HIGHFIELD RESOURCES LIMITED

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Highfield Resources Ltd Path to Production for High Margin Muga Potash Mine

September 2016 Corporate Presentation

ASX Code: HFR

COMPETENT PERSON STATEMENT – RESOURCES

Information relating to resources was prepared by Mr Leo Gilbride, P.Eng and Ms Vanessa Santos, P.Geo, of Agapito Associates. The Competent Person for Resources under JORC Code standards is Mr Leo Gilbride, P.Eng and Ms Vanessa Santos, P.Geo. of Agapito Associates of Colorado, 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. Ms Santos is a licensed professional geologist in South Carolina and Georgia, USA, and is a registered member of the Society of Mining, Metallurgy and Exploration Inc.

The Society of Mining, Metallurgy and Exploration Inc is a JORC Code ‘Recognised Professional Organisation’ (RPO). An RPO is an accredited organisation of which the Competent Person 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 Field Services and Ms Santos is the Chief Geologist with Agapito Associates and both have sufficient experience to qualify as a Competent Person for the relevant style and type of mineralisation and deposit under consideration of this release. Mr Gilbride and Ms Santos consent to the inclusion in the report of the matters based on this information in the form and context in which it appears.

COMPETENT PERSON STATEMENT – RESERVES

Information relating to reserves was prepared by Mr. José Antonio Zuazo Osinaga, Technical Director of CRN, S.A.; Mr. Jesús Fernández Carrasco, Managing Director of CRN, S.A. and Mr Manuel Jesus Gonzalez Roldan, Geologist of CRN, S.A. Mr. José Antonio Zuazo and Mr. Jesús Fernández, are licensed professional geologists in Spain, and are registered members of the EUROPEAN FEDERATION OF GEOLOGISTS, an accredited organisation to which the Competent Person (CP) under JORC Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, or Ore Reserves through the ASX.

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

Mr. José Antonio Zuazo and Mr. Jesús Fernández consent to the inclusion in the release of the matters based on their information in the form and context in which it appears.

FORWARD LOOKING STATEMENTS

This presentation includes certain ‘forward looking statements’. All statements, other than statements of historical fact, are forward looking statements that involve various risks and uncertainties. There can be no assurances that such statements will prove accurate, and actual results and future events could differ materially from those anticipated in such statements.

Such information contained herein represents management’s best judgment as of the date hereof based on information currently available. The company does not assume any obligation to update any forward looking statement.

Corporate Summary
Board and Senior Management
The Muga Potash Mine
Timeline to Production and Key Milestones
Capital and Operating Costs
Stakeholder Engagement
Permitting
Upside Potential
Value Proposition
Summary

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1. Corporate Summary

Fully Diluted Equity
Ordinary Shares on Issue	311.2m
Options & Performance shares	108.2m
Fully Diluted	419.4m
Undiluted Market Cap at A$1.32 (6 September 2016)	A$411m
Cash as at 30 June 2016	~A$94m
Enterprise Value	A$317m / US$241m1
Average Daily Volume (6 months)	~470,000
Shareholders (Fully Diluted)
Spanish in-country management	12%
Australian based management	6%
EMR Capital	26%
Other Shareholders	56%
Total	100%

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Broker	Recommendation	12-month Price Target
Bell Potter	BUY	A$1.75
Blue Ocean	BUY	A$3.00
Canaccord Genuity	BUY	A$2.30
Foster Stockbroking	BUY	A$2.30
RBC Capital Markets	BUY	A$2.00
Taylor Collison	BUY	A$3.47
	AVERAGE	A$2.46

1) USD:AUD exchange rate 0.76:1.00

2. Board and Senior Management

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Board and Senior Management experienced in construction and operations

