HIGHFIELD RESOURCES LIMITED — Capital/Financing Update 2016

Jan 18, 2016

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ASX Release 19 January 2016

HIGHFIELD RESOURCES’ MUGA MINE TO POSITION HIGHFIELD AS HIGHEST MARGIN POTASH PRODUCER GLOBALLY

Highlights

• An independent report by Argus FMB on behalf of the European project finance banking syndicate confirms, that based on average potash prices for the 2015 calendar year:

• Highfield likely to be the highest margin potash producer globally;

• Highfield, through its Muga Potash Mine, likely to be the lowest cost potash producer on a delivered to customer basis into its target markets of Europe, Brazil, and the United States; and

• Highfield would have achieved a total cash margin of 61% in 2015.

Spanish potash developer, Highfield Resources (ASX: HFR) (“Highfield” or “the Company”), is pleased to announce that an independent report prepared by Argus FMB, commissioned by the European project finance banking syndicate, has determined the Muga potash mine is likely to position the Company as the highest margin potash producer globally based on average potash prices received in the 2015 calendar year.

The four major European commercial banks engaged in Highfield’s project finance process commissioned Argus FMB, the global fertiliser consultants, to produce an independent report on the potash market. The report included a specific focus on Highfield’s flagship Muga Potash Mine.

Highfield’s Managing Director, Anthony Hall, commented:

“The Argus FMB report provides independent, third-party validation that Muga is likely to position Highfield as the highest margin potash producer globally.

We continue to believe we have the most compelling potash project globally, and this is the first of our portfolio of five projects that all appear to exhibit similar characteristics.”

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Average margin $/t
Margin Curve
250
Highfield
200
150
100
50
0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75
MOP Capacity (mn t)
Estimated margin of each producer based on a weighted average of sales to different markets
Prices are 2015 whole-year averages
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Figure 1: Margin Curve of all Global Potash Producers

Highfield Resources Ltd. ACN 153 918 257 ASX: HFR

Issued Capital 310.6 million shares 51.5 million performance shares 52.8 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 Ph. +61 8 8133 5098 Ph. +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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Independent Cost Curve Positioning and Margin Analysis

Argus FMB’s report has concluded Highfield is likely to be the highest margin producer globally, assuming a sales ratio of 75% / 25% into Europe and the United States respectively. The report also concluded that Highfield is likely to be the lowest cost potash producer on a delivered to customer basis into the Company’s target markets of Europe, Brazil, and the United States.

Argus FMB’s report has estimated the profit margins of all potash producers globally, taking into account actual sales markets, as illustrated above in Figure 1.

The report also shows Highfield’s position on the delivered total cash cost to customer curve of all producers into various markets. The costs estimated include all cash costs required to get one tonne of Muriate of Potash product to the point of sale in the relevant market, as shown below in Figures 2, 3 and 4. Figure 5 shows an estimate of 2015 calendar year margins for producers, including Highfield´s notional margin for its Muga Mine.

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Cost to cfr $/t
Europe CFR Cost Curve
250
200
150
Highfield
100
50
0
0 1,000 2,000 3,000 4,000 5,000
MOP sales ('000t)
Estimated cost to deliver product to a European point of entry most appropriate to the producer
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Figure 2: Europe CFR Cost Curve to Customer

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Cost to cfr $/t
US CFR Cost Curve
300
250
200
150 Highfield
100
50
0
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
MOP sales ('000t)
Estimated cost to deliver product into the US corn belt
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Figure 3: US CFR Cost Curve to Customer

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www.highfieldresources.com.au

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Cost to cfr $/t
Brazil CFR Cost Curve
250
200
150
Highfield
100
50
0
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
MOP sales ('000 t)
Estimated cost to deliver product to the Brazilian port of Paranagua
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Figure 4: Brazil CFR Cost Curve to Customer

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Average margin ÷
Margin Curve
average price
70%
Highfield
60%
50%
40%
30%
20%
10%
0%
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75
MOP Capacity (mn t)
Estimated margin of each producer based on a weighted average of sales to different markets
Prices are 2015 whole-year averages
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Figure 5: Average Estimated Margin for 2015 Calendar Year

For more information:

Company

Anthony Hall Managing Director Ph: + 34 617 872 100 Hayden Locke Head of Corporate Development Ph: +34 609 811 257

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

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

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www.highfieldresources.com.au

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About Argus FMB

Argus has 750 full time staff with offices in each of the world’s principal commodity centres. Its main activities comprise publishing market reports containing price assessments, market commentary and news, and business intelligence reports that analyse market and industry trends.

Argus is a leading provider of data on prices and fundamentals, news, analysis, consultancy services and conferences for the global crude, oil products, LPG, natural gas, electricity, coal, emissions, bioenergy, fertilizer, petrochemical, metals and transportation industries. Data provided by Argus are widely used for indexation of physical trade. Companies, governments and international agencies use Argus information for analysis and planning purposes.

Argus has 20 offices globally, including London, Houston, Washington, New York, Calgary, Rio de Janeiro, Singapore, Dubai, Beijing, Tokyo, Sydney, Moscow, Astana, Riga and other key centres of the commodity industries. Argus was founded in 1970 and is a privately held UK-registered company.

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 expects to receive a positive environmental declaration in the first quarter of 2016 to enable it commence construction of the Mine.

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Figure 6: Location of Highfield´s Muga, Vipasca, Pintano, Izaga and

Sierra del Perdón Projects in Northern Spain

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www.highfieldresources.com.au