HIGHFIELD RESOURCES LIMITED — Investor Presentation 2021

Jul 11, 2021

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Constructing the Next European Potash Mine Corporate Presentation | July 2021

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COMPETENT PERSONS STATEMENT FOR MUGA POTASH PROJECT

This presentation was approved by Mr Ignacio Salazar, CEO of Highfield Resources. The information in this presentation that relates to Ore Reserves is based on information prepared by Dr Mike Armitage, the Chairman of SRK Consulting (UK) Limited. Dr Mike Armitage is the Competent Person who assumes overall professional responsibility for the Compliance Opinion. The information in this presentation that relates to 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.

Dr. Mike Armitage is employed by SRK Consulting (UK) Limited. The information in this presentation that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled under the direction of Dr. Mike Armitage, who is a Member of the Institute of Materials, Metals and Mining (“IMMM”) which is a ‘Recognised Overseas Professional Organisation’ (“ROPO”) included in a list promulgated by the Australian Securities Exchange (“ASX”) from time to time.

Dr. Mike Armitage 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 a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

Dr. Mike Armitage consents to the inclusion in this report of the matters based on this information in the form and context in which it appears.

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. Anna Fardell consents to the inclusion in this presentation of the matters based on her 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 presentation was approved by Mr Ignacio Salazar, CEO of Highfield Resources. The information in this presentation 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 presentation 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.

An Investment Opportunity in the Next Major European Potash Mine

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Muga Potash Mine

Highfield Resources

Strong market fundamentals Global potash prices on the move

Strong financial position and financial markets support

Location is a major strategic advantage Shallow mineralization Infrastructure in place

Experienced Management and Board

A Compelling Investment Opportunity Low capex intensity per tonne

Strong local support

Forecast to be one of the highest margin potash mines globally

Top environmental credentials

Moving up in project life cycle

Upside growth opportunities

Corporate Snapshot

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Capital Structure
Share Price (7 July 2021)	$0.735
Shares on Issue	329.6 million
Options & Performance Rights	-
Market Capitalisation	$242.3 million
Cash (31 March 2021)	$15.8 million
Drawn Debt*	-
Enterprise Value	$226.5 million

*Note: Debt of €185 million previously approved by leading European banks. Work ongoing with Endeavour financial for updated debt package

Major Shareholders	%
EMR Capital	31.6%
WWB Investments	6.1%
Australian Super	5.1%
Top 20 Total	59.7%

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Price ($) Volume (m)
$1.00 1.2
$0.90
1.0
$0.80
$0.70
0.8
$0.60
$0.50 0.6
$0.40
0.4
$0.30
$0.20
0.2
$0.10
- -
Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21
Volume Share Price
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Highfield Resources and the Muga Project

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A potash developer listed on the ASX (HFR) with projects in Northern Spain

Local Spanish head office and project office with the entire executive team based in Pamplona, near the Muga Project site Muga Mine

Muga is a two phase project which will produce a total of 1 Mtpa of muriate of potash

Muga has received the Mining Concession and it is now preparing for Construction

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Conventional Underground Room Conventional and Pillar mining. Flotation and Declines accessing Crystallisation shallow processing mineralisation

Milestones Achieved

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Permitting

Mining concession received on 1 July 2021

Engineering Detailed design engineering prepared and ready

Sales and Non-binding MOUs representing more than Phase-1 production capacity Marketing for potash and salt have already been signed Corporate Endeavour Financial appointed and finalising financing strategy

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Why

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Shallow Mineralization, Conventional Mining, with Tier-One Infrastructure in Place

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Decline access to shallow mineralization; underground Room and Pillar mining. No aquifers

Close to the Port of Bilbao (~220km), Spain’s largest port

First class infrastructure and access to new road systems

National Electricity Grid Substation is in close proximity to mine site

Significant Logistical Competitive Advantage

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Extremely competitive and versatile export options

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~1,750km from mines to port
Muga will be one of ~1,700km from mines to port
Excellent existing
infrastructure only two potash
mines located in
Southern Europe
~6,800 nautical miles
~8,700 nautical miles
Low freight cost to
Port of Tarragona Brazil, a key potash
market
~220km from mine to port
~5,000 nautical miles
Competing Markets
Destination (Shipping Days)
Easy access to premium southern
European market where product can
be competitively trucked directly to Country of departure Time to port Brazil West Europe
customers in France and Spain Spain ~2h 18 -
Germany ~3h 21 -
Russia/Belarus ~2-3 days 26 5
~
Canada West Coast 3 days 43 35
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Top Quartile Margins in the Industry

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European prices continue to trade at a premium to other markets​

Margin curve forecast for 2024 (real US$)

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450.00 200
400.00
150
350.00
300.00
100
250.00
200.00 50
150.00
0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75
-50
Potash Standard MOP bulk fob Vancouver US$/t
Highfield Rest of World
Potash Granular MOP bulk cfr northwest Europe (EUR/t converted to US$/t)
US$/t
MOP US$/t
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Mine location provides exposure to significantly lower potash delivery rates to European market, meaning higher netbacks at mine gate

Low costs and higher netbacks at mine gate position the mine as potentially one of the highest margin potash mines globally

Source: Argus Media, CRU, Highfield Resources., ASX Release 14 October 2019

The Company confirms that all material assumptions underpinning these figures, in-line with the initial public report released on 15 October 2018 (refer ASX release “Muga Project Update”), the Quarterly Report Published on 14 October 2019 and the clarification document released on 21 November 2019 (refer ASX release “Further Clarification – Muga Project”), continue to apply and have not materially changed.

