have been upgraded as part of the Muga Project development meaning that additional capital expenditure on this aspect should be minimal.

It is approximately 140kms on this highway to the Port of Pasajes, a port with confirmed capacity to ship product, which is located on Spain’s Atlantic coast. The Port of Bilbao is located a further 115km by road from Pasajes, giving additional optionality and operational flexibility to the Company in its pathway to commercialisation. The Company has confirmed capacity availability and has signed MOUs with both the Port of Pasajes and the Port of Bilbao.

Similar to the Muga DFS, the Company has opted to outsource the transport and logistics solution to minimise capital expenditure and will pay a small additional fee on a “per tonne” of product shipped basis.

7. Markets

Salt Market

The global market for NaCl, is approximately 300 million tonnes per annum which comprises a variety of smaller sub-segments each with different demand drivers. Salt has over 14,000 commercial applications but over 80% is consumed in four main markets:

• Chloralkali production (38%);

• Soda ash production (21%);

• Road de-icing (13%);

• Food/food processing (10%); and

• Others (18%).

The purity of the NaCl produced by the crystallisation plant will be in excess of 99.95%. As a result, the Company expects the key markets for its product to be the industrial salt markets that are estimated to represent c. 85% of the global market and, typically, are the premium market segments.

Major salt producers which operate in North America and Europe have achieved long-term average prices of US$140-160 per tonne, delivered to customer for all salt other than de-icing, which is lower quality and commands significantly lower pricing.

For the purposes of this Study the Company has assumed a selling price of US$125 per tonne at Pasajes which allows $15-35 transport costs from port to customer. From Pasajes most global markets are likely to be accessible given the comparatively high value of product, but the Company believes the East Coast of the United States is a natural market given higher prices in the region. The Company considers this pricing assumption to be at the lower end of the expected price spectrum due to the high purity of the product which is likely to attract a premium price, but prudent given the stage of the project. A 5% selling commission has then been applied to represent selling commissions, and prices are escalated at 2.2% per year to reflect the impact of inflation.

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Potash Market

The Company will obtain approximately 135,000 tonnes of K62 MOP from the crystallisation plant. This product has a higher content of K2O than the K60 which will be produced at the flotation plants of the Company’s Muga and Sierra del Perdón projects.

The predominant use of potash globally is as a fertiliser. K62 product is suitable for fertilizer, but also has additional commercial and industrial applications. Due to the relative scarcity of this higher-purity product as opposed to K60, it can achieve a premium price. The Company has not considered any premium for the purposes of this Scoping Study, and any premium to prevailing K60 prices would provide upside to the economics of the project.

The price assumed for the K62 product is the same as has been used for the Muga DFS and the Sierra del Perdón Scoping Study, as is summarised below:

Table 2: Potash Price Assumptions per metric tonne of product

	2016	2017	2018	2019	2020
FOB Vancouver Reference	350.00	374.00	385.00	393.00	379.00
Ave. CIF NW Eur and CFR Brazil	396.90	421.65	434.20	443.75	430.72
Less:
Sales Commission (5%)	19.85	21.08	21.71	22.19	21.54
Contract Price Discount (5%)	19.85	21.08	21.71	22.19	21.54
Average Nett Price	357.20	379.49	390.78	399.37	387.64

8. Capex

Crystallisation Plant

The costs associated with construction of the crystallisation plant and broader infrastructure have been estimated using the report delivered by GEA as detailed in section 4 of this Scoping Study. The costs outlined by GEA are on an EPC basis, and this has been used as the basis for estimating Capex.

The Company believes it is likely that savings could be generated from existing internal capabilities in engineering, architecture and project management.

Capex estimates have been factorised from the GEA proposal to adjust for the smaller plant operating capacity.

Capex Estimate for Crystallisation Plant

Capex Estimate for Crystallisation Plant
Item	Eur	USD
Filtration Systems	14,625,000	15,394,737
NaCl Crystallisation Equipment	18,200,000	19,157,895
KCl Crystallisation Equipment	13,650,000	14,368,421
Piping Material, Instruments and Miscellaneous	10,395,000	10,942,105
Electrical	8,190,000	8,621,053
Erection Costs	17,550,000	18,473,684
Total	82,610,000	86,957,895

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Buildings and Civil Works

The three main stages of the crystallisation plant (filtration, NaCl crystallisation/drying and KCl crystallisation/drying) will each require a separate building. In addition, two storage buildings will be constructed for the NaCl and K62 product.

