HIGHFIELD RESOURCES LIMITED - Capital/Financing Update 2015

ASX Release 20 April 2015

HIGHFIELD RESOURCES DELIVERS COMPELLING SCOPING STUDY FOR SIERRA DEL PERDÓN POTASH PROJECT

Highlights

 Scoping Study completed delivering:
Post tax, unlevered NPV10 of US$527 million
Post tax, unlevered IRR of 38.5%
EBITDA in first full year of production of US$120 million
 Initial 20-year mine life, significant upside with ongoing exploration
 Proposed mine is a decline accessed conventional, underground, room and pillar operation with flotation circuit processing
 Average yearly, steady state production of approximately 520k tonnes of granular K60 potash with cash operational expenditure in full production estimated at US$155/tonne (including transport costs to target markets)
 Independent expert spot potash prices discounted by 10% for contract pricing and sales and marketing fees delivering a 2017 FOB Vancouver standard product reference price of US$315 / tonne in real terms
Capital cost estimated at US$233 million , inclusive of a 20% contingency

Spanish potash developer Highfield Resources Limited (HFR: ASX) (“Highfield” or “the Company”) has completed a Scoping Study for its 100%-owned Sierra del Perdón Project (“SdP” or “the Project”), located within 50km of its flagship Muga Potash Project. The study confirms SdP´s potential to be a long life, high margin project with low upfront capital cost to production.

Highfield’s Managing Director Anthony Hall commented:

“The Scoping Study indicates that our Sierra del Perdón Potash Project is technically viable and has the ability to produce strong cash flows over a long mine life. The economic analysis suggests it is one of the best undeveloped potash projects globally.

Sierra del Perdón is a fantastic second project for Highfield. While our focus remains firmly on the rapid development of our flagship Muga Potash Project, Sierra del Perdón´s Scoping Study demonstrates the robustness of our broader project pipeline which will be further enhanced by ongoing development work at our Vipasca and Pintano Projects. Importantly all projects are located in Spain´s potash producing Ebro Basin within close proximity to the Muga Project.”

Highfield Resources Ltd. ACN 153 918 257 ASX: HFR

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

Head Office Directors 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

The Scoping Study is based on the Mineral Resource Estimate (“MRE”) prepared by independent resource geologists Agapito Associates, Inc (“Agapito”). It includes 41.8 million tonnes of Indicated material with an average grade of 10.7% K20 and 40.3 million tonnes of Inferred material with an average grade of 10.5% K20 for a total MRE of 82.1 million tonnes with an average grade of 10.6% K20. It also includes an exploration target comprising 100-250 million tonnes of carnallite mineralisation with an average grade of 9%-13% K20 and 50-100 million tonnes of sylvinite mineralisation with an average grade of 10%-14% K20 ( refer ASX Release dated 7 April 2015 ).

Canada-based global engineering firm Hatch completed the preliminary desktop metallurgical analysis and process flow design which informs the capital and operating cost estimates for the aboveground installation. The underground installation and operations, due to its geologically analogous nature, relies heavily on the detailed work completed for the Company´s Muga Potash Project Definitive Feasibility Study (“DFS”), which was released to the ASX on 30 March 2015.

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 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 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. Gilbride and Ms. Santos consent to the inclusion in the release of the matters based on their information in the form and context in which it appears.

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About Highfield Resources

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

Highfield’s Muga, Vipasca, Los Pintanos, and Sierra del Perdón potash projects are located in the Ebro potash producing basin in Northern Spain covering a project area of close to 400km[2] . The Sierra del Perdón project includes two former operating mines. The Company has recently completed a definitive feasibility study for its Muga Project and is currently working towards commencing construction in the fourth quarter of 2015.

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

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Sierra del Perdón Scoping Study Overview

Author

Geoalcali S.L 20 April 2015

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Contents	Contents
1.	Overview ............................................................................................................................... 2
2.	Key Outputs Summary......................................................................................................... 15
3.	Preparation and Budget Pricing Support ............................................................................ 18
4.	Location Plan and Ownership.............................................................................................. 19
5.	JORC Compliant Mineral Resource Estimate....................................................................... 20
6.	Mining Target and Mining Sequence .................................................................................. 24
7.	Capex ................................................................................................................................... 25
a.	Underground Development ............................................................................................ 25
b.	Processing Plant and Associated Infrastructure .............................................................. 26
c.	Utilities and Logistics ....................................................................................................... 27
d.	Project Delivery and Owners´ Costs ................................................................................ 28
e.	Contingency ..................................................................................................................... 28
f.	Summary of Capex .......................................................................................................... 29
8.	Opex .................................................................................................................................... 30
a.	Underground Operations ................................................................................................ 30
b.	Above Ground Operations .............................................................................................. 31
c.	Transport ......................................................................................................................... 32
d.	Balance of Opex............................................................................................................... 32
e.	Opex Summary ................................................................................................................ 33
9.	Key Financial Metrics and Notes ......................................................................................... 34
10.	Project Timeline .............................................................................................................. 35
11.	Modifying Factors ............................................................................................................ 36
a.	Mining and Geological Considerations............................................................................ 36
b.	Metallurgical and Processing Considerations ................................................................. 37
c.	Infrastructure .................................................................................................................. 40
d.	Economic Considerations ................................................................................................ 40
e.	Marketing Considerations ............................................................................................... 42
f.	Permitting and Approvals ................................................................................................ 44
g.	Legal, Environmental, Social and Governmental ............................................................ 44
12.	Summary ......................................................................................................................... 46

Sierra del Perdón Potash Project – Scoping Study – Overview

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1. Overview

Cautionary Statement required by Clause 38 of JORC Code, 2012 Edition

The Scoping Study referred to in this report is based on low-level technical and economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised.

Background

Highfield Resources Limited (ASX:HFR) (“Highfield” or “the Company”) is an ASX listed potash development company with four 100% owned potash projects in Northern Spain.

The Company has completed a Scoping Study for its Sierra del Perdón Potash Project (“SdP” or the “Project”), located in northern Spain with close proximity to the Atlantic coastline of Northern Spain and Southern France.

The Scoping Study builds upon the work completed in preparing a Pre-Feasibility Study (“PFS”) and Definitive Feasibility Study (“DFS”) for the Company´s flagship Muga Potash Project completed in May 2014 and March 2015 respectively.

Financial Highlights

Total capital expenditure (“Capex”) is estimated at US$233m. This delivers a total K60 granular potash product of 520k tonnes per annum. Cash operational expenditure (“Opex”) in full production is estimated at US$155 per tonne. These estimates deliver compelling financial metrics of:

a post tax, unlevered internal rate of return (“IRR”) for the Project of 38.5%; and
a net present value using a discount rate of 10% (“NPV10”) of US$527m.

EBITDA in the first full year of production is estimated at US$120 million.

All calculations assume a received potash price of 10% less than price forecasts provided by independent fertiliser consultants, Integer Research.

The Project

The Sierra del Perdón Project is a project to develop, construct and operate a potash mine in Northern Spain. The Project is owned 100% by the ASX-listed Highfield Resources Limited.

The proposed mine is an underground conventional room and pillar operation with mineralisation to be accessed via a decline (a tunnel from the surface to the mineralisation where ore is taken to the surface via a conveyor belt). Significant advantages, especially in initial capital expenditure, result from potash mining via decline access and conventional underground operations.

The SdP Mineral Resource Estimate (“MRE”) consists of three, relatively shallow potash beds (beginning from <300m below surface), with the two upper seams consisting primarily of carnallite, and the lower seam of sylvinite. Sylvinite is a combination of potassium chloride (KCl) and what is commonly referred to as “halite” or “salt” (NaCl). Carnallite is generally found in combination with NaCl (halite) and can be considered to be a mixture of (KCl), magnesium chloride (MgCl) and “salt” (NaCl).

Sierra del Perdón Potash Project – Scoping Study – Overview

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Figure 1. Sierra del Perdón Project Area Showing Mineral Resource Footprint, Historic and Current Exploration Drill Holes and Historic Exploitation Areas

The purpose of this study is to assist the Company in making an early stage assessment as to the technical and economic viability of an underground conventional mine, producing a market standard granulated K60 potash for use in fertilisers applications. The study considered a base case operation, mining and processing ore comprising 50% sylvinite and 50% carnallite ores by weight. The Company believes there is the potential that a sylvinite only operation may be viable with ongoing exploration success at SdP. This would enhance the results of the Study delivering lower Capex, lower Opex and a greater volume of product.

The Company is building upon substantial historical information from the Project area including seismic surveys, over 30 years of historical mine production and twenty five historical drill holes. The Company has also completed an additional six drill holes, upon which the JORC Mineral Resource Estimate (“MRE”) is based, and is planning to commence a more extensive exploration and infill drilling campaign in the second half of Calendar Year 2015.

Sierra del Perdón Potash Project – Scoping Study – Overview

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In addition, due to similarities between SdP and the Muga Potash Project, the Company has relied heavily upon the work completed for the Muga Potash Project Pre-Feasibility Study (“PFS’), which was released in May 2014, and the Definitive Feasibility Study (“DFS”), which was completed in March 2015.

Since the Company´s acquisition of the Project in October 2012, considerable early-stage work has been completed which now supports the completion of the Scoping Study for the Project. The results of the Scoping Study are described in this document.

Potash

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

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

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Figure 2: Potato Plant Yield with Three Levels of Potash Application (IPI Coordination Project, ´97)

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

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

Potash also helps the milk production process in animals.

The Scoping Study

The Scoping Study utilises work completed by a number of independent consultants (working directly on SdP or indirectly via their involvement with the Muga Potash Project PFS and DFS) including Hatch and SADIM. The Scoping Study has been based on six new drill holes (completed by Highfield), twenty five historical drill holes (completed by previous owners/operators of the mines), which were used primarily for

Sierra del Perdón Potash Project – Scoping Study – Overview

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structural information, historical mining reports of the Potasas de Navarra and Potasas de Subiza Companies, and the reinterpretation of seismic profiles and wireline logs completed in the late 1980s.

Hatch used the information from five modern drill holes to complete a scoping study level process study that assumed the mining of a 50 / 50 blend of sylvinite and carnallite mineralisation (refer Table 1 below). The Hatch study estimated plant capex, opex and likely metallurgical recoveries.

Table 1. Summary of modern drill hole assay results used by Hatch for the preparation of the scoping study level process study

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Project Area

The Project area comprises three contiguous permits. The Company has been granted Investigation Permits for three named areas; Adiós, Amplicación de Adiós and Quiñones.

The Project area includes two former operating mines; Potasas de Navarra and Potasas de Subiza. The area produced potash continuously from 1963 through until the closure of the Potasas de Subiza mine in 1996. The final shipment of potash from the Potasas de Subiza Mine occurred in 1997.

As a result of these mining operations there is a large amount of historical information available, both in terms of metallurgy and geology, and of historical mining techniques applied to the style of mineralisation prevalent throughout the basin where the projects are located.

In total, there were twenty five historical drill holes completed in the area for which the Company has had access to data, both geological and structural. There is also some historical drilling information pertaining to grade, however, these were ignored from a resource perspective due to its age and the lack of information regarding the testing and QA/QC protocols that accompanied the grade estimates.

More recently, the Company has completed a program of six holes across the three permit areas. It is planned that there will be extensive infill and extensional drilling conducted in the coming year as the Project progresses.

Sierra del Perdón Potash Project – Scoping Study – Overview

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The Scoping Study primarily considers the Adiós and the Quiñones permit areas of the Project. The drill holes completed by the Company in these permit areas have been used as the basis for a JORC Indicated and Inferred Mineral Resource Estimate necessary to support the completion of a Scoping Study under the JORC Code (2012).

Given the paucity of new drill holes at the Project, as well as not using any of the historical drilling data to inform the MRE, there would appear to be substantial potential resource upside that could result from the additional drilling campaigns.

The Company expects the PFS to benefit from further drilling across the three permit areas.

Main Options Considered

The main options considered in the Scoping Study were:

a. Mining – underground conventional mining versus solution mining;
b. Mineralisation Access – decline access versus shaft access;
c. Underground design – room and pillar versus long wall mining;
d. Process flow design – pure carnallite circuit versus a carnallite / sylvinite circuit
e. Mineral Processing – flotation circuit versus crystallisation processing;
f. Product – K60 versus K62 and standard versus granular;
g. Transport – trucking to port and/or mixed mode of short haul trucking and rail to port versus the extension of the rail network to the Project; and
h. A magnesium plant delivering saleable Mg product from the mining tails.

High level analysis was conducted for each option with decisions for most options being relatively straight forward based on technical and financial considerations. From a mineral extraction perspective the Scoping Study suggests an underground conventional mine accessed via a straight line decline into a room and pillar operation is both technically viable and, economically, a stand-out. The base case assumes that both carnallite and sylvinite ores (ratio of 1:1) will be mined and processed.

The Scoping Study assumes 3.153m tonnes of combined sylvinite and carnallite ore is mined per annum for a 20 year period. The Study assumes an extraction ratio of 70% based on the backfilling uplift consistent with the work completed on the Muga Mine DFS. Extraction ratios of 80% are assumed in the sylvinite seam and 60% in the carnallite seam.

Given the above, the Scoping Study assumes there is 39.4m tonnes of sylvinite at an average grade of 14% K2O and 52.5m tonnes of carnallite at an average grade of 10% K2O. Both amounts are supported by the JORC Mineral Resource Estimate and Exploration Targets for the Project.

This in turn enables the Company to process its mineralisation via a two stage process utilising a carnallite decomposition circuit followed by a standard flotation circuit producing K60 muriate of potash (MOP or KCl).

The Scoping Study suggests that processing a combination of the sylvinite and carnallite ore, rather than a pure carnallite ore, will yield the best technical (recovery) and financial results. Further work on the metallurgical performance of the ore will be required to better understand this relationship and ensure the robustness of the Company’s decision making process in this regard.

Sierra del Perdón Potash Project – Scoping Study – Overview

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It is assumed that 100% of production will be compacted to the granular product required for the Brazilian market and other target markets for the Company´s product. The preferred transport solution is trucking to the Port of Pasajes with a total distance of approximately 100kms from the Project.

Preferred Site and Environmental Approvals

The Company has identified a number of suitable sites for the SdP processing plant including a preferred site. The preferred site allows direct access to the initial target mine zone via a straight line decline. This has the effect of reducing both Capex and Opex.

The environmental approvals process has not yet commenced for SdP given the early stage of the Project. The Company has considerable expertise in the environmental approvals process within its Spanish management team, including the recent submission of both a Memoria Resumen (preliminary environmental statement of intent) and full environmental and social impact assessment (“ESIA”) for the Muga Potash Project, which was completed and lodged in December 2014. It is anticipated that the key studies constituting the ESIA; such as hydrology, geotechnical, flora and fauna studies etc; will be completed post the completion of the PFS for the Project, to facilitate the lodgement of the Memoria Resumen and, following that, the full ESIA in support of a Mining Concession application.

The Company has previously commissioned independent consultant IDOM to complete a socio-economic assessment of the expected impacts of the Project on the surrounding area which includes 17 municipalities and a total population of approximately 37,000.

Mineral Resource Estimate and Exploration Target

Independent geological and mining consultants, Agapito Associates Inc. prepared the JORC Mineral Resource Estimate (“ MRE ”) and Exploration Target for the Sierra del Perdón Project as per Table 2 and Table 3 below.

Sierra del Perdón Potash Project – Scoping Study – Overview

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Table 2. Sierra del Perdón JORC Mineral Resource Estimate Effective date 22 March 2015

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

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

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Table 3. Sierra del Perdón Exploration Target Effective date 17 March 2015

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

Production

The base case considered in the Scoping Study is an owner operated mine that produces approximately 520k tonnes of K60 potash per annum over a 20 year period. It is assumed, for financial analysis purposes, that the operation commences at full production of 3.15 million tonnes of ROM ore per annum or 400 tonnes per hour delivered to the processing facility.

In steady state production, 3.15 million tonnes of carnallite and sylvinite ore will be processed via a carnallite decomposition circuit followed by a conventional KCl flotation circuit delivering an estimated recovery of approximately 83% and assumes the composition of the ore being processed to be equal parts carnallite and sylvinite by weight.

The process flow sheet being considered will be versatile enough to process pure carnallite ore or some combination of carnallite and sylvinite ore up to a ratio (by weight) of carnallite to sylvinite of approximately 1:1.

The range of recovery rates for the process plant was estimated based on worked completed by Canada headquartered, global independent consultants Hatch.

Hatch used assay data from the six drill holes completed by Highfield at SdP to infer the average chemical compositions of the ore feed for the two book-end cases for the Project. Utilising this data, Hatch ran simulations using the SysCAD software, which incorporates the thermo-physical properties of potash and carnallite solubility data that is widely available in published literature and research papers. These simulations assisted in the estimation of the mass and energy balances of the proposed process flow-sheet for the Project.