Low Capex Intensity and Strong Project Economics

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Phase 1 capex of €368 million + Phase 2 capex of €208 million

MUGA: HALF THE CAPEX INTENSITY OF OTHER GLOBAL DEVELOPMENT PROJECTS (US$ per tonne of potash)

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1800
1600
1400
1200
1000
800
600
400
200
0
BHP (Jansen) Canadian mine BHP (Jansen) Eurochem K+S (Bethune) Russian mine Eurochem Muga
Phase 2 average Phase 1 (Usolsky) average (Volgakali)
Capex intensity $/t
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Source: Company Websites, Highfield Resources

Compelling financials, with an NPV8 of €1.97 billion, IRR 25% and EBITDA of €310 million per annum at full production

The Company confirms that all material assumptions underpinning these figures, in-line with the initial public report released on 15 October 2018 (refer ASX release “Muga Project Update”), the Quarterly Report Published on 14 October 2019 and the clarification document released on 21 November 2019 (refer ASX release “Further Clarification – Muga Project”), continue to apply and have not materially changed.

Muga Mine – Key Physicals and Financials

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	14 October 2019
CAPEX phase 1 (500,000 tpa MOP)	€368 million
CAPEX phase 2 (Additional 500,000 tpa MOP)	€208 million
Total CAPEX	€576 million
ROM tonnes	179.8 million tonnes
Average plant tonnage feed rate	400 tph
K2O grade	10.7%
KCl recovery	94%
LOM MOP production1	30.1 million tonnes
LOM MOP average potash prices for first 20 years of MOP production1	€378/t
Foreign exchange Euro:USD	1:1.09
De-icing salt production	11.4 Mt
Vacuum salt production	15.2 Mt
C1 cost (€/t)	€82/t
Tax rate (Navarra)	28%
Life of mine	30 years
NPV8	€1.97 billion
IRR	25%

1 Cautionary Statement. The production targets set out in this update is derived from Muga Proved and Probable Ore Reserves and Inferred Mineral 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.

The Company confirms that all material assumptions underpinning these figures, in-line with the initial public report released on 15 October 2018 (refer ASX release “Muga Project Update”), the Quarterly Report Published on 14 October 2019 and the clarification document released on 21 November 2019 (refer ASX release “Further Clarification – Muga Project”), continue to apply and have not materially changed.

Sales Strategy

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MOP sales (pa)
Salt sales (pa) Wider Europe:
• ~250-300 kt MOP
• ~200-250 kt salt
US East Coast:
• ~50 kt MOP
L oc al:
• ~200-250 kt salt • ~450-500 kt MOP
• ~400-500 kt salt
Africa:
• ~50 kt MOP
South America: Potash MOUs signed
• ~200-250 kt MOP MOP
Ameropa 250,000 tpa
Sales & Marketing Strategy well advanced Keytrade 300,000 tpa
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• ✓ Sales & Marketing Strategy well advanced

• ✓ A high level of interest in the mine with MOUs signed for more than phase 1 production

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Salt MOUs signed

• Vacuum De icing - Cargill 1,000,000 tpa Maxisalt 400,000 tpa 100,000 tpa

• ✓ Salt sales will convert potential environmental liability into commercial opportunity

• ✓ Africa & Brazil provide key future growth areas for potash demand

Key project milestone timeline

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2021 2022 2023 2024
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Contract with
construction
partner
Pre-
Finalise procurement of lead items and start
Construction construction of the bolter miner
Local town hall
construction licenses
Reconfirm debt
credit approval
Financing
Finalise funding
package
Early works and above ground
installations
Construction Process plant
Ramps and underground galleries
Production Operational
readiness
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Appendix

Global Potash Prices on the Move at the Right Time

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Strong market fundamentals

Upward price forecasts

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02 10
08
02
06
01
04
01
02
00 00
Crop Production Global Population
+29% -14%
12000 0.25
10000 0.2
8000
0.15
6000
0.1
4000
0.05
2000
0 0
2018 2050 2018 2050
Billion
Billions of tonnes 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2025 2028
Millions
Hectares/capita
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World population

Arable land per capita

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Soybean prices are the highest in 5 years
525
505
485
465
445
425
405
385
365
345
325
2016 2017 2018 2019 2020 2021
Potash prices are increasing rapidly
(and the buying season in Europe is ongoing)
650
550
450
350
250
150
2016 2017 2018 2019 2020 2021
SMOP fob Vancouver USD/t GMOP cfr northwest Europe Euro/t
GMOP fob New Orleans barge USD/st GMOP cfr Brazil USD/t
US$/t
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Source: UN FAO

Source: Argus Media

Strong Board with Global Mining Industry Experience and Robust Governance Processes

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Richard Crookes Independent Non-Executive Director Chairman

Richard has over 30 years of experience in the resources sector. He worked as Chief Geologist and Mining Manager for Ernest Henry Mining in Australia (now Glencore). He has been Executive Director for the Energy Metals Division of Macquarie Bank and Investment Director for EMR Capital.

