Highfield Resources (ASX: HFR) has received a key environment permit to advance the Muga potash project in Spain, which as the potential to be one of the highest-margin potash mines worldwide.
Spain’s Ministry for Ecological Transition approved the permit, paving the way for Highfield to focus on securing the mining concession and necessary construction approvals.
With the permit now on board, Highfield will also commit to purchasing several long lead time mining and processing equipment items as well as completing the final project design.
“The awarding of the Declaracion de Impacto Ambiental is the most significant step for Highfield in de-risking the Muga project,” Highfield chief executive officer Peter Albert said.
“The Muga project has the potential to deliver tremendous benefits to all of our stakeholders and the Highfield team is excited to now be able to move towards mine construction,” Mr Albert added.
Muga potash project
A feasibility study on Muga has projected earnings before interest tax depreciation and amortisation of €300 million (A$483 million) per annum at full production, which is estimated at 1 million tonnes per annum.
Highfield is looking at a two-phase development with the initial phase to include a €342 million (A$550 million) capital expenditure to generate 500,000tpa of product.
The second phase capital outlay is estimated at €199 million (A$320 million), and this would double production to 1Mtpa and bring in the €300 million per annum in EBITDA over 27 years.
With the mine located in Spain, Highfield anticipates its production will be close to key demand areas in Europe, enabling competitive and versatile export options and quick delivery times.
Looking ahead at potash demand, the consensus is consumption will grow at 2.5% annually, driven by higher crop production and population growth.
Highfield plans to begin construction in the next 12 months with this stage expected to take about two years to complete.
With news of the environmental approval, Highfield was one of the top movