HIGHFIELD RESOURCES LIMITED — Capital/Financing Update 2016

Jul 25, 2016

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ASX Release 26 July 2016

MOUs SIGNED FOR 100% OFFTAKE OF PHASE ONE PRODUCTION FROM MUGA POTASH MINE

Highlights

• Highfield has signed non-binding MOUs with fertiliser traders covering more than 100% of expected phase one production from its flagship Muga Potash Mine

• Three globally recognised fertiliser traders include: Keytrade AG, Ameropa AG and Trammo Inc.

• On signing of formal contracts with these traders Highfield will have achieved a proposed key condition precedent to drawdown its project finance facility currently being finalised with its European banking syndicate

• Highfield has withdrawn from the previously announced (refer ASX release 30 May 2016) MOUs signed with other fertiliser companies in Europe

Highfield Resources (ASX: HFR) (“Highfield” or “the Company”) advises that it has withdrawn from the non-binding memorandums of understanding (“MOUs”) for potash offtake it signed with three large fertiliser companies, active in the Spanish and French markets. These MOUs represented annual offtake amounts of up to 320,000 tonnes per annum of K60 MOP.

Importantly, the Company continues to have ongoing discussions with these European fertiliser companies and expects that it will still execute offtake contracts with these entities as the Muga Potash Mine approaches first production.

The Company has signed non-binding MOUs for offtake with Keytrade AG, Ameropa AG and Trammo AG (together “the Traders”) covering up to 600,000 metric tonnes of K60 MOP per annum produced from its Muga Potash Mine. Upon signing of formal documentation for these MOUs, Highfield will have achieved a key condition precedent proposed by the mandated lead arrangers for the Project Finance Facility of the Muga Potash Mine. This facility is in the final stages of negotiation.

The Traders all have deep experience in the global fertiliser market across the three recognised macronutrients – potassium, nitrogen and phosphate. Importantly for Highfield, they all have recent and ongoing experience marketing potash in Highfield’s European target markets on an ad-hoc basis for incumbent producers. Highfield remains focused on those markets that deliver it the maximum possible margin, where it has clear logistical and margin advantages over its peers.

Highfield Managing Director Anthony Hall commented:

“We are pleased to announce the signing of MOUs for potash with Keytrade AG, Ameropa AG and Trammo AG. These MOUs cover up to 600,000 metric tonnes of K60 MOP which is more than 100% of expected phase one production from our flagship Muga Potash Mine.

These trading groups have excellent track records in the global fertiliser market including our target markets within Europe. We look forward to formalising these agreements as we move towards production at Muga,”

Highfield Resources Ltd. ACN 153 918 257 ASX: HFR

Issued Capital

310.8 million shares

51.5 million performance shares 53.3 million options

Registered Office Head Office Directors Company Secretary C/– HLB Mann Judd Avenida Carlos III, 13 - Derek Carter Donald Stephens 169 Fullarton Road 1°B, 31002 Pauline Carr Dulwich, SA 5065 Pamplona, Richard Crookes Australia Spain Jim Dietz –––––––––––––––––– –––––––––––––––––– Anthony Hall T. +61 8 8133 5098 T. +34 948 050 577 Owen Hegarty F. +61 8 8431 3502 F. +34 948 050 578 Pedro Rodriguez

www.highfieldresources.com.au

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Further information on the MOU counterparties is provided below:

Keytrade AG , founded in 1997, has trading relationships with suppliers, distributors and end-users in more than 115 countries globally. Historically, it has sold potash in the European, South-East Asian, Brazilian, African and US markets through its long term relationships with incumbent producers.

Ameropa AG , founded in 1948, is a global trading firm focussed on fertilisers and grains. It has offices and distribution assets in 31 countries globally. Ameropa maintains close relationships with potash producers in Europe and markets available tonnes on an ad-hoc basis.

Trammo, Inc. was originally formed and incorporated as Transammonia in 1965. Trammo's Commodities Division is headquartered in Tampa FL, USA and Zurich, Switzerland and has multiple offices around the world, which focus on maintaining regular, direct contact with key customers and suppliers. The Commodities Division manages a large portfolio of products that complement each other and its worldwide traded volume reached 29.2 million metric tons in calendar year 2015. The United States, Northwest Europe, Brazil, FSU, China and South East Asa are important distribution markets for the Commodities Division. Over the years Trammo has been selling potash from various suppliers.

For more information:

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

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www.highfieldresources.com.au

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About Highfield Resources

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

Highfield’s Muga, Vipasca, Pintano, Izaga and Sierra del Perdón potash projects are located in the Ebro potash producing basin in Northern Spain, covering a project area of more than 550km[2] . The Sierra del Perdón project includes two former operating potash mines.

The Company completed a Definitive Feasibility Study for its flagship Muga Project in March 2015, which was optimised in November 2015 to enhance operational efficiencies, sales and marketing activities and the life of mine. Highfield is awaiting a positive environmental declaration and mining concession which will enable it commence construction of the Mine.

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

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

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www.highfieldresources.com.au