HIGHFIELD RESOURCES LIMITED — Capital/Financing Update 2018

Oct 14, 2018

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ASX Release 15 October 2018

MUGA PROJECT UPDATE

Highfield Resources (ASX: HFR) (“Highfield” or “the Company”) is pleased to provide a project update on the Company’s flagship Muga Potash Project (“Muga” or “the Project”).

Highlights

• Two phase mine development with the first phase average production of approximately 500,000 tpa of MOP and the second phase of approximately 1,000,000 tpa.

• Phase 1 capex of €342 million with additional Phase 2 capex of €199 million.

• Competitive C1 cash cost of €104/t, including salt by-product credit.

• EBITDA of approximately €300 million per annum at full production.

• Mine location continues to drive globally competitive margins.

• 27 year mine life.

• NPV8 €1,159 million and IRR of 23%.

Cautionary Statement. The mining inventory underpinning the production targets set out in this update is derived from Measured, Indicated and Inferred Resources from the Muga tenement as well as the Exploration Target at the Vipasca tenement. There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the production target itself will be realised. The potential quantity and grade of an Exploration Target is conceptual in nature, there has been insufficient exploration to determine a mineral resource and there is no certainty that further exploration work will result in the determination of mineral resources or that the production target itself will be realised. The technical parameters underpinning the target in the market announcement dated 19th June 2015 continue to apply and have not materially changed.

Highfield Resources Ltd. ACN 153 918 257 ASX: HFR Issued Capital 329.5 million shares 53.25 million options

Spain Head Office Avenida Carlos III, 13 - 1°B, 31002 Pamplona, Spain

Registered Office 169 Fullarton Road Dulwich, SA 5065 Australia

–––––––––––––––––– T. +61 8 8133 5098 –––––––––––––––––– F. +61 8 8431 3502 T. +34 948 050 577 F. +34 948 050 578

Directors Company Secretary Derek Carter Donald Stephens Peter Albert Pauline Carr Richard Crookes Roger Davey Jim Dietz Owen Hegarty Brian Jamieson Isaac Querub

www.highfieldresources.com.au

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Overview of Project Update

Following the Optimised Feasibility Study of 2015, the Company is pleased to announce a Project update with a revision to the capital cost (capex), operating cost (opex), mine plan and financial outcomes.

The capital cost estimate for phase 1 of the Project to produce approximately 500,000 tonnes of Muriate of Potash (“MOP”) per annum is €342 million, excluding approximately €23 million spent to date. This capex includes improvements to the mine design incorporating twin declines to access the ore body, conventional room-and-pillar extraction with a chevron development pattern suited to potash mining, a reconfigured process plant based on recent metallurgical testwork, a review of marketing and sales strategy, and a reassessment of supporting logistics and infrastructure requirements. The capex to bring the mine to its full operating capacity of approximately 1 million tonnes per annum of MOP is estimated to be an additional €199 million.

The operating cost for the Project at full capacity is forecasted to be €104/t on a C1 basis over the life of mine, which includes a salt by-product credit of €12/t. The primary market for phase 1 of the Muga Mine MOP product is likely to be Southern Europe and for phase 2 a conservative estimate of sales to other parts of Europe and exports outside of Europe has been assumed. The net result positions Muga as potentially one of the highest margin potash mines globally.

The financial outcomes of the revised mine plan, capex, opex and product sales revisions are positive, with EBITDA at the phase 2 mine production output[1] being approximately €300 million per annum, NPV8 €1,159 million and an IRR of 23% (NPV10 of €799 million).

Update Details

The revised mine plan is primarily based on Measured, Indicated and Inferred Resources for the Muga deposit as per the ASX announcement of 10[th] October 2018, audited by mining consulting group, SRK Consulting (UK) Limited (“SRK”) and summarised below.

In addition, the Company has included a portion of the Exploration Target for Vipasca as per the ASX announcement of 19[th] June 2015.The potential quantity and grade of an exploration target is conceptual in nature, there has been insufficient exploration to determine a mineral resource and there is no certainty that further exploration work will result in the determination of mineral resources or that the production target itself will be realised. The technical parameters underpinning the target in the relevant market announcement continue to apply and have not materially changed.