It also allowed Hatch to estimate a range of potential recoveries for ore compositions or either pure carnallite ore or ore with composition comprising 50% carnallite and 50% sylvinite. The recoveries indicated by Hatch’s work were approximately 75% and 83% for these ore compositions respectively. This is lower than

Sierra del Perdón Potash Project – Scoping Study – Overview

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historical recovery rates for the operations of Potasas de Navarra and Potasas de Subiza suggesting there may be some upside. The base case assumes that the ore processed with comprise 50% carnallite and 50% sylvinite.

The processing plant has a design capacity of 400 tonnes per hour with a peak capacity of 460 tonnes per hour. A capacity utilisation rate of 90% at 400 tonnes per hour has been assumed. This equates to 7,884 hours per annum at the design capacity.

Metallurgy

No formal metallurgical testing has been completed as this is deemed to be too detailed for this level of study. However, Hatch conducted computer simulations using known chemical compositions, taken from drill hole assays at the Project to infer, with a relatively high degree of confidence, a range of likely recoveries depending on ore composition.

A detailed metallurgical test work program will be completed as part of the PFS to ensure the recovery profile is well understood and can be estimated with a higher degree of confidence, commensurate with the levels expected for a PFS.

Construction

Construction is estimated to take 18 months and benefits from straight line decline access to relatively shallow sylvinite and carnallite mineralisation. The timeline also benefits from processing via a two stage carnallite decomposition circuit followed by a conventional flotation circuit, as opposed to crystallisation based processing.

Product and Markets

100% of the potash produced will be pink granular K60 product which is becoming more common in the global fertiliser markets and can be used in both direct application and blended fertilisers. For the purpose of this Scoping Study, it is assumed that 50% of the product will be sold into the NW European market while the remaining 50% will be targeted at the Brazilian seaborne market, which is the largest seaborne market in the world.

The Scoping Study assumes no sales of sodium chloride (common salt) or of magnesium by-product despite the obvious potential in these market segments. The Company has completed a market assessment and preliminary sales and marketing strategy to enter the common salt market for the Muga Potash Project and it is assumed that this work will remain valid for the SdP Project. In addition, the Company has commenced a study to understand the market dynamics for the high purity magnesium by-product that will be produced from SdP. Neither of these sales and marketing strategies are sufficiently progressed to be included in the Scoping Study at this time.

Tailings Management

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

After approximately 12 months there will be sufficient voids in the underground mining operations to cater for the backfilling of tailings into the mine. Detailed work has been completed in the Muga Potash Project PFS and DFS on the backfilling of the salt tailings, via a paste backfilling reticulation system, into a room and pillar mine. This process is used successfully for many room and pillar mines for different commodities.

The use of backfilling of the salt tails has two significant advantages; 1, it increases extraction ratios as tailings provide additional geotechnical support for mined areas allowing selective extraction of what were

Sierra del Perdón Potash Project – Scoping Study – Overview

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previously supporting pillars; and 2, it reduces the potential for negative above ground environmental impacts associated with tailings storage facilities. Point 1, in particular, offers potential additional economic upside to the results observed in this study.

Scoping Study Preparation

The Scoping Study was prepared internally by the Company with support from domestic and international specialist consultants. The Company’s key management personnel have developed and operated underground conventional mines in Spain and, as a result, elected to utilise this experience and critical incountry relationships to complete the Scoping Study.

The management team recently completed a detailed PFS and DFS for the Muga Potash Project, located 40kms from the SdP Project. These two projects share many similarities, most notably access via a decline to shallow mineralisation which is conventionally mined via a room and pillar operation. The Company has relied heavily on work completed for the Muga Potash Project PFS and DFS in the preparation of this study.

Notable differences are primarily associated with the ore composition (SdP having both carnallite and sylvinite) and, therefore, the processing flow sheet. The major difference is the addition of a carnallite decomposition circuit.

The Company engaged independent consultant Hatch to give its professional opinion on the potential metallurgical performance of the ore at SdP. In addition, the Company’s management has experience in the processing of carnallite rich ores and, therefore, has a high degree of confidence in the work completed in this respect.

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.

Capex and Opex Estimates

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

Capex for SdP is estimated at approximately US$233.24 million (CY2015 prices). The Company has, as part of the Muga Potash Project PFS and DFS, obtained budget pricing support for a majority of the physical costs comprising the Capex estimate (excluding EPCM, owners’ costs and contingency). The Company believes these budget supports are still relevant and, therefore, offer a high level of confidence in the estimates contained in this study.

C1 Opex is estimated at US$155.19 per tonne (CY2015 prices). C1 Opex includes the cost of shipping 50% of the product to Brazil. C2 Opex is estimated at US$177.61 per tonne. C3 Opex is also estimated at US$177.61 per tonne (marketing fees have been factored into the net potash price assumption for revenue purposes), reflecting the fact that there are no royalties (public or private) associated with the SdP Project.

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 excluding freight costs from port to Brazil.

The Company has elected to use the low end of the recommended contingency range for a scoping study of 20% to 35%. The Company believes that, due to the highly comparable nature of the SdP Project relative

Sierra del Perdón Potash Project – Scoping Study – Overview

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to the Muga Potash Project, that the Company can have relatively high confidence in the estimates produced for this Scoping Study. Many of the items include recently obtained budget pricing support, which is in excess of the levels of accuracy typically expected at the scoping study stage.

Potash Pricing Assumption

Potash price assumptions have been provided by independent fertiliser consultants Integer Research. A 5% sales commission has been applied to these prices for financial modelling purposes. An additional 5% reduction has also been applied to factor in likely contract pricing discounts.

Table 4. Integer Potash Price Forecast and Pricing Differential to Highfield’s Target Markets

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Report dated 17 March 2015

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Modelled potash prices are as follows:

Table 5. Nominal Potash Price Forecasts used in Scoping Study (US$ per metric tonne)

	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

For financial modelling purposes, the Company has assumed that it will receive nominal MOP prices from 2016 to 2020. From 2021 onwards, it is assumed that prices for granular MOP product will increase at a rate of 2.2% per annum.

The study assumes that costs are inflated annually from 2015 at a compounding rate of 2.2% per annum.

The model assumes a fixed exchange rate assumption of EUR0.95: USD1.00. Costs for the Project are largely denominated in EURs, while revenues are denominated in EUR and US$.

Financial Metrics

The financial model calculates returns on an after tax, unlevered basis. The Project delivers an after tax, unlevered IRR of approximately 38.5%. The US$ Net Present Values at various discount rates are presented below.

Discount Rate	NPV in US$
8%	$662m
10%	$528m
12%	$423m

The financial model assumes 86 periods of three calendar months each with the first commencing on 1 January 2017. 75% of the upfront Capex is expended in the first calendar year and 25% in the second calendar year through to 30 June 2018. Production is programmed to commence on 1 July 2018.

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

Spanish tax law for mining projects enables 15% of revenues to be applied against future capital expenditure via a capital reserve fund. The fund allows this money to be set aside, on a pre-tax basis, provided it is spent on a capital project in Spain within ten years. The Scoping Study does not assume any benefit from this opportunity.

EBITDA in the first full year of production (CY2019) is estimated at US$119.6m.

Sierra del Perdón Potash Project – Scoping Study – Overview

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Progression to Pre-Feasibility Study

The Scoping Study for SdP 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:

Completion of the additional drilling campaign designed to increase resource confidence;
Completion of a detailed metallurgical test work program to inform detailed process flow design, mass balance and reagent use;
Detailed underground engineering, including mine scheduling; and
Commencement of key environmental and social work channels including the preparation of a Memoria Resumen and associated studies and consultation programs.