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Board of Directors
Derek Carter
Non-Executive Chairman Pauline Carr Jim Dietz
Owen Hegarty Richard Crookes
Independent Independent
Non-Executive Director Non-Executive Director
Non-Executive Director Non-Executive Director
Anthony Hall
Advisor
Peter Albert
Donald Stephens
Managing Director &
Company Secretary
CEO
Pedro Rodriguez
Advisor
Senior Leadership Team
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Michael Schlumpberger EGM Operations

Mike Norris John Claverley Chief Financial Officer General Manager

Gonzalo Mayoral EGM Development

Hayden Locke Head of Corporate & Strategy

2. Board and Senior Management

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Board and Senior Management experienced in construction and operations

Board of Directors and Senior Management	Board of Directors and Senior Management
Derek Carter – Non Executive Chairman A geologist with over 40 years experience in exploration and development, including nearly 20 years in management of ASX listed exploration companies including acting as Chief Geologist in Spain for the Shell Group and the Managing Director of Minotaur Resources.	Peter Albert – Managing Director & CEO A metallurgist by training, and a Chartered Engineer, he has over 30 years’ experience in project management, construction, operations, stakeholder management and corporate strategy globally. He has held senior leadership roles with a number of large international companies, including most recently CEO of Hong Kong publicly listed companies G-Resources and Jinchuan Group International.
Pauline Carr – Independent Non Executive Director A governance professional with an accounting background and over 25 years` experience in the mining industry. Pauline has held senior positions in Newmont Asia Pacific and Normandy Mining Limited and worked for many years for Exxon Mobil. She holds positions on a number of other Boards and Councils.	Owen Hegarty – Non Executive Director An executive with over 40 years experience in the global mining industry that included 25 years in Rio Tinto where he was the Managing Director for Asia, and founder and 15 years as CEO of Oxiana Ltd. He is a director of various listed and unlisted resources companies and is Executive Chairman of EMR Capital.
Richard Crookes – Non Executive Director A geologist with over 28 years executive experience in the resources and investments industry. He is currently an Investment Director of EMR Capital and was formerly a Director of Macquarie Bank’s Metals Energy Capital Division and was Chief Geologist with Ernest Henry Mining.	Jim Dietz – Independent Non Executive Director A chemical engineer with over 41 years’ experience in the fertiliser, chemical and petroleum industries. Jim spent the last 17 years of his career at PotashCorp, including 11 years as Chief Operating Officer (COO). Prior to this he worked for Standard Oil of Ohio and British Petroleum.
Donald Stephens – Company Secretary A Chartered Accountant and Corporate Advisor with over 25 years’ experience in the mining industry and accounting profession. He is a director and company secretary of multiple ASX listed entities.	Michael Norris – Finance Director A qualified Chartered Accountant with 30 years´experience, gained almost entirely in the mining industry. Prior to joining Highfield, he was Finance Director for London-listed West African gold producer, Avocet Mining and various positions for Anglo American and Rio Tinto.
Michael Schlumpberger – Project Director A qualified Mining Engineer and MBA, with extensive operational mining experience including over 21 years at PotashCorp during which time he had operational responsibility for the expansion and ongoing operations at PotashCorp’s 8Mtpa Lanigan underground potash mine.	Hayden Locke – Head of Corporate and Strategy Over 10 years experience in a variety of fields including investment banking, private equity and natural resources. Most recently as Head of Corporate for ASX listed Papillon Resources, which was acquired by TSX listed B2Gold Corporation in 2014. 5

3. The Muga Potash Mine

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Muga - Highfield’s most advanced, low capex, high margin potash development project

Summary

Located in Northern Spain, within 150km of key Atlantic Port near San Sebastian (Port of Pasajes)
Project Optimisation Study completed in November 2015
Detailed engineering and design underway, long lead items ordered and deposits paid
Expected to produce 1.08Mtpa of granular K60 MOP per annum at full production, initial mine life of 47 years life
Staged project capex including contingency:
Phase 1 – €267 million delivering 540ktpa
Phase 2 – €145 million delivering an additional 540ktpa
Substantial mine life upside potential
All-in-sustaining Cash Cost to Port – €122 / tonne of MOP
Unlevered, post tax, NPV10 – US$1.46 billion (NPV8 – US$2.04 billion)
MoUs signed with two Atlantic Coast ports for long term logistics solution
MOUs signed with three traders for the sale of MOP, discussions underway with fertiliser offtakers

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Source: ASX Announcement dated 17 November 2015

3. The Muga Potash Mine

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Relatively simple, proven technology with first rate access to end markets

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Decline access to shallow mineralisation
Simple Mining
Underground room and pillar mining
Sylvinite ore
Simple
Processing
Simple flotation process flowsheet
Direct connection to national electricity grid
First Class
Infrastructure
Close to port, no road or rail upgrades
Located in a potash consuming region
Proximity to
Local Markets
Good access to the large Brazilian and US
markets
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8
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4. Timeline to Production and Key Milestones

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Construction ready program, two years from commencement of construction to production

	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project	Month of Project
Item Pre-Development Stages	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24
Detailed Engineering and Design
Long Lead Items Ordered
Electricity Connection
Water

Site Preparation:
Plant Site
Waste Dumps
Brine / Salt Ponds

Underground:
Box Cut
Decline
Drifts and Conveyors
Aboveground:
Storage Buildings
Process Plant
Drying, Compacting and Glazing
Plant Commissioning

First Production

5. Muga Capital and Operating Costs

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Lowest project capital cost potash project globally on a $ / tonne of production basis

Muga Phase 1 – Project Capital Cost		• Negotiations continue with Acciona for a fixed price lump sum contract for project delivery
Component	Amount (€ millions)	• No major aquifer unit allows simple decline access
Underground Installations	69.0	• Decline access to mineralisation significantly lowers
Above Ground Civil Works	26.8	capital cost relative to most potash peers
Process Plant	33.0	• Clean ore allows flotation processing without
		crystallisation step, flotation process flow sheet is
Storage and Conveyors	19.9	lower cost
Buildings	5.4	• Grid electricity connection lowers capital and
Instrumentation and Control	1.5	operating cost
Plant Equipment	45.6	• No port upgrades, rail spurs or other
Utilities	16.1	infrastructure expenditure
Indirect Costs	33.8	• First class roads and motorways and access
Contingency	15.9	to site
Total incl. Contingency	267.0	• Phase 1 Capital Cost delivers 540Ktpa production
		• Only €145 million capex to double
		10 production

5. Muga Capital and Operating Costs

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Low delivered cost to customer positions Muga to be a high margin potash mine

Muga - Operating Cost
Component	Amount (€ / tonne MOP)	Amount (US$ / tonne MOP)
Mining	55.1	61.2
Processing	45.1	50.1
Transport (FOB Pasajes)	17.4	19.4
Direct Cash Operating Cost	117.6	130.7
SG&A	7.5	8.3
Sustaining Capital	5.0	5.6
Royalties	0.0	0.0
All-in-Sustaining Cash (AISC) Cost (FOB Pasajes)	122.6	136.2
0 50 100 150 200 250 0 10 20 30 40 50 60 70 Cost to fob $/t MOP Capacity (mn t) Cash Cost to FOB Export Port Highfield

Muga is expected to deliver bottom quartile all-in-sustaining cash (AISC) cost delivered to Europe, Brazil and the USA
Muga benefits strongly from:
No brine inflow management costs
Proximity to domestic customers (< 200km)
Proximity to export port (< 150km)

– No royalties or government levies

Low sustaining capital cost
Low ongoing SG&A cost due to location

Source: Argus FMB Consulting Services Note: Argus cash cost to FOB curve is not on an all-in-sustaining basis 11 and excludes SG&A and sustaining capital costs

6. Stakeholder Engagement

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Highfield is committed to sustainable development, supporting the local community