The relevant Competent Persons’ statements have been inserted at the end of this ASX announcement.

1 This production target must be read in conjunction with the cautionary statements on page 1 that “ there is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised ” and that " the potential quantity and grade of an Exploration Target is conceptual in nature, there has been insufficient exploration to determine a mineral resource and there is no certainty that further exploration work will result in the determination of mineral resources or that the production target itself will be realised. The technical parameters underpinning the target in the market announcement dated 19th June 2015 continue to apply and have not materially changed. "

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Resource and Exploration Target

The information in this release referring to mining inventory is derived from Mineral Resource statements related to Muga and the Exploration Target related to Vipasca as per the market announcements referenced above. The relevant Competent Persons’ statements have been inserted at the end of this ASX announcement.

The Muga Potash Project Mineral Resource Estimate in Table 1 is as per the ASX announcement released on the 10[th] October 2018.

Table 1 Audited SRK Mineral Resource Statement for the Muga Potash Project Deposit

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The Vipasca Exploration Target as released on 19[th] June 2015 has a range of tonnage of 127 million tonnes to 255 million tonnes, with a grade range of 12% to 16%. This Exploration Target is supported by a continuation of the surface geology identifying the same geological features as those observed in Muga, including the same geological units, the same sedimentary environment and the same geological

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structures. Futhermore, the drillholes in the western sector of Muga show important thicknesses of evaporite materials with very good potash intersections, showing no evidence of depletion, or proximity to the edge of the basin and interpreted to extend into the Vipasca tenement. A gravimetric survey carried out in 2015 demonstrating continuity of the potash bearing evaporite into the north western extension of the Project area. Also, in 2016 seismic studies have confirmed the previous assumptions, identifying reflectors that are interpreted as the layers of potash and salt at depth.

Mineral Inventory

The mineral inventory, and subsequent mine plan, is based on the Measured and Indicated Resources for the Muga deposit audited by SRK as per the ASX release on 10[th] October 2018[2] . In addition, the Company has included in the revised mine plan a portion of the higher grade Muga Inferred Resources as per the same announcement as well as the abutting Vipasca Exploration target as per the ASX announcement of 19[th] June 2015. The Company has a reasonable expectation that these additional Mineral Resources and Exploration Target tonnes will be considered in longer term assessments of Ore Reserves following further drilling as well as engineering assessments and the receipt of mining exploitation permits as well as the current interpretations relating to geology as described above. The Exploration Target from the abutting tenement is a continuation of the Muga Mineral Resource and would be mined as an extension of the planned Muga mining operation. The Mineral Resources from the abutting tenement are included from year 18 of the revised mine plan.

Table 2 below describes the various sources of the mining inventory tonnes.

Table 2: Mineral Inventory Tonnes

	Resource or Exploration Target	Resource or Exploration Target	Mining Inventory	Mining Inventory
	Million Tonnes	Grade %K2O	Million Tonnes	Grade %K2O
From Muga Measured & Indicated	235	12.35	117	10.29
From Muga Inferred	32	13.25	22	10.29
Vipasca Exploration Target	127 to 255	12-16	39	12.78

2 The assessment of Ore Reserves in accordance with the JORC 2012 guidelines is in progress by SRK and scheduled to be completed in Q4 2018. SRK has assisted the Company in developing the mine planning approach for the Measured and Indicated Resources of the Muga deposit which will form the basis of the estimate of Proved and Probable Reserves respectively.

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Mine Planning and Process Design

A detailed revised mine plan was developed by the Company’s mine planning team with support from mining consulting group, SRK. The revised mine plan targets a production rate to deliver approximately 1,000,000 tpa of MOP over a mine life of 27 years[3] based on the current mining inventory which includes Mineral Resources from Muga and Exploration Target from the abutting tenement of Vipasca, see Figure 1 below.

Figure 1: Mine plan design for Muga and Vipasca extension

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The revised mine plan also incorporates the anticipated requirements of the environmental permitting process, particularly related to subsidence controls and exclusion zones around towns, infrastructure and objects of significant cultural importance.

Underground access will be by twin parallel declines from surface, over a length of 2.6 km to a depth below surface of approximately 350 meters. The declines, approximately 25 metres apart along their length, are connected by three crosscuts and will be developed concurrently with bolter-miners using continuous haulage systems to transport mined material to surface.

The same equipment will be used to develop underground infrastructure including workshops, two 900 t storage silos (for buffer tonnage and increased blending capacity), and service areas such as emergency evacuation chambers, pumping stations and electrical substations.

The primary production method will be room and pillar with an advancing chevron pattern approach. The pillar design has been assessed to provide an optimal extraction ratio while maintaining ground stability to

3 This production target must be read in conjunction with the cautionary statement on page 1 that “ there is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised ” and that " the potential quantity and grade of an Exploration Target is conceptual in nature, there has been insufficient exploration to determine a mineral resource and there is no certainty that further exploration work will result in the determination of mineral resources or that the production target itself will be realised. The technical parameters underpinning the target in the market announcement dated 19th June 2015 continue to apply and have not materially changed. "

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ensure safe working and environmental conditions are achieved in the potash environment, see Figure 2 below.

Figure 2: Chevron pattern mining in East and North section of the mine

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The mining fleet includes bolter-miners for main access development, continuous miners for high volume thick seam extraction and road headers for selective mining of thinner and steeper dipping areas. See Figure 3 for examples of a typical bolter miner, continuous miner and road header.

Figure 3.1, 3.2 and 3.3: Bolter miner, Continuous Miner and Road Header

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In-seam horizontal exploratory drilling will be undertaken once the declines are completed and will continue from strategic positions throughout the mine life.

Secondary extraction is achieved through floor-cuts and pillar cross-cuts on mining retreat. Mineral haulage will be with high capacity electric shuttle cars from the face to a crusher located in the seam and then conveyed to surface. Parallel conveyor systems will be used to convey ore from working areas and separately place waste material into underground workings. The shift system enables 21 hours per day cutting time per machine.

Mined potash grade and process recoveries have been assessed based upon the resource geology assessment, mine planning, metallurgical test work, and technical process studies that have been completed to date. The production of MOP at the Project´s full capacity peaks at over 1 Mtpa with an average of 960,000tpa. The revised mine plan yields an estimated mine life of 27 years comprising approximately 18 years of mine life from Muga Measured and Indicated Resources, and a further 9 years from Muga Inferred tonnes and the Vipasca Exploration Target. On a tonnage basis the 27 years of Muga mine life is estimated to be 117 million tonnes from Muga Measured and Indicated Resources, 22 million tonnes from Muga Inferred tonnes and 39 million tonnes from the Vipasca Exploration Target[4] .

As described by the Company in previous ASX releases, additional metallurgical test work has been completed over a number of months at the Saskatchewan Research Centre (“SRC”) laboratories in Canada which was overseen by the metallurgical consultancy, Global Potash Solutions, and Highfield metallurgical staff. The samples for this test work were taken as a result of a detailed geo-metallurgical review of all previous geological and metallurgical work. Representative samples of the different ore types based on anticipated presentation of these materials from the mine to the process plant were collected and tested under anticipated process plant operating conditions. The results from this work were then incorporated into a revised process design developed by the Canadian engineering company, Hatch in Saskatchewan, which has extensive potash process plant design experience. Processing will be by conventional flotation featuring a two-stage crushing process, attrition scrubbing and hydrocyclone desliming facility with a potassium chloride (“KCl”) froth flotation circuit, supplemented by a crystalliser circuit to optimise recovery and to support handling of waste products. Average recoveries of potassium chloride over the mine life are estimated to be 78.8%.

The new process flowsheet design is similar to other potash operations in Europe processing similar ore types.

The Company appointed Micon International Company Ltd, a third-party mineral consultancy company, to undertake a technical review of specific aspects of the Project. This included a high-level review of resources and a detailed review of reserves, mine planning and scheduling, mine operation planning, process design and operation planning, project execution plan and programme sequence, cost plan, contract plans and procurement plans which confirmed the validity and suitability of all the technical work reviewed, and identified potential risk areas and mitigating strategies. Micon confirmed that the quantity and substance of the work completed is generally more advanced than most projects at a similar stage of development.