Sierra del Perdón Potash Project – Scoping Study – Overview

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2. Key Outputs Summary

The key mine and process plant parameters are:

Table 6. Summary of Mine Parameters

	Key Design Elements	Response
	Mineralisation	Carnallite and Sylvinite
	Annual ore extraction	3.153m tonnes per annum
	Carnallite Resource assumed	52.5m tonnes at 10% K2O at a 60% extraction ratio
	Sylvinite Resource assumed	39.4m tonnes at 14% K2O at an 80% extraction ratio
	Initial mine depth to surface	250m
	Mine access	1,800m length decline at a gradient of 12% and a section of 30m2
	Life of mine	20 years
	Indicated Resources*	41.8m tonnes @ 10.7% K2O
	Inferred Resources*	40.3m tonnes @ 10.5% K2O
	Sylvinite Exploration Target	50m to 100m tonnes @ 10% to 14% K2O
	Carnallite Exploration Target	100m to 250m tonnes @ 9% to 13% K2O
	Plant recovery rate (MOP)	83.0%
	Average annual production (K60)	520k tonnes
	Product composition	100% pink K60 granular
	Process plant size	400 tonnes per hour design capacity with an ability to process 460 tonnes per hour at peak capacity
	Utilisation rate	90% or 7,884 hours per annum at 400 tonnes per hour
	Logistics solution	50% to Port of Pasajés by 100km road haulage 50% road haulage to domestic markets of Spain, France and Portugal
	Operating assumption	Mine and processing plant as owner operator Transport solution outsourced

* The Resources are included within the global Exploration Target

Sierra del Perdón Potash Project – Scoping Study – Overview

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Table 7. Summary of Estimated Capital Expenditure in CY2015 dollars

Capex Estimate Summary

Capex Estimate Summary
Component	Eur USD
Underground development and Machinery	44,200,943 46,527,309
Process plant and associated infrastructure	118,502,900 124,739,895
Utilities and logistics	6,312,500 6,644,737
Sub Total	169,016,343 177,911,940
Mining Permits	2,110,727 2,221,818
EPCM and Owners Costs	13,521,307 14,232,955
Contingency (20%)	36,929,676 38,873,343
Total	221,578,053 233,240,056

Table 8. Summary of Estimated Operational Expenditure per tonne of product in CY2015 dollars

Operating Cost Summary

Operating Cost Summary
Components	Euros / t	USD / t
C1 Cost
- Mining	41.71	43.90
- Processing	42.15	44.37
-Transport	22.66	23.85
Sub Total	106.51	112.12
- G&A	10.00	10.53
- SustainingCapital	10.65	11.21
Total C1 Costs PRE-CONTINGENCY	127.17	133.86
20% Contingency on Mining, Processing and
Transport(exc sea freight to Brazil)	20.26	21.32
C1 Costs Including Contingency	147.42	155.18
C2 Costs
- Depreciation	21.30	22.43
- C1 Costs	147.42	155.18
Total C2 Costs	168.73	177.61
C3 Costs
- Royalties	0.00	0.00
- C2 Costs	168.73	177.61
Total C3 Costs	168.73	177.61

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Table 9. Summary of Key Additional Financial Model Assumptions

	Assumption Item
	Marketing Fee and Contract Pricing Discount 10% of sales price
	Pricing Year 2015
	Escalation 2.2% on expenses from 2015 2.2% on revenue from 2021
	Corporate Tax Rate 25% from 2016
	Tax Depreciation Rate 25% per annum
	Exchange Rate EUR0.95 : USD1.00
	Remediation Costs 10% of total upfront capex escalated

Table 10. Summary of Key Financial Metrics

	Metric	Output
	Unlevered Post Tax IRR	38.5%
	NPV10	US$528 million
	EBITDA in first year of full production	US$120 million
	Total Capex	US$233 million

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3. Preparation and Budget Pricing Support

The Scoping Study was prepared by the Company working with domestic and international specialist consultants relying upon work completed for the Muga Potash Project PFS that was finalised in 2014 and the DFS that was completed in March 2015.

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

A list of key consultants and contractors that have completed work for the Muga Potash Project DFS and the SdP Scoping Study is presented below. The Company believes it has chosen a credible mix of local and international consultants and contractors with a blend of in-country construction and in-country and global potash experience.

Table 11. Summary of Key Consultants and Contractors

	Table 11. Summary of Key Consultants and Contractors
	Component Who	Base
	JORC Mineral Resource Estimate Agapito Associates, Inc	USA
	Mine Engineering SADIM	ESP
	Process Engineering Hatch	CAN
	Assay Lab ALS Global	IRE
	Transport Study IDOM	ESP
	Potash Market Research Integer	GBR

Sierra del Perdón Potash Project – Scoping Study – Overview

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4. Location Plan and Ownership

Highfield´s 100% owned Sierra del Perdón Project covers an area of approximately 149km[2] in Northern Spain. It is less than 40kms from Highfield´s well progressed Muga Potash Project for which the Company recently completed and released a PFS, and is in the final stages of completing a DFS. SdP has a number of similarities to Muga-Vipasca, including shallow depths from surface to initial potash mineralisation of less than 300m in some cases.

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Figure 2: Sierra del Perdón Project Location Map in Relation to Muga-Vipasca

The Sierra del Perdón Project area comprises three contiguous permits covering 148.98 km[2] . The Company has been granted Investigation Permits for three named areas; Adiós, Amplicación de Adiós and Quiñones. All permits are Investigation Permits and are issued for a period of three years. Application may be made to roll over these permits for additional three year periods or alternatively to convert the permits to mining concessions. The Table below provides permit details.

Table 12. Interests in Mining Permits Held by the Company

Region Permit Name	Permit Type Applied Granted Area (km2) Holder	Structure
Navarra Adios Navarra Amplicación de Adios Navarra Quiňones	Investigation 19/07/11 08/07/12 32.48 Geoalcali SL Investigation 19/07/11 08/07/12 75.60 Geoalcali SL Investigation 26/10/12 14/02/14 40.90 Geoalcali SL	100% 100% 100%

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

Sierra del Perdón Potash Project – Scoping Study – Overview

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5. JORC Compliant Mineral Resource Estimate

Independent geology and mining consultant, Agapito Associates, Inc. (“ Agapito ”) has issued a JORCcompliant Measured and Indicated Resource estimate and Exploration Target. The Mineral Resource and Exploration Target was estimated using a computer 3D gridded-seam geologic (block) model constructed with Mintec Inc. MineSight 3D© v9.0 software. Historical and modern data for the property were reviewed by the CPs for quality and completeness. Data utilized in the model include historic and modern drill hole logs and assays, historic and modern interpretations of 2D seismic surveys, surface topography in the form of a digital elevation model (DEM), permit boundary lines, historic resource analysis, historic geological surface mapping, and historical mining records from the Potasas de Navarra and Potasas de Subiza mines.

Beds are defined as upper carnallite, lower carnallite and sylvinite. A total of 41.8 million tonnes of Indicated Resource is reported with an average grade of 10.7% K2O. An additional 40.3 million tonnes is classified as Inferred Resource with an average grade of 10.5% K2O.

Table 13. Sierra del Perdón JORC Mineral Resource Estimate Effective date 22 March 2015

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Table 14. Sierra del Perdón Exploration Target Effective date 17 March 2015

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

The Mineral Resource has reasonable prospects for eventual economic extraction, in accordance with JORC standards. This is supported by preliminary high-level economic analysis which assumes a base case mining scenario with multi-seam room-and-pillar mining and processing by conventional crushing, carnallite decomposition and KCl flotation circuit. Room-and-pillar mining was conducted successfully at Navarra and Subiza potash mines at Sierra del Perdón from the 1960’s through to the 1990s, which further supports the Company’s analysis.

The high-level economic analysis indicates the Project will have positive returns on investment over a realistic, wide range of capital and operating costs, and a trailing-5-year range of potash prices. A positive return on investment is considered a minimum for justifying reasonable prospects for eventual economic extraction and designation as a Mineral Resource, but does not necessarily represent an economically attractive mining opportunity depending upon the desired minimum return on investment. For this reason, not all parts of the Mineral Resource are necessarily suitable for inclusion in a production target or

Sierra del Perdón Potash Project – Scoping Study – Overview

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upgradeable to a Mineral Reserve. Detailed engineering and mine planning are required to determine which parts of a Mineral Resource are suitable for mining for a specific project, including this Scoping Study.

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Figure 3: Sierra del Perdón Project Location Map Showing JORC compliant Mineral Resource estimate and historical drill holes

Sierra del Perdón Potash Project – Scoping Study – Overview

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Quality Control and Data Confirmation

The 2013 drilling program was conducted by Highfield personnel. The Company has put in place a rigorous QA/QC protocol to ensure that data collected is robust and can be relied upon.

Highfield and ALS Global (ALS), the primary contract laboratory, maintained the usual quality control procedures of standards, duplicates, and blanks. Highfield made multiple Standard or Certified Reference Material-type (SRM or CRM) samples representing low-, medium-, and high-grade (LG, MG, HG) potassium material.

SRM samples, blanks, and duplicates were inserted, both by Highfield personnel during sample preparation and by ALS as part of their own quality assurance/quality control (QA/QC) program. ALS inserted commercial standards BCR-113 and BCR-114, both potash fertilizer materials, muriate of potash (MOP) and sulfate of potash (SOP), respectively, as well as their own internal standard, SY-4, a diorite gneiss used as a blank material. The insertion rate is one blank, one SRM, and one laboratory duplicate per 20 samples or batch.