Civil works required will be minimal owing to the existing development of the area in relation to the Company’s Muga project.

Capex Estimate and Details for Buildings and Civil Works

Capex Estimate and Details for Buildings and Civil Works
Item	Eur USD
Filtration Building	1,800,000 1,894,737
NaCl Crystallisation Building	525,000 552,632
KCl Crystallisation Building	420,000 442,105
Storage and Administrative Buildings	4,136,364 4,354,067
Bulk Handling Facility	3,000,000 3,157,895
Civil Works	1,300,000 1,368,421
Total	11,181,364 11,769,856

Utilities and Logistics

The Project operations will require a mixture of electricity, natural gas and minor quantities of diesel to serve its energy requirements. Supply infrastructure will be in place at site due to the construction of the Company’s Muga project. Costs relating to connection of the Project to these supplies are included in the estimate for buildings and civil works.

Logistics requirements for the project will be outsourced consistent with the Company’s plans for both the Muga and Sierra del Perdón projects. The bulk handling facility for truck loading at site is also included in the Capex estimate for building and civil works.

The Scoping Study proposes direct road haulage to the Port of Pasajes for shipment to into the NW European market for potash and the east coast North American market for vacuum salt. The Project is substantially benefitted by its relative closeness to two significant ports located on the Atlantic Coast of Spain – the Port of Bilbao and the Port of Pasajes. This is further supported by first class infrastructure, including both road and rail, which is within close proximity to the Project running to one or the other of these ports.

The operating philosophy adopted by the Company is one of minimising Capex, while ensuring Opex associated with logistics and transport remains within a reasonable range. For this reason, the Company believes that outsourcing the entirety of its transportation, port handling and storage, and shipping needs is likely to be the best option to achieve its dual objectives.

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Figure 5: Port of Pasajes

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Figure 6: Transport Route from Site to Port of Pasajes

Project Delivery and Corporate Costs

Project delivery costs have been estimated on an EPC basis. The Company believes it will have the internal engineering, architecture and project management capabilities to allow direct owner procurement and construction management. As such, if it is deemed cost-effective, it is likely that the project will be constructed on an EPCM basis, with the possibility of generating significant Capex savings.

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Capex Estimate for Project Delivery and Owners Costs

Capex Estimate for Project Delivery and Owners Costs
Item Corporate Costs	Eur USD 3,751,655 3,949,110
Permit Fees	469,617 494,334
Total	4,221,272 4,443,444

Contingency

The Company has assumed a 20% contingency on all costs corresponding with the low end of the recommended range for a scoping level study. The Company believes this is justified, given the EPC turnkey proposal it received from GEA for the development of the Project including prescribed ranges are well within the required levels of accuracy for a scoping study.

Capex Estimate for Contingency

Item Crystallisation Plant	Eur USD 16,522,000 17,391,579
Buildings and Civil Works	2,236,273 2,353,971
Project Delivery and Corporate Costs	844,254 888,689
Total	19,602,527 20,634,239

Summary of Capex

Total Capex is estimated US$123.8m. This represents the total estimated capital required to construct a plant capable of processing 161 tonnes of slimes per hour, operating at 90% capacity utilisation (a total of 1.271m tonnes per annum).

Capex Estimate Summary

Component Crystallisation Plant	Eur USD 82,610,000 86,957,895
Buildings and Civil Works	11,181,364 11,769,856
Sub Total	93,791,364 98,727,751
Associated Permits	469,617 494,334
Corporate Costs	3,751,655 3,949,110
Contingency (20%)	19,602,527 20,634,239
Total	117,615,163 123,805,434

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9. Opex

Crystallisation Plant

Opex has been calculated using detailed equipment and operating specifications provided by GEA. The Company then applied various input parameters (electricity, gas, labour, reagents) to build the Opex on a per tonne of slimes basis from first principles. Opex per tonne of product has been calculated using the total quantity of both NaCl and K62 produced. A contingency of 20% has also been included in Opex figures.