4 This production target must be read in conjunction with the cautionary statements on page 1 that “ there is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised “ and that " the potential quantity and grade of an exploration target is conceptual in nature, there has been insufficient exploration to determine a mineral resource and there is no certainty that further exploration work will result in the determination of mineral resources or that the production target itself will be realised. The technical parameters underpinning the target in the market announcement dated 19th June 2015 continue to apply and have not materially changed.”

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Utilities and Infrastructure

The main energy source for the Project will be grid electricity with a capacity of 60MVA (phases 1 and 2) which is sufficient for peak periods when in full production as well as by-product salt processing.

A medium pressure, natural gas underground pipeline supply will be provided from the national network to deliver natural gas for all gas fired heat sources.

Process water will be a combination of recovered rainwater, ground water and water taken from the utility canal in the vicinity of the site. An on-site water treatment plant will provide potable water for all required purposes. Water discharged to public water courses will be fully treated to ensure that it complies with the discharge requirements. Other water will be stored on site for later re-use.

Non-binding MOUs were previously signed with the Port of Pasajes and the Port of Bilbao (refer ASX announcements 18 December 2014 and 20 January 2015). Both MOUs confirmed the ability to ship significant quantities of product through these ports and the MOU with Pasajes was reconfirmed in early 2017. The costs for road transportation and port facilities are deducted from the MOP sales price rather than incorporated into the C1 cost.

Construction Contracting

Acciona Infraestructuras S.A. is the preferred construction partner and will be engaged for the majority of the work packages.

The total Project construction activities have been broken down into a number of works packages most of which are vertical packages incorporating all elements from the ground to the finished product. A few packages are horizontal for example earthworks across the full site and instrumentation and control.

The various packages are at different stages of development. One package, the conveyors, silos and bins, has been awarded, others are at detailed design phase and firm pricing has been received, most have reached at least basic design stage and tenders for detailed design have been sought from the market, whilst only 2 packages are at a preliminary stage of engineering development.

Project Timetable

The Project schedule assumes that construction will commence approximately one year after the receipt of the environmental permit to allow sufficient buffer to secure all the necessary construction permits. This is also the time required to manufacture, deliver and assemble the bolter miners. The twin declines are developed over the subsequent two years along with the mining infrastructure and process plant construction. Thus, the anticipated timeline to first potash production is three years post the receipt of the environmental permit, and the Company will look to accelerate this where possible.

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CAPEX

The capex estimate to achieve phase 1 production is €342 million including contingency. A further €199 million is required to develop the mine to full phase 2 capacity. Table 3 below, details the phase 1 Project costs.

Table 3: Capex breakdown

	Euros
	Phase 1 capex
Preliminaries	9,611,934
Underground capex	72,505,061
Above ground civil works	30,342,112
Facilities buildings	5,068,944
Process plant capex	136,416,038
Dewatering and backfilling plant	20,633,812
Utilities	11,898,444
Indirect costs	43,242,393
Pre-production costs	12,758,052
Total capex	342,476,790

The capex estimate includes firm, recent quotations for capital plant, budget prices from manufacturers, measured quantities and tested market rates. A small number of items are estimated from all-in rates based on ratios (e.g. earth moving costs estimated based on cubic metres of earth at a per metre rate). The source of pricing is shown in Graph 1 below.

Graph 1: Capex by source of pricing

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The capex estimate is comprehensive and confirmed by Micon International Company Ltd. (“Micon”) to be superior to typical estimates at this stage of a project’s development. Allowances have been made for the full mining fleet to extract ore over the life of mine including refurbishment and replacement costs, ground

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support, conveying systems for ore and backfill operations, ventilation systems and other materials to support mining development. For the full scale mine operation, the equipment includes 2 bolter-miners, 4 road headers, 5 continuous miners, 11 feeder breakers and 20 shuttle cars. The process plant capex includes all of the equipment as assessed by Hatch to produce up to 500,000 tpa of MOP for phase 1 production. This includes mined ore receipt and handling, size reduction of the ore, recovery of potash from the ore by conventional flotation and also by a crystalliser circuit.

In addition to the quotes and other pricing sources indicated above, each package has been separately assessed for the purpose of incorporating a contingency allowance into each of the areas in Table 2 above. The overall contingency for the Project is approximately €26m.