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

Highfield’s procedure designates duplicates on the quarter core at 1 in 20, blanks at 1 in 50, and standards at 1 in 20. Duplicates were submitted to ALS, and ICP results show good internal agreement. Referee samples (at a rate of 1 in 20) were tested at Saskatchewan Research Council Laboratory (SRC). In general, SRC reports K2O values lower than reported by ALS. Because ALS and SRC show good internal agreement, the bias suggests a calibration issue.

Sierra del Perdón Potash Project – Scoping Study – Overview

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6. Mining Target and Mining Sequence

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

Agapito Associates, Inc. was not engaged by the Company at this stage to evaluate the mineability of the resource. Agapito included, in its Mineral Resource Estimate, a reduction of 15% in the headline in situ resource estimate to account for geological uncertainty.

The Scoping Study assumes 3.153m tonnes of combined sylvinite and carnallite ore is mine per annum for a 20 year period. The Study assumes an extraction ration of 70% based on the backfilling uplift consistent with the work completed on the Muga Mine DFS. Extraction ratios of 80% are assumed in the sylvinite seam and 60% in the carnallite seam.

Further drilling and engineering work is required to confirm the above, but given the level of Study the Company believes the assumptions are reasonable.

Sierra del Perdón Potash Project – Scoping Study – Overview

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7. Capex

a. Underground Development

The underground development assumes straight line decline access into a conventional underground room and pillar operation. It is estimated construction will take 18 months. The Capex estimate includes the first year of galleries required for mineral extraction. After the initial year this infrastructure is included in underground Opex as part of ongoing mine infrastructure.

Table 15. Capex Estimate Detail for Underground Development

Capex Estimate for Underground Development and Machinery

Item	Eur USD
Surface Infrastructure	410,737 432,355
Decline Construction	10,376,240 10,922,358
First Development Infrastructure	6,219,651 6,547,001
Ventiliation System	2,005,459 2,111,009
Emergency Systems and Control Systems	668,856 704,059
Mining Equipment	24,520,000 25,810,526
Total	44,200,943 46,527,309

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Figure 4: Virtual Image of a Decline Access to Underground Operations

Sierra del Perdón Potash Project – Scoping Study – Overview

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b. Processing Plant and Associated Infrastructure

The processing plant is a two stage carnallite decomposition circuit followed by conventional KCl flotation circuit. It will be built progressively over the 18 month period, contemporaneously with the decline construction, with operating capacity of 400 tonnes per hour and peak capacity of 460 tonnes per hour. The associated infrastructure includes site works, perimeter protection, tailings storage facility for clays and insoluble materials and for a minimum of an initial 12 months of production, and buildings for the processing plant, administration personnel and employee welfare.

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

Capex Estimate for Process Plant and Associated Infrastructure

Item	Eur USD
Construction Preliminaries, Civil and Building Works	34,942,900 36,782,000
Process Equipment	59,800,000 62,947,368
Tailings Management	9,000,000 9,473,684
Paste Backfill Plant	4,760,000 5,010,526
ROM and Product Transfer Equipment	10,000,000 10,526,316
Total	118,502,900 124,739,895

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Figure 5: Virtual Image of the Company´s proposed aboveground operations at its Muga Project

Sierra del Perdón Potash Project – Scoping Study – Overview

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c. Utilities and Logistics

The Project operations will require a mixture of electricity, natural gas and minor quantities of diesel to serve its energy requirements. A majority of the energy will come from Spain´s national electricity grid. Natural gas will primarily be used for product drying and will be connected directly to the Spanish gas distribution network. Additional utility connections include water and telecommunications. In all instances distribution networks are within 5 kms of the Project.

Table 17. Capex Estimate Detail for Utilities and Logistics

Capex Estimate and Details for Utilities and Logistics

Capex Estimate and Details for Utilities and Logistics
Item	Eur USD
Electrical Supply and Installation	4,620,000 4,863,158
Natural Gas Supply and Installation	875,000 921,053
Water Supply and Installation	650,000 684,211
Offsite drainage	67,500 71,053
Voice and Data Connections	100,000 105,263
Total	6,312,500 6,644,737

The Scoping Study proposes direct road haulage to the Port of Pasajes for shipment to Brazil as well as into the NW European market. The proposed processing plant is located 3.5kms from a dual national highway with speed limits of 120kms / hour for light vehicles and 90kms / hour for HGVs.

It is approximately 100kms on this highway to the Port of Pasajes, a port with confirmed capacity to ship potash, located on its Atlantic coast. Additionally, 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.

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Figure 6: Picture of Port of Pasajes

Sierra del Perdón Potash Project – Scoping Study – Overview

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d. Project Delivery and Owners´ Costs

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

Table 18. Capex Estimate Detail for Project Delivery and Owners´ Costs

Capex Estimate for Project Delivery and Owners Costs

Capex Estimate for Project Delivery and Owners Costs
Item	Eur USD
Engineering, Procurement and Construction Management	6,760,654 7,116,478
Owners Costs	6,760,654 7,116,478
Permit Fees	2,110,727 2,221,818
Total	15,632,034 16,454,773

e. 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 level of budget pricing support it has for the components of the project which have been taken from the recently completed PFS for the Muga Potash Project.

Table 19. Capex Estimate Detail for Contingency

Capex Estimate for Contingency

Capex Estimate for Contingency
Item	Eur USD
Underground	8,840,189 9,305,462
Above Ground	23,700,580 24,947,979
Utilities and Logistics	1,262,500 1,328,947
Project Delivery and Owners Costs	3,126,407 3,290,955
Total	36,929,676 38,873,343

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f. Summary of Capex

Total Capex is estimated US$232.24m. This represents the total estimated capital required to construct an operation capable of extracting and processing 400 tonnes of mixed carnallite and sylvinite ore per hour, operating at 90% capacity utilisation (a total of 3.153m tonnes per annum).

The mine plan assumes 3.153m tonnes per annum of ROM ore will be delivered to the plant.

Table 20. Capex Estimate Summary

Capex Estimate Summary

Capex Estimate Summary
Component	Eur USD
Underground development and Machinery	44,200,943 46,527,309
Process plant and associated infrastructure	118,502,900 124,739,895
Utilities and logistics	6,312,500 6,644,737
Sub Total	169,016,343 177,911,940
Mining Permits	2,110,727 2,221,818
EPCM and Owners Costs	13,521,307 14,232,955
Contingency (20%)	36,929,676 38,873,343
Total	221,578,053 233,240,056

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8. Opex

a. Underground Operations

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

Table 21. Opex Estimate Detail for Underground Operations in $ per tonne of ROM

Opex Detail for Underground Operations Item	Euros / t ROM USD / t ROM
Electricity	1.42 1.50
Fuel	0.37 0.39
Maintenance	0.49 0.52
Consumables	1.32 1.39
Labour	2.04 2.15
H&S and Comunications	0.08 0.09
Services & Miscellaneous	1.15 1.21
Sub Total	6.88 7.24
Contingency (20%)	1.38 1.45
Total	8.25 8.69
Per tonne of Product	50.05 52.69

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b. Above Ground Operations

The processing plant is a simple two stage carnallite decomposition circuit followed by a standard flotation circuit. A contingency of 20% has been added to estimated above ground Opex.

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

Opex Detail for Above Ground Operations

Opex Detail for Above Ground Operations
Item	Euros / t ROM USD / t ROM
Labour	1.13 1.19
Electricity consumption	1.53 1.61
Gas consumption	0.71 0.75
Water consumption	0.08 0.08
Flotation reagent consumption	0.83 0.88
Operations and Maintenance	0.54 0.57
Diesel	0.13 0.14
Backfilling	1.76 1.86
Miscellaneous	0.24 0.25
Sub Total	6.95 7.32
Contingency (20%)	1.39 1.46
Total Per Tonne of Product	8.34 8.78
	50.58 53.24

Sierra del Perdón Potash Project – Scoping Study – Overview

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c. Transport

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

Table 23. Opex Estimate Detail for Transport to Port in $ per tonne of Product

Opex Detail for Transport

Opex Detail for Transport
Item	Euros / t ROM USD / t ROM
Road transportation	12.83 13.51
Port Charges and Taxes	1.60 1.68
Port Incidentals and transport to Brazil for 50% of prod.	8.23 8.66
Sub Total	22.66 23.85
Contingency (20%) (excl transport to Brazil)	3.49 3.67
Total (per tonne of product)	26.15 27.52

d. Balance of Opex

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

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

Table 24. Opex Estimate Detail for Sustaining Capex, G&A and Depreciation in $ per tonne of Product

Opex Detail for Sustaining Capex, G&A and Depreciation

Opex Detail for Sustaining Capex, G&A	and Depreciation
Item	Euros / t	USD / t
Sustaining Capex	10.65	11.21
General and Administative	10.00	10.53
Depreciation	21.30	22.43

