Page 90 - pd296-August21-mag-web

ReGIonAL RoUnD-UP eURoPe

Muga finally on path to production

ighfield Resources Ltd chief executive been very explicit about that support for the so they are fully committed and fully support-
HIgnacio Salazar never once doubted his project.” ive of the strategy to move the company as
company’s ability to overcome the final per- The award of the mining concession will quickly as possible into production.”
mitting hurdle and begin the long-awaited unlock a number of work streams for High- Highfield has also signed MoUs for offtake
construction of the Muga potash project in field as the company looks to begin formal which cover the proposed first phase of pro-
Spain. construction works at Muga before the end duction. Salazar said the company may
The administrations of Madrid, Aragon of Q1 2022. elect to tie an offtake deal into its project fi-
and Navarra last month granted the mining Salazar said a number of pre-construction nancing package, however, he insisted any
concession for Muga, about 50km south- activities would be expedited now that the agreement of that nature needed to be in the
east of Pamplona, bringing an end to what mining concession was in hand, including best interests of Muga and the community
some investors believed was a drawn-out the finalisation of a construction agreement stakeholders.
regulatory process which took the best part with preferred contractor Acciona. Tenders “One of the key features of this project is
of six years to complete. for the construction of the bolter miner, final- its strategic location in the middle of a highly
Salazar, who joined Highfield a little more ising the procurement of key equipment and intensive agriculture region with very limited
than 12 months ago, told Paydirt he always securing the local town hall licences for the supply of potash, which makes us extremely
felt the company’s application for the mining project build also sit top of Highfield’s priority competitive in any case because the alterna-
concession had the support of each of the list. tives are very far away,” he said.
three administrations. The pre-construction phase will run in par- “The key suppliers are in the middle of
“With all of these processes you cannot allel to project financing. Endeavour Finan- Canada, Russia and Belarus; they are the
take them for granted, so we are very happy cial continues to lead that process, with the leaders in the industry but they are far away,
and very relieved to have the mining conces- preferred funding package still a combina- so those are the comparisons we can use
sion granted because it is the main permit tion of debt and equity. to set the pricing structure. In Europe, prices
and it opens the door for us to start preparing An initial capex of €368 million is required have been trading at a premium compared
for the construction,” Salazar said. for the starter 500,000 tpa operation at to global prices and will keep trading like that,
“Like any other project, you want to move Muga, with output to be doubled in phase so that will give us another advantage.”
forward quickly and I think expectations two following a further investment of €208 Salazar, who returned to Spain last year
were a lot more optimistic at the beginning [of million. after living abroad for many years, said the
the permitting process], but if you put those Salazar is confident of locking away pro- country was slowly emerging from a pro-
timelines in not only the Spanish context but ject finance before the end of the year, sug- longed period in lockdown due to the global
in the overall industry context, it’s not a long gesting the efforts of others prior to his arrival COVID-19 pandemic and projects such as
period compared to other projects like this. in July 2020 meant the pathway to full con- Muga would be critical to resuscitating the
“I never had any doubt in my mind we were struction would be very smooth. nation’s economy.
going to get it. I always felt we had the sup- “Three or four years ago the company ran “When I arrived it was to get the mining
port of the administrations. It was slow but a process and got credit approval of €185 concession and now it’s to get us into con-
the support has been incrementally growing. million with the three key European banks struction, so next year we should be talking
The project was being better understood which typically run project finance for these about having started the construction and
and everybody was aligned, and for a pro- types of projects,” he said. “If anything we getting ready to deliver the project,” he said.
ject like this you always need to have a lot of are expecting to do better than that now the “We see a major gap in terms of value that
people aligned. project is a lot more robust and de-risked. will be closed simply by delivery of the pro-
“You’re always going to have one or two “We have the support of our shareholders, ject and all of the management team is very
people that are against certain things, but in particular EMR [Capital] with 30% owner- clear on those next steps.”
the overall support has been growing and ship of the company and also Aussie Super
the administrations have all stood up and with 5%. They see the value to be created… – Michael Washbourne

Page 90 aUgUST 2021 aUSTRaLIa’S PaYDIRT