Opex Detail for Crystallisation Plant

Opex Detail for Crystallisation Plant
Item	Euros / t Slimes USD / t Slimes
Steam	1.62 1.70
Electricity	3.56 3.75
Cooling Water	0.00 0.00
Chemicals & Reagents	1.95 2.05
Labour	0.27 0.28
R&M	0.86 0.90
Consumables	0.04 0.05
Waste Disposal	0.15 0.16
Sub Total	8.45 8.89
Contingency (20%)	1.69 1.78
Total	10.14 10.67
Per tonne of Product	33.24 34.99

Transport

The proposed transport solution assumes that both road haulage and port handling are outsourced. For simplicity, Opex per tonne of product figures are considered to be the same for both end products. A contingency of 20% has been added to estimated transport Opex.

Opex Detail for Transport

Opex Detail for Transport
Item	Euros / t USD / t
Road transportation	12.83 13.51
Port Charges and Taxes	4.60 4.84
Sub Total	17.43 18.35
Contingency (20%)	3.49 3.67
Total (per tonne of product)	20.92 22.02

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Balance of Opex

The balance of estimated Opex comes from sustaining capex, G&A costs and depreciation. For simplicity, Opex per tonne of product figures are considered to be the same for both end products.

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

Opex Detail for Sustaining Capex, G&A and Depreciation

Item	Euros / t USD / t
Sustaining Capex	7.59 7.99
General and Administative	4.00 4.21
Depreciation	15.18 15.98
Total (per tonne of product)	26.77 28.17

Opex Summary

Estimated Opex is provided at C1, C2 and C3 levels below. For simplicity, Opex per tonne of product figures are considered to be the same for both end products.

Operating Cost Summary

Operating Cost Summary
Components	Euros / t	USD / t
C1 Cost
- Crystallisation Plant	27.70	29.15
-Transport	17.43	18.35
Sub Total	45.13	47.50
- G&A	4.00	4.21
- SustainingCapital	7.59	7.99
Total C1 Costs PRE-CONTINGENCY	56.72	59.70
20%Contingencyon Mining,Processingand Transport	9.03	9.50
C1 Costs Including Contingency	65.74	69.20
C2 Costs
- Depreciation	15.18	15.98
- C1 Costs	65.74	69.20
Total C2 Costs	80.92	85.18
C3 Costs
- Royalties	0.00	0.00
- C2 Costs	80.92	85.18
Total C3 Costs	80.92	85.18

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The Company has elected to factor in a sales and marketing fee of 5% against both of its NaCl and KCl price assumptions. An additional 5% reduction has also been applied to KCl sales to factor in likely contract pricing discounts.

10.Economic Analysis

Financial Metrics

	Metric	Output
	Unlevered Post Tax IRR	33.0%
	NPV8 NPV10 NPV12 US$286 million US$222 million US$174 million
	EBITDA in first year of full production US$56 million (2019)
	Total Capex US$124 million

Notes to the financial model:

1. Amounts are shown in Calendar Year 2015 Euro or $ as indicated;

2. Exchange Rate assumption is EUR0.95:USD1.00;

3. All expenses are escalated at 2.2% per annum from CY2015;

4. Potash price assumptions are nominal through to CY2020 and then escalated at 2.2% per annum;

5. NaCl price assumptions are escalated at 2.2% from CY2015;

6. Transport Opex assumes all transport solutions are outsourced;

7. 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);

8. Full production is estimated at 1.270m tonnes of slimes throughput per annum;

9. At a recovery rate of 95% for NaCl and 90% for KCl full production produces 254k tonnes of saleable vacuum salt (99.95% purity) and 134k tonnes of potash (K62) per annum; and

10. Life of operation assumption is 24 years (consistent with Muga) with end of operation works estimated at 5% of initial Capex (escalated).

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. The potash price assumption in the Company´s financial model is a delivered potash price that assumes all product will be sold in NW Europe.

Discount	Rate	NPV (US$)
8%		$286m
10%		$222m
12%		$174m

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Table 3: NPV Sensitivity to Potash Price and Discount Rate

Potash Price / NPV ($´000)	Potash Price / NPV ($´000)	Potash Price / NPV ($´000)
Sensitivity 70% 85% Price Received(2015) 268.28 $ 325.76 $	100% 115% 130% 383.25 $ 440.74 $ 498.23 $
NPV12 101,038 $ 137,349 $	173,661 $ 209,973 $ 246,285 $
NPV10 135,522 $ 178,964 $	222,405 $	265,847 $ 309,289 $
NPV8 180,404 $ 233,006 $	285,607 $ 338,209 $ 390,810 $

Project economics are also relatively sensitive to the NaCl price assumption. The table below compares key financial metrics in a high and low case.