Pauline Carr Independent Non-Executive Director

Pauline has over 30 years of resources sector experience. She has occupied senior and executive positions for Newmont Asia Pacific and Normandy Mining Limited and has worked for a number of years in the petroleum and gas sector with Exxon Mobil.

Isaac Querub Independent Non-Executive Director

Isaac was the CEO of Glencore Spain, and Partner of Andria Real Estate Investments, Incogas and Moka Consulting. He was a member of the Board of Asturiana de Zinc and currently he is a member of the board of various European mining companies.

Roger Davey Independent Non-Executive Director

Roger was a Director, Vice President and GM of Minorco (AngloGold) subsidiaries in Argentina. More recently he was Senior Mining Engineer in the project finance team for NM Rothschild Mining and Metals. Roger is experienced in operating in Spain as the Chairman of Atalaya Mining and has considerable knowledge of start-up mines around the world.

Brian Jamieson Non-Executive Director

Brian was on the Board of Oxiana for 10 years and assisted Owen Hegarty in developing that company into a major mining house. Brian has over 40 years’ experience in the advisory, manufacturing, resources and technology industries in Australia and offshore and is experienced in developing exploration-focused companies into producers.

Experienced and capable management team

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Ignacio Salazar Chief Executive Officer

Ignacio has over 30 years’ experience, most of which have been in the resources sector. His outstanding international career includes 18 years working with Royal Dutch Shell and 12 years with Orosur Mining Inc. including seven years as CEO. Ignacio joined HFR as CEO in July 2020

Mike Norris Chief Financial Officer

Mike was Finance Director of Avocet Mining, a gold producing company listed on the London Stock Exchange. He was Head of Business Performance for Industrial Minerals at Anglo American, and CFO at two Rio Tinto mines in the USA.

Ricardo Pérez External Relations & Permitting

Ricardo has over 20 years of experience in the management of investment firms, leading investment processes in companies, fundraising and strategic consulting. He is an active member of various companies’ boards of directors. He has international experience facilitating the integration of companies from different countries and their commercial expansion.

Javier Olloqui Human Resources

Javier has over 25 years of experience in Human Resources management, nationally as well as internationally, for companies such as Aludium, Gamesa Eólica, Faurecia, Mondragón Group and 3P Biopharmaceuticals.

Leonardo Torres-Quevedo Project Construction Director

Leonardo is a mining engineer with more than 20 years’ experience in project management focused on large construction projects in Spain. Prior to becoming an employee of the Company, he worked for 9 years at Bovis Project Management where he spent the last 2 years working on the Muga.

Olivier Vadillo Marketing and Investor Relations

Olivier has more than 15 years professional experience in strategic consultancy. He has worked for companies such as Wood Mackenzie and Deloitte where he developed business strategies and financial models. Previously he was Head of Metals and Mining Research Asia for Wood Mackenzie in Sydney.

Industry Leading ESG Credentials

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• ❖ Environmental compliance and commitment through DIA award

Environmental Factors

• ❖ Progressively rehabilitate mine: Backfilling and salt sales

• ❖ Muga will be the only mine not to leave residue on the surface after production

• ❖ Strong local support in favour of the Muga Project

• ❖ Qualified and available local labour market (+4000 CVs received)

Social Factors

• ❖ 100+ foundation initiatives already invested in the community

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Governance Factors

• ❖ Robust governance and strong focus on responsibility and ethics

• ❖ Admitted as a signatory to the UN Global Compact initiative

• ❖ Adherence to rigorous ASX and EU disclosure and reporting obligations

Recognition for Commitment to Health, Safety and Social Responsibility

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Bonus 2018 A health and safety recognition for having a low Member of Ecodes’ Climate Action initiative accident rate

InnovarSE certificate Receipt of the Cycle of Improvement award as a result of sustainable initiatives

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RSA 2021 certificate Reconcilia certificate Aragón Province Social Responsibility Seal for the Work Life Balance Award fourth consecutive year

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Blue Stamp/Seal
For Health and Safety
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REGISTERED OFFICE

169 Fullarton Road Dulwich SA 5065 Australia

SPAIN HEAD OFFICE

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

Ignacio Salazar CEO T: +34 948 050 577 Olivier Vadillo Investor Relations T: +34 609 811 257

www.highfieldresources.com.au