Sierra del Perdón Potash Project –

Scoping Study – Overview

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e. Opex Summary

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

Table 25. Opex Estimate Summary

Operating Cost Summary

Operating Cost Summary
Components	Euros / t	USD / t
C1 Cost
- Mining	41.71	43.90
- Processing	42.15	44.37
-Transport	22.66	23.85
Sub Total	106.51	112.12
- G&A	10.00	10.53
- SustainingCapital	10.65	11.21
Total C1 Costs PRE-CONTINGENCY	127.17	133.86
20% Contingency on Mining, Processing and
Transport(exc sea freight to Brazil)	20.26	21.32
C1 Costs Including Contingency	147.42	155.18
C2 Costs
- Depreciation	21.30	22.43
- C1 Costs	147.42	155.18
Total C2 Costs	168.73	177.61
C3 Costs
- Royalties	0.00	0.00
- C2 Costs	168.73	177.61
Total C3 Costs	168.73	177.61

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

Sierra del Perdón Potash Project – Scoping Study – Overview

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9. Key Financial Metrics and Notes

Table 26. Key Financial Metrics

	Metric	Output
	Unlevered Post Tax IRR	38.5%
	NPV8 NPV10 NPV12	US$662 million US$528 million US$423 million
	EBITDA in first year of full production	US$120 million (2019)
	Total Capex	US$233 million

Financial model notes include:

Amounts are shown in Calendar Year 2015 Euro or $ as indicated;
Exchange Rate assumption is EUR0.95:USD1.00;
All expenses are escalated at 2.2% per annum from CY2015;
Potash price assumptions are nominal through to CY2020 and then escalated at 2.2% per annum;
Transport Opex assumes all transport solutions are outsourced;
Tax depreciation is 25% per annum consistent with current Spanish tax laws that allow for accelerated depreciation (Regimen Especial de Impuestos Para el en Sector Minero);
Full production is estimated at 3.153m tonnes of 50% carnallite and 50% sylvinite ore per annum at an average grade of 12.0% K2O (20.0% K60 product);
At a recovery rate of 83.0% full production produces 520k tonnes of saleable potash (K60) per annum;
An average grade of 12.0% K2O is assumed across all years of production; and
Life of mine assumption is 20 years with end of mine works estimated at 10% of initial Capex (escalated).

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10. Project Timeline

The Company is aiming to commence construction at SdP immediately after the completion of the decline construction for the Muga Potash Project, which is expected to be completed by the end of CY2016.

This will see commencement of construction in January 2017.

The construction program assumes three months of plant commissioning from April to June 2018.

Full production is expected to be reached in July 2018.

Sierra del Perdón Potash Project – Scoping Study – Overview

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11. Modifying Factors

a. Mining and Geological Considerations

The Project is strongly advantaged by the geology that sees relatively shallow depths to mineralisation capable of being accessed via a decline. Six drill holes have been completed by the Company into the mineralisation with no drill hole encountering the presence of aquifers. Furthermore, twenty five historical holes and over 30 years of mining history at the site also confirm no presence of aquifers in the area. This supports the decision to access the mining horizon via a decline, which greatly reduces upfront capital expenditure.

Within the evaporite are three relatively thick, potash seams interbedded by halite and insolubles, and with substantial halite in both the hanging and foot walls. In addition, there is minority underlying sylvinite in some of the lower sequences. The carnallite is always overlying the sylvinite, which has favourable geotechnical impacts in underground room and pillar mining.

This geological information and historical mining suggest that underground conventional mining is possible, with the seams having sufficient height for relatively low Opex, and the hanging wall and foot wall halite providing good competency for room and pillar mining.

The Scoping Study assumes mining of sylvinite and lower carnallite beds only.

Mining is challenged by steeply dipping beds as the evaporite extends to the west, however, the historical mines circumvented this issue by mining across the strike of the potash beds, in some cases at over 40 degrees of declination.

Further work on the optimum mining methodology will be considered in the PFS and DFS for the Project.

Mining heights will range from a minimum of 1.5m to over 5m, depending on the thickness of seams being mined. The selection of road headers to mine the seams allows increase selectivity and manoeuvrability and, thus, should have a positive impact on the levels of mining dilution.

The Scoping Study assumes an extraction ratio of 70%. The MRE calculated by Agapito includes a 15% reduction for geological uncertainty and, as such, the Scoping Study has not included this in its mining assumptions. Extensive work completed as part of the Muga DFS on backfilling of salt tailings indicates that with backfilling extraction ratios of over 83% can be achieved for sylvinite beds.

The Company has previously explored the option of utilising a shaft for this style and depth of mineralisation and concluded that a decline was more advantageous for the following reasons:

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

The Company has also previously explored long wall mining and determined room and pillar was more advantageous, firstly as infrastructure was progressively constructed and as a result it had substantially lower up front Capex. And secondly, long wall mining reduces the agility and selectivity of mining which, in turn, leads to much increased mining dilution to the detriment of project economics.

Sierra del Perdón Potash Project – Scoping Study – Overview

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Figure 7: Virtual Image of Proposed Underground Operations

b. Metallurgical and Processing Considerations

Two types of processing plants tend to be used for potassium salt processing in the form of sylvinite (KCl plus NaCl). The conventional flotation circuit is generally used where possible as it has a lower initial Capex, shorter construction timelines and lower ongoing Opex. Ore extracted via underground conventional is able to be processed via flotation circuit, which is preferable given the Capex and Opex advantages over hot crystallisation plants.

In the case of ores rich in carnallite, there is an additional step which occurs at the front end of the process which involves the decomposition of the carnallite to remove the magnesium chloride content prior to entering the standard KCl flotation circuit.

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Figure 8: Simple Process Flow Diagram for Carnallite Rich Ores

Sierra del Perdón Potash Project – Scoping Study – Overview

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Figure 9: Simple Flotation Process Flow Chart for Carnallite and Sylvinite Ores

The carnallite decomposition circuit is an important step in removing the MgCl prior to entering the floatation plant. After de-sliming, the carnallite is decomposed via the addition of water and the KCl crystallises out of solution in a series of reactor tanks via the chemical reaction defined by the following formula:

KClMgCl 6H2O (s) + NaCl (s) + nH2O  KCl (s) + NaCl (s) + MgCl2(aq) + (n+6) H2O (l) + KCl (aq) + NaCl (s)

Important considerations include, firstly, if the addition of water at the front end is not sufficient, the carnallite cannot be completely decomposed and KCl product with be lost in the ensuing KCl floatation step as carnallite. Secondly, if too much water is added, some sylvinite will be lost in the carnallite decomposition circuit as overflow. Therefore, water control is crucial in the cold crystallisation process to remove the MgCl from the ore and to minimise KCl loss.

The proposed carnallite decomposition circuit employs a series of multistage reactors tanks ( refer Figure 10 ) where water is added in the first tank and overflow is used in the next tank and so on for (N) tanks. This is done to increase the retention time within the circuit and reduces the degree of super-saturation of the KCl product and to minimise the generation of KCl fines, which can cause recovery issues in the following floatation recovery stage.

Empirical data suggests a KCl yield in the range of 80% to 84% from this process. Additional recovery could be achieved by installing an additional hot crystallisation process, however, increased Capex and Opex, as well as increased operational complexity, have led the Company to conclude that this step is not economically viable.

Sierra del Perdón Potash Project – Scoping Study – Overview

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Figure 10: Schematic of Multi-Stage Cold Crystallisation of KCl from Carnallite using N Crystallisers in Series

The main issues that must be considered during follow-up metallurgical testwork are:

Type and chemical composition of potassium salt ores (with the content of carnallite being an important driver of process recoveries);
Levels of insolubles;
Coarseness of ore; and
Incursions within the KCl grains.

Each of the issues above have a direct impact, to varying degrees, on the recoveries which will be observed in processing potassium salt ores.

Estimated recovery ranges for the Scoping Study were calculated by independent, Canada headquartered, consultants Hatch. Hatch used chemical assay results from the six drill holes completed by the Company to infer an expected average mineral composition of the ore body under two scenarios (carnallite only and carnallite / sylvinite combination). Hatch used this inferred mineral composition in conjunction with publicly available information relating to various salt solubilities, to run simulations using the CADsys software. From this work, Hatch estimates that recoveries will fall within the range of 75% to 83%, depending on the composition of the ore (carnallite to sylvinite ratio) being feed to the processing plant. This is lower than historical recovery rates for the operations of Potasas de Navarra and Potasas de Subiza suggesting there may be some upside.