Table 4: NPV Sensitivity to NaCl Price and Discount Rate

Nacl Price / NPV ($´000)	Nacl Price / NPV ($´000)	Nacl Price / NPV ($´000)
Sensitivity 70% 85% Price Received(2015) 87.50 $ 106.25 $	100% 115% 130% 125.00 $ 143.75 $ 162.50 $
NPV12 126,665 $ 150,163 $	173,661 $ 197,159 $ 220,657 $
NPV10 166,162 $ 194,284 $	222,405 $	250,527 $ 278,648 $
NPV8 217,482 $ 251,545 $	285,607 $ 319,669 $ 353,732 $

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 5: NPV Sensitivity to Capex and Discount Rate

Capex / NPV ($´000)	Capex / NPV ($´000)	Capex / NPV ($´000)
Sensitivity 70% 85% Capex($´000) 86,664 $ 105,234 $	100% 115% 130% 123,805 $ 142,376 $ 160,947 $
NPV12 199,379 $ 186,520 $	173,661 $ 160,802 $ 147,943 $
NPV10 248,781 $ 235,593 $	222,405 $	209,217 $ 196,029 $
NPV8 312,655 $ 299,131 $	285,607 $ 272,083 $ 258,559 $

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

Table 6: NPV Sensitivity to Exchange Rate and Discount Rate

Exchange Rate / NPV ($´000)	Exchange Rate / NPV ($´000)	Exchange Rate / NPV ($´000)
Sensitivity EURO : USD 0.80 0.875	100% 0.95 1.025 1.10
NPV12 131,461 $ 154,369 $	173,661 $ 190,130 $ 204,352 $
NPV10 174,652 $ 200,575 $	222,405 $	241,041 $ 257,135 $
NPV8 230,829 $ 260,565 $	285,607 $ 306,984 $ 325,446 $

11.Next Steps

Finalisation of Muga flotation testwork

The composition of the slimes, especially the KCl content, has the potential to effect the economic viability of the Crystallisation Plant. As such, it will also be vital to assess the slime composition with respect to any changes in expected recovery rates from Muga’s flotation plant. In particular, any increase in KCl recoveries at Muga will result in less KCl being present in the slimes available for crystallisation processing.

Detailed metallurgical test work to assess technical viability

The Company has performed initial physical testwork on slimes generated from testwork related to the Muga flotation plant. Although the results of these tests were positive and gave the Company high confidence that the process is viable, the amount of slimes tested was relatively small. As the Muga testwork is finalised, there will be larger quantities of slimes with a final expected composition available for further testwork. It is likely that some testing will need to be carried out on slimes which will be produced once the Muga Mine is in operation.

Environmental and approvals

From an environmental point of view, the Company will need to perform detailed testwork on the expected waste product produced from the crystallisation plant. Expectations are that the waste product will have a content which will allow storage in the existing Muga Mine waste storage facilities without any alterations.

In Spain, the initial step to construct the processing facilities is the lodging of a Memoria Resumen . This is a preliminary environmental impact assessment statement of intent. It is intended to allow the relevant referral authority to evaluate the likely content and studies proposed for the final environmental impact assessment.

Highfield has existing internal capabilities to perform this process.

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Scoping Study – Overview

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Refinement of Capex and Opex figures

Although the Company has received a detailed proposal from GEA, additional work must be completed to fully understand and gain a more granular separation of the likely Capex and Opex before a full Feasibility Study can be developed. To produce more detail in these areas, the Company will continue to work with GEA, as well as carrying out independent work so that a greater confidence level with respect to all figures can be obtained.

Analysis of the Industrial Salt and K62 markets .

Additional work is required to fully understand the dynamics of the Industrial Salt market, especially in Northern America and Western Europe. The Company believes there may be an opportunity to enter into an offtake contract with a North American based salt user prior to construction of the Project that will be investigated over the coming months.

Although the Company has a deep understanding of the potash market, additional work must be performed to fully understand the unique characteristics of the K62 market.

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