Highfield Resources Ltd agrees term sheet for €312.5m senior secured project financing

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Facilities from a group of experienced European mining lenders will cover a substantial part of the pre-production investment required to complete construction of the Muga Potash project in Spain.

Highfield Resources Ltd (ASX:HFR) has agreed a non-binding indicative term sheet with a group of European mining lenders, resulting in an overall package of €312.5m to finance the construction of its project Muga Potash 100% owned in Spain.

Secured senior project financing will cover a significant portion of the pre-production investment required to complete Muga Phase I construction.

Mining lenders

The group of experienced lenders includes Société Générale, ING Bank NV and Natixis for a financing line of 300 million euros and an additional cost overrun line of 12.5 million euros.

In addition, the company has attracted strong interest from local Spanish banks wishing to participate in the facilities.

“Critical Stage”

Highfield CEO Ignacio Salazar said: “As we approach construction at Muga, we have reached another critical milestone by securing a term sheet for €312.5m of senior debt.

“Following an extensive due diligence process by independent experts, we have succeeded in increasing the debt facility in quantity and duration compared to initial expectations, which shows the merits and growing confidence in the Muga project.

“This is a major achievement in Muga’s funding strategy, providing further momentum for the advancement of strategic investments and other funding options.”

Installation requirements

Overview of terms:

  • €300 million senior secured project finance facility;
  • Additional cost overrun facility of €25 million, of which €12.5 million financed by senior debt;
  • Cut financing in equipment leasing up to 22.5 million euros; and
  • Facility term of up to 10 years including a 2.5 year grace period.

The facility remains subject to the lenders completing their final due diligence and credit approvals.

Endeavor Financial is acting as financial advisor to the Company.

About Muga

Highfield Resources is an ASX-listed potash company focused on building its flagship low-cost, low-capex Muga-Vipasca project in Spain, having been awarded the mining concession in July 2021.

Muga is a unique project in Western Europe. It has shallow potash mineralization accessible to decline with no overlying aquifer.

The project benefits from the quality and easily accessible infrastructure already in place in the region and, most importantly, the Muga project is at the heart of a European agricultural region which has a clear demand for potash supply to meet future needs.

Highfield’s potash properties (Muga-Vipasca, Pintanos and Sierra del Perdón) are located in the Ebro potash production basin in northern Spain, covering an area of ​​approximately 250 square kilometers.

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