This early stage work indicates, as would be expected, that the recoveries achieved are likely to be higher as more sylvinite is present within the ore relative to carnallite.

Further detailed testwork will be completed as part of the PFS process to provide greater confidence in the metallurgical performance of the ores mined at SdP.

Finally, the Project has a significant exploration target of sylvinite ore. Importantly, the sylvinite beds encountered at SdP have nearly identical geological composition to the banded sylvinite ores at the Muga Potash Project. The banded ores give metallurgical recoveries of 88% to 89% in test work completed for Muga. This suggests there may be merit in pursuing a sylvinite only process plant, however, this is predicated on exploration success and, therefore, is not included for the purposes of this study.

Sierra del Perdón Potash Project – Scoping Study – Overview

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c. Infrastructure

Spain has exceptional infrastructure that substantially advantages the Project.

The Company has identified a number of potential sites for the location of a processing plant and associated infrastructure. All sites are within 5kms of water, electricity and gas networks.

The local council of Beriain has already set aside a process plant site, which the Company has identified as its preferred location, in anticipation of the mine progressing to permitting and mining concession application phase. The land is controlled by the Government and, therefore, has no acquisition cost associated with it. The proposed transport solution sees an upgrading of 3.5kms of bitumen (metalled) roads before utilising 100kms of dual lane highways to the Port of Pasajes.

d. Economic Considerations

Costs

The majority of costs included in this study have been taken from budget pricing received from Spanish contractors as part of the Muga Potash Project PFS, which was completed in 2014, and the Muga Potash Project DFS currently being completed. These contractors have constructed similar operations in Spain.

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

The exchange rate of EUR0.95:USD1.00 is based on the current spot price (effective date 16 March 2015).

Electricity costs are based on actual quotes from Iberdrola and reagent usage estimates and costings are based on studies completed by EngComp for the Muga Potash Project PFS and DFS, as well as budget pricing for reagents from Spanish suppliers.

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

Revenue

The Company is proposing to produce a pink K60 product of which 100% will be in the granular form. These products will be consistent with the Canadian standard.

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

The potash price assumption used was provided by independent fertiliser market consultants, Integer Research (refer Table 25).

The Company has elected to use these pricing assumptions for its base case to highlight the robust nature of the Project, which achieves an unlevered, post tax IRR of 38.5% and an NPV10 of US$528m.

Sierra del Perdón Potash Project – Scoping Study – Overview

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Table 27. 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

By-Product Credits

The Company believes it is likely to receive by-product credits resulting from the sale of its sodium chloride by product and of its high purity magnesium by-product.

The Company has prepared a market assessment and preliminary sales and marketing strategy. At this time it is not sufficiently advanced for inclusion as an assumption in the Scoping Study.

As a result no allowance for these sales has been made in the Scoping Study. The Company believes byproduct credits will be included in its PFS for the Project.

Sensitivity Analysis

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

Table 28. Potash Price Sensitivity Analysis

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 107,777 $ 265,372 $	422,966 $ 580,560 $ 738,155 $
NPV10 153,961 $ 340,763 $	527,565 $	714,367 $ 901,169 $
NPV8 213,463 $ 437,779 $	662,095 $ 886,412 $ 1,110,728 $

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.

Sierra del Perdón Potash Project – Scoping Study – Overview

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Table 29. Capex Sensitivity Analysis

Capex / NPV ($´000)	Capex / NPV ($´000)	Capex / NPV ($´000)
Sensitivity 70% 85% Capex($´000) 163,268 $ 198,254 $	100% 115% 130% 233,240 $ 268,226 $ 303,212 $
NPV12 473,621 $ 448,294 $	422,966 $ 397,638 $ 372,311 $
NPV10 578,793 $ 553,179 $	527,565 $	501,951 $ 476,337 $
NPV8 713,876 $ 687,986 $	662,095 $ 636,205 $ 610,315 $

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

Table 30. Foreign Exchange Rate Sensitivity Analysis

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 305,217 $ 369,138 $	422,966 $ 468,917 $ 508,601 $
NPV10 393,475 $ 466,267 $	527,565 $	579,893 $ 625,085 $
NPV8 507,059 $ 591,222 $	662,095 $ 722,597 $ 774,849 $

e. Marketing Considerations

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

Highfield’s addressable markets are naturally those which are easily accessible from mine site. Given that the export port is located on the Atlantic Coast of Spain, these are those surrounding the Atlantic Rim, as well as any accessible by road from the mine.

Integer Research Limited have performed a study covering each of these addressable markets. A summary of the size of these markets and Integer’s estimation of potential market penetration is contained in the table below.

Sierra del Perdón Potash Project – Scoping Study – Overview

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Table 31. Addressable market sizes, 2014

*Integer Estimates*
Market	2014 Market size	Estimated Potential Market Penetration
		Medium	Medium	High case	High case
		case	case share	volumes	share
		volumes
USA – eastern	1 million tonnes	30,000	5%	80,000	8%
seaboard		tonnes		tonnes
USA – mid-west	5 million tonnes	50,000	1%	125,000	2%
		tonnes		tonnes
Brazil	9.2 million tonnes	450,000	5%	675,000	7%
		tonnes		tonnes
Spain & Portugal	550-700,000	100-150,000	20%	275,000	44%
	tonnes	tonnes		tonnes
French Atlantic	260-270,000	100-150,000	45%	200,000	75%
Market	tonnes	tonnes		tonnes
North France &	1.7 million tonnes	50,000	2%	150,000	9%
Benelux		tonnes		tonnes
UK & Ireland	500-600,000	20,000	4%	40,000	7%
	tonnes	tonnes		tonnes
Nordic countries	1 million tonnes	Severely	~1%	30,000	3%
		limited		tonnes
West & Northwest	300-350,000	50,000	15%	150,000	45%
Africa	tonnes	tonnes		tonnes

The Company believes it has a transport advantage relative to competitors into all of its target markets.

Sierra del Perdón Potash Project – Scoping Study – Overview

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f. Permitting and Approvals

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

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Figure 11: Diagrammatic Representation of Spanish Approvals Process for Mining Activities

The initial step required to receive environmental approvals to construct and operate a mine and processing facilities in Spain is the lodging of a Memoria Resumen . The submission of this document initiates the environmental administrative process. The content of this document is similar to an environmental impact assessment but is less exhaustive. It is generally referred to as a preliminary environmental impact assessment. The Company will commence the preparations for the Memoria Resumen in parallel with the preparation of the PFS. Immediately following this, the Company will commence the workstreams required to prepare an IFC compliant environmental and social impact assessment (“ESIA”).

Once complete, the Company will be in a strong position to initiate its application for a mining concession at the Project.

g. Legal, Environmental, Social and Governmental

Legal and Government

The Company holds a 100% interest in the Project. There are no agreements with third parties to share in any Project revenues, nor are there any other beneficial ownerships or options to acquire stakes.

The Project lies in the province of Navarra, which will have direct involvement in the Project decision making process. The Company commissioned independent Spanish consultants IDOM to complete a study of the expected socio-economic impacts of the proposed development of a potash mine at Sierra del Perdón.

Sierra del Perdón Potash Project – Scoping Study – Overview

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The Project area extends to approximately 149km[2] and includes 17 municipalities that are expected to be affected by the proposed development. The total population of these municipalities in 2013 was 37,083 with approximately 38% of the population – or 14,084 – being located in the municipality of Zizur Mayor.

Table 32. Sierra del Perdón Town Halls and Populations in 2012

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Only three of the 17 municipalities had a population density of greater than 120 person per km[2] and, therefore, the vast majority of these municipalities are deemed to be rural settlements.

Environment and Social

The Company believes, based on work conducted for the Muga Potash Project, that the Project is likely to be a significant contributor to province GDP. While the provinces of Navarra is recognised to have stronger employment than the national average, with unemployment currently estimated at 16.2% relative to 25% in Spain generally, the Project is still expected to have a considerable positive impact on employment for the province and, in particular, the municipalities surrounding the Project. It is estimated that over 5,000 man years of employment will be created over the approximately 20 year life of the Project.

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

More broadly, the Company has created its headquarters in Pamplona and has a team comprising 30 people, the majority of whom are Spanish nationals.

Sierra del Perdón Potash Project – Scoping Study – Overview

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12. Summary

The Project

The Sierra del Perdón Project is a project to develop, construct and operate a potash mine in Northern Spain. The Project is owned 100% by the ASX listed Highfield Resources Limited (ASX:HFR).

The Project proposes to mine a combination of sylvinite and carnallite ore, which will be processed via a standard two stage process consisting of a carnallite decomposition circuit in series with a standard KCl floatation plant.