The source of the data for the capital cost estimate plus the contingency allowances indicate a high level of confidence in the capital estimate and this has been verified by Micon. Comparing the capex estimate for the full Project on a per tonne basis, the Project is deemed to have a competitive position compared to other MOP projects currently proposed. Muga’s capital intensity per tonne for the full production will be approximately €541/tonne, whereas the average for currently proposed potash projects globally is approximately €870/tonne with some as high as €1,390/tonne.

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OPEX

The opex has been built up from first principles looking at each cost unit separately based on individual activities in the mine, process plant and support areas. Labour costs have been built up from detailed personnel schedules at each stage of the development and through both phases of the operation to full production.

The resulting cost estimate has been expressed on a €/tonne of run-of-mine material (“ROM”) basis and converted to a €/tonne of granular MOP product basis using forecast MOP production.

The average C1 opex estimate for the Project is €104/t, as shown in Table 4 below.

Table 4: Operating cost breakdown for per tonne of MOP

Operating Cost Summary - Per tonne MOP C1 Costs Components Mining Processing Salt treatment Waste and backfilling Environmental & Other Sub Total G&A Sustaining Capital Salt By-Product Credit Total C1 Costs C2 Costs Components Depreciation C1 Costs Total C2 & C3 Costs	Euros/tonne of MOP 38.15 47.74 3.53 4.85 3.23
	97.51 7.79 9.99 -11.72
	103.57 23.60 103.57
	127.16

The C1 Cost is calculated at mine gate and does not include transport costs to the port. Sustaining capex has been estimated based on equipment requirements throughout the life of mine.

A salt by-product credit has been estimated based upon an assessment of Spanish regional and European salt markets and assuming a modest production of 500,000 tpa of salt.

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Graph 2 below plots Highfield’s anticipated costs FOB at the port as compared to publicly available data from other MOP operations on an equivalent 2024 FOB basis for comparison purposes.

Graph 2: FOB Cost curve forecast for 2024 (real US$)

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MOP Capacity Mt
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Source: Argus Media 2024 cost forecasts (Q3 2018 dataset), Highfield Resources.

Graph 2 demonstrates Muga’s competitive position on the cost curve against World peers. Although not at the bottom of the cost curve as compared to the very high-grade potash mines, what will differentiate Muga from most of its competitors is its geographical location in relation to markets and infrastructure and the net-back prices that Muga will likely be able to achieve in the premium European market. For the purposes of the current analysis, 100% of the first phase of production is assumed to be sold into local and regional markets and for the second phase a conservative approach has been adopted which considers 25% sold into northern European markets and 25% to export markets. Forecast Potash prices are based on Argus Media’s Q3 2018 dataset. The forecast used in the model for southern Europe price for 2020 is around €255-265/tonne and for the weighted average price for the mix of markets as described above that has been used for the life of mine in the financial model is around €360-380/tonne.

As a result of its geographical location, the fragmented market in southern Europe and the consequential prices that are received in these markets, Muga will have a competitive margin position as compared to global peers. Graph 3 below indicates the analysis for Muga which has been verified by Argus Media.

Graph 3: Margin curve forecast for 2024 (real US$)

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Source: Argus Media 2024 cost forecasts (Q3 2018 dataset), Highfield Resources.

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FINANCIAL RESULTS

Table 5: Muga Potash Project financial overview

Production capex	Production capex	Production capex	€342Million (phase 1), €199Million (phase 2)
C1 cost per tonne of production			€104/t
Total MOP produced			24Mt
Life of Mine			27 Years
NPV (millions)	Discount rate	8%	€1,159 (A$1,888)
		10%	€799 (A$1,302)
		12%	€546 (A$890)
IRR			23%
Average EBITDA per year in full production			€300Million

The updated Project continues to show strong financial metrics including EBITDA of approximately €300m per year in full production, a post-tax, unlevered internal rate of return (“IRR”) of 23% and a net present value (“NPV”) with a discount rate of 8% of €1,159 million. The average C1 cost over the life of mine of €104 per tonne of MOP produced includes sustaining capex and salt by-product credit.