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Safety
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- Developing a strong safety first culture within our work force
- Focus on minimising harm to both workers and surrounding environment
Minimise -
Environmental Impact
- Core focus on minimising risk and impact on environment surrounding the project area
- ESIA completed in compliance with industry best practice, Spanish legislation and IFC’s Equator Principles
- Implement robust and appropriate ongoing monitoring and response plans
Sustainable Economic - Development

Creating quality employment with a preference for local employees and contractors Become a significant employer in the region

Social Development

Creating an industry for the long term Continue to invest in community initiatives surrounding the project

6. Stakeholder Engagement

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Highfield is actively participating in the community through its Geoalcali Foundation

Geoalcali Foundation

Established in September 2014
Over 70 community projects to date
Visible statement of Company´s intent to actively support the community

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Seguridad Primero

Compromiso medioamiental

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Crecimiento económico

Desarrollo social

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7. Permitting

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Permitting process moving towards conclusion

MAGRAMA (environment department) is moving through its official process of reviewing the Environmental and Social Impact Assessment

Environmental Declaration

We understand that the official process is well advanced
Highfield is supporting this process and is working closely with various governmental departments involved in the process to expedite it as quick as is possible
Political vacuum in Spain is likely not assisting the bureaucratic process
Following the award of the Environmental Declaration (DIA) MINETUR (that includes the Department of Mines) can move to award the Mining Concession (CE)

Mining Concession

The Company continues to remain confident of receiving its DIA and mining concession in the near future

8. Upside – Muga Expansion & K62 Project

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Highfield has a number of near term value creation opportunities

Muga Expansion Project

K62 Crystallisation Project

Upfront investment at Muga will allow cost effective expansion, post Phase 2 development
Crystallisation plant to process slimes and tailings from Muga Potash Mine to produce K62 MOP and high purity vacuum salt
Second decline allows conveyor capacity to double
Requires investment in underground mining equipment to increase ore production
Scoping Study released May 2015
Initial Capital Cost of US$124 million including contingency
Process plant is modular, expansion relatively simple
NPV10 of US$222 million (NPV8 – US$285 million)
Surface space set aside for future expansions
Expected to have similar cost metrics to Muga Phase 2 development
Study contemplated production of 135ktpa of K62 MOP and 260ktpa of high purity vacuum salt

Source: ASX Announcement dated 19 June 2015

8. Upside – Other Projects

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Control of basin of projects with shared characteristics of Muga Potash Mine

8. Upside – Other Projects

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Control of basin of projects with shared characteristics of Muga Potash Mine

Muga Extension

SOP Project

Sierra del Perdón

Exploration target of 127 to 255 million tonnes at 12% to 16% K2O
Target based on geophysical surveys confirming continuation of evaporite from Muga Potash Mine
High level of confidence in exploration target

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Scoping Study complete for 500ktpa SOP Mannheim facility
Total capex US$147 million
Lowest quartile cash cost to customer
MOUs signed with acid suppliers, HCl customers and ports
Good access to US market, strong implied margins to Highfield

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Scoping Study completed April 2015
Decline access to underground conventional with flotation processing
Total Capex – US$233 million
520ktpa of K60 MOP with initial mine life of 20 years
Unlevered, post tax, NPV10 – US$527 million (NPV8 – US$662 million)

8. Upside – Other Projects

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Control of basin of projects with shared characteristics of Muga Potash Mine

Pintanos

Vipasca

Izaga

Current Exploration Target of 127m to 255m tonnes at 12 to 16% K2O covering 7.1km[2]
Additional northern extension identified covering 2.8km[2]
Upside potential equal to current Muga Project Resource and Mine Reserve
Exploration Target of between 320 million and 1,2 billion tonnes at 12% to 16% K2O
TDEM and gravimetric surveys show strong continuity of evaporite horizon
Permit contiguous with Muga and shares many characteristics
Grass roots exploration tenement
Clear continuation of evaporitic sub basin
Historical drilling encounter potash horizons within evaporite
Historical drilling not able to be used for resource purposes
Potential to be Highfield’s second mine

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9. Value Proposition - Highfield

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Independent verification that Muga Mine would have made Highfield the highest margin producer

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9. Value Proposition – Potash Market

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Many experts believe potash prices have reached the marginal cost of production

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Solid Demand
Fundamentals
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65 million
tonnes
60 million
tonnes
Producer
Discipline 5.9 million 0.9 million
Returning tonnes tonnes
2015 2016 Closures and 2016 2016/17 Potential
Production Supply Operating Consensus Under
Capability Reductions Capability Demand Supply
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Have we seen the start of a recovery for potash prices?

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Source: Argus FMB, PotashCorp, Company websites and releases

9. Value Proposition

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Potash companies command premium multiples relative to diversified mining companies

Project Pipeline

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-
Muga Extension
-
Muga Exploration Target
-
Sierra del Perdón
-
Los Pintanos Significant
- 9.7x EV / EBITDA
Vipasca upside
- US$1.94 bn
Izaga potential
-
Sulphate of Potash (SOP)
-
Magnesium Hydroxide
-
Industrial and de-icing salt
Optimisation Study
NPV10 – US$1.46 bn
Current EV
US$241 m
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Unlevered, post tax, NPV10 – US$1.46 billion (NPV8 – US$2.06 billion)
Potash producing peers average EV/EBITDA multiple of 9.7x
Muga forecast to make Highfield the highest margin potash producer globally
Forecast US$200 million per annum in EBITDA at today’s potash prices
Highfield EV in production US$1.94 billion at today’s potash prices
AUD$2.69 billion at current exchange rates
Post tax NPV to Pre Production Capex Ratio – 5.0x
Currently trading at 0.17x of NPV 10

Note: Optimisation study released 17 November 2015 HFR Share Price – A$1.32 / share

1) Fully diluted shares on issue of 419.4 million and A$94 million in cash; USD : AUD – 0.76

9. Value Proposition - Highfield

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Low capex, low risk, high margin potash development with majority of its funding in place

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Low Capital Cost
Lowest capital cost to
production
Outstanding
High Margin Investment
Bottom quartile delivered
Metrics
cost to customer
Well funded Over A$80 million in
Compelling
Investment cash
Value
Lower Technical Muga NPV10 – US$1.46bn
Risk
First world jurisdiction
Lower Risk
Clear path to export
Low Geopolitical markets
Risk
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10. Summary

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Outstanding portfolio of projects with Muga the flagship

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Lowest capital cost to production
Lowest quartile delivered cash cost to customer
NPV10 – US$1.46 billion (NPV8 over US$2 billion)
Experienced team of mine builders and operators
MD Peter Albert has over 30 years’ experience in building and operating mines globally
EGM Operations, Mike Schlumpberger, was GM of PotashCorp’s largest underground potash mine in Canada
Well funded
Over A$80 million in the bank
Project finance syndicate with credit approvals for facility to support construction

Logo of the Company’s Spanish Foundation that is currently delivering several projects with local communities

Awaiting final permits to commence construction

REGISTERED OFFICE

169 Fullarton Road Dulwich SA 5065 Australia

HEAD OFFICE

Avenida Carlos III, 13-15, 1B, 31002 Pamplona, Spain T +34 948 050 577 | F +34 948 050 578

www.highfieldresources.com.au [email protected]

FURTHER INFORMATION

Peter Albert Managing Director T +34 628 590 109 Hayden Locke Corporate Development T +34 609 811 257

AI assistant

HIGHFIELD RESOURCES LIMITED — Investor Presentation 2016

65048_rns_2016-09-15_fcce5a73-6685-4978-83e3-f0148d0115fc.pdf

COMPETENT PERSON STATEMENT – RESOURCES

COMPETENT PERSON STATEMENT – RESERVES

FORWARD LOOKING STATEMENTS