Potash

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

Preferred Site and Environmental Approvals

It is anticipated that the key studies constituting the ESIA; such as hydrology, geotechnical and flora and fauna studies; will be completed post the completion of the PFS for the Project, to facilitate the lodgement of the Memoria Resumen and, following that, the full ESIA in support of a Mining Permit application.

Production

In steady state production, 3.153m tonnes of carnallite and sylvinite ore will be processed via a carnallite decomposition circuit followed by a conventional KCl flotation circuit delivering an estimated recovery of 83%.

Sierra del Perdón Potash Project – Scoping Study – Overview

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The process flow sheet being considered will be versatile enough to process pure carnallite ore or some combination of carnallite and sylvinite ore up to a ratio (by weight) of sylvinite to carnallite of approximately 1:1.

The range of recovery rates for the process plant was estimated based on worked completed by Canada headquartered, global independent consultants Hatch.

Hatch used assay data from the six drill holes completed by Highfield at SdP to infer the average chemical compositions of the ore feed for the two extreme cases for the Project. Utilising this data, Hatch ran simulations using the SysCAD software, which incorporates the thermos-physical properties of potash and carnallite solubility data that is widely available in published literature and research papers.

These simulations assisted in the estimation of the mass and energy balances of the proposed process flowsheet for the Project. Importantly, it also allowed Hatch to estimate a range of potential recoveries for each of the extremes of ore composition – i.e. pure carnallite ore or ore with composition comprising 50% carnallite and 50% sylvinite. The range indicated by Hatch’s work was 75% and 83.5% for these ore compositions, respectively. This is lower than historical recovery rates for the operations of Potasas de Navarra and Potasas de Subiza suggesting there may be some upside.

For the purposes of this Scoping Study, we have assumed the plant will process ore comprising 50% carnallite and 50% sylvinitie by weight, giving an expected recovery of 83%.

Construction

Construction is estimated to take 18 months and benefits from straight line decline access to relatively shallow interbedded carnallite and sylvinite mineralisation. The timeline also benefits from processing via a conventional flotation circuit as opposed to crystallisation based processing.

Product and Markets

100% of the potash produced will be pink granular K60 product which is becoming more common in the global fertiliser markets. It is expected that the Company will target 50% sales into the Brazilian seaborne market and the remaining 50% into the North Western European market (Spain, Portugal and France in particular that form part of this market).

Capex and Opex Estimates

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

Capex for SdP is estimated at approximately US$233m (CY2015 prices) and includes a 20% contingency. The Company has, as part of the Muga Potash Project PFS and DFS, obtained budget pricing support for a majority of the physical costs comprising the Capex estimate (excluding EPCM, owners´ costs and contingency). The Company believes these budget supports are still relevant and, therefore, offer a high level of confidence in the estimates contained in this study.

C1 Opex is estimated at US$155.19 per tonne (CY2015 prices) and includes the cost of transport to Brazil for 50% of the product. C2 Opex is estimated at US$177.61 per tonne. C3 Opex is also estimated at US$177.61 per tonne (marketing fees have been factored into the net potash price assumption for revenue purposes), reflecting the fact that there are no royalties (public or private) associated with the SdP Project.

Sierra del Perdón Potash Project – Scoping Study – Overview

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Financial Metrics

The financial model calculates returns on an after tax unlevered basis. The Project delivers an after tax, unlevered IRR of approximately 38.5%. The Net Present Values in US$ is presented below.

Discount Rate	NPV in US$
8%	$662m
10%	$528m
12%	$423m

EBITDA in the first full year of production (CY2019) is estimated at US$119.6m.

Progression to Pre-Feasibility Study

a. Completion of the additional [ten hole drilling campaign and up to an additional six hole infill drilling campaign to increase resource confidence];
b. Completion of a detailed metallurgical test work program to inform detailed process flow design, mass balance and reagent use;
c. Detailed underground engineering and mining schedule; and
d. Commencement of key environmental and social work channels including the preparation of a Memoria Resumen and associated studies and consultation programs.

Sierra del Perdón Potash Project – Scoping Study – Overview

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Competent Persons’ Statement

This document was prepared by Mr. Hayden Locke, Head of Corporate Development for Highfield Resources and was reviewed by John Claverley, General Manager – Geoalcali and Anthony Hall, Managing Director – Highfield Resources. The information in this release that relates to the JORC Mineral Resource Estimate and Exploration Results is based on information prepared by Mr. Leo J. Gilbride, P.Eng and Ms. Vanessa Santos, P.Geo. of Agapito Associates, Inc. (AAI) of Colorado, U.S. Mr. Gilbride is a licensed professional engineer in the State of Colorado, U.S. and is a registered member of the Society of Mining, Metallurgy and Exploration, Inc. (SME). Ms. Santos is a licensed professional geologist in South Carolina and Georgia, U.S., and is a registered member of the SME. SME is a Joint Ore Reserves Committee (JORC) Code ‘Recognized Professional Organization’ (RPO). An RPO is an accredited organization to which the Competent Person (CP) under JORC Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, or Ore Reserves through the ASX. Mr. Gilbride is the Vice President of Engineering and Ms. Santos is the Chief Geologist with AAI, and both have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a CP as defined in the 2012 Edition of the JORC Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr. Gilbride and Ms. Santos consent to the inclusion in the release of the matters based on their information in the form and context in which it appears.

Sierra del Perdón Potash Project – Scoping Study – Overview

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ABOUT HIGHFIELD RESOURCES

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

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Figure 12: Location of Highfield´s Muga-Vipasca, Pintano and Sierra del Perdón Projects in Northern Spain

Sierra del Perdón Potash Project – Scoping Study – Overview

AI assistant

HIGHFIELD RESOURCES LIMITED — Capital/Financing Update 2015

65048_rns_2015-04-19_73b1729e-30ca-4f4d-89a7-095daac7f7d6.pdf

HIGHFIELD RESOURCES DELIVERS COMPELLING SCOPING STUDY FOR SIERRA DEL PERDÓN POTASH PROJECT

Highlights

For More Information

www.highfieldresources.com.au

Competent Persons’ Statement

About Highfield Resources

Sierra del Perdón Scoping Study Overview

1. Overview

Cautionary Statement required by Clause 38 of JORC Code, 2012 Edition

Background

Financial Highlights

The Project

Potash

The Scoping Study

Table 1. Summary of modern drill hole assay results used by Hatch for the preparation of the scoping study level process study

Project Area

Main Options Considered

Preferred Site and Environmental Approvals

Mineral Resource Estimate and Exploration Target

Table 2. Sierra del Perdón JORC Mineral Resource Estimate Effective date 22 March 2015

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

Production

Metallurgy

Construction

Product and Markets

Tailings Management

Scoping Study Preparation

Exchange Rate

Capex and Opex Estimates

Contingency

Potash Pricing Assumption

Report dated 17 March 2015

Financial Metrics

Progression to Pre-Feasibility Study

2. Key Outputs Summary

Table 7. Summary of Estimated Capital Expenditure in CY2015 dollars

Capex Estimate Summary

Table 8. Summary of Estimated Operational Expenditure per tonne of product in CY2015 dollars

Operating Cost Summary

3. Preparation and Budget Pricing Support

4. Location Plan and Ownership

5. JORC Compliant Mineral Resource Estimate

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

Quality Control and Data Confirmation

6. Mining Target and Mining Sequence

7. Capex

a. Underground Development

Capex Estimate for Underground Development and Machinery

b. Processing Plant and Associated Infrastructure

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

Capex Estimate for Process Plant and Associated Infrastructure

c. Utilities and Logistics

Capex Estimate and Details for Utilities and Logistics

d. Project Delivery and Owners´ Costs

Table 18. Capex Estimate Detail for Project Delivery and Owners´ Costs

Capex Estimate for Project Delivery and Owners Costs

e. Contingency

Capex Estimate for Contingency

f. Summary of Capex

Capex Estimate Summary

8. Opex

a. Underground Operations

Table 21. Opex Estimate Detail for Underground Operations in $ per tonne of ROM

b. Above Ground Operations

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

Opex Detail for Above Ground Operations

c. Transport

Table 23. Opex Estimate Detail for Transport to Port in $ per tonne of Product

Opex Detail for Transport

d. Balance of Opex

Table 24. Opex Estimate Detail for Sustaining Capex, G&A and Depreciation in $ per tonne of Product

e. Opex Summary

Table 25. Opex Estimate Summary

Operating Cost Summary

9. Key Financial Metrics and Notes

10. Project Timeline

11. Modifying Factors

HIGHFIELD RESOURCES LIMITED Capital/Financing Update 2015