These continued robust projections are derived from a number of changes which the Company believes have significantly reduced the construction and operational risk of the Project. These amendments have resulted both from detailed technical update studies and from the Company’s dialogue with the environmental authorities in respect of its application for the Declaración de Impacto Ambiental (“DIA”) for Muga Project.

The resulting amendments in the mine plan include: reduced underground extraction ratios of ore; incorporation of exclusion zones around defined infrastructures; revised metallurgical recoveries; revised capital costs of mining equipment and process plant; greater contingency allowances; cost escalation over the three years since the previous capex estimate in the November 2015 optimisation study; and the current price forecast described above. In addition, the Company considers that the environmental and social factors for Muga and the abutting tenements remain unchanged or are enhanced since the release of the November 2015 optimisation study. As to the permitting process, this is ongoing and is as most recently reported in the Quarterly Activity Report of 23rd July 2018.

The Company has run sensitivity analysis on the key parameters with potential to have a significant impact on the projected returns. This analysis indicates the projected returns for the Project are most sensitive to changes in the received potash price. The financial results use an MOP price forecast based on Argus Media’s Q3 2018 dataset. The sensitivity analysis indicates that even in the downside scenario of a fall of 20% in received potash prices the Project would still deliver a post-tax NPV8 of €697 million.

The Company has also run a financial analysis considering if the mining inventory from the Exploration Target and the Muga Inferred tonnes were deleted from the projected forecasts. As the additional ore from the Exploration Target and Muga Inferred is currently modelled to be mined and processed after the Muga material, the impact is not considered to be material, yielding an NPV8 in the range of €900 million to €975 million and an IRR 22%.

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For more information:

Highfield Resources Limited

Peter Albert Managing Director Ph: +34 628 590 109

Olivier Vadillo Investor Relations Ph: +34 609 811 257

About Highfield Resources

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

Highfield’s Muga, Vipasca, Pintanos, 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] .

Highfield is awaiting the granting of a positive environmental permit, the award of the mining concession and other permits which will enable it to commence construction of the Mine.

Figure 4: Location of Highfield’s Muga, Vipasca, Pintano, Izaga and Sierra del Perdón Projects in Northern Spain*

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*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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COMPETENT PERSONS STATEMENT FOR MUGA POTASH PROJECT

This update was prepared by Mr. Peter Albert, Managing Director of Highfield Resources. The information in this update that relates to Ore Reserves, Mineral Resources, Exploration Results and Exploration Targets is based on information prepared by Ms Anna Fardell. Senior Consultant at SRK Consulting (UK) Limited, and Mr Tim Lucks Principal Consultant at SRK Consulting (UK) Limited

Ms Anna Fardell is a Resource Geologist employed by SRK Consulting (UK) Limited, and has at least five years’ experience in estimating and reporting Mineral Resources relevant to the style of mineralisation and type of deposit described herein. Ms Fardell is a registered member of the Australian Institute of Geoscientists (6555) and considered a Competent Person (CP) under the definitions and standards described in the JORC Code 2012. Ms Fardell takes responsibility for the Mineral Resource Statement presented here.

Ms Anna Fardell consents to the inclusion in this update of the matters based on their information in the form and context in which it appears.

COMPETENT PERSONS STATEMENT FOR MINERAL RESOURCES AND EXPLORATION TARGETS OTHER THAN MUGA MINERAL RESOURCES.

This update was prepared by Mr. Peter Albert, Managing Director of Highfield Resources. The information in this update that relates to Ore Reserves, Mineral Resources, Exploration Results and Exploration Targets is based on information prepared by Mr José Antonio Zuazo Osinaga, Technical Director of CRN, S.A.; and Mr Manuel Jesús Gonzalez Roldan, Geologist of CRN, S.A.

Mr José Antonio Zuazo Osinaga is a licensed professional geologist in Spain, and is a registered member of the European Federation of Geologists, an accredited organisation to which Competent Persons (CP) under JORC 2012 Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, Ore Reserves or Exploration Targets through the ASX.

Mr José Antonio Zuazo Osinaga has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as CP as defined in the 2012 edition of the JORC Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Mr. José Antonio Zuazo and Mr. Manuel Jesús Gonzalez Roldan consent to the inclusion in this update of the matters based on their information in the form and context in which it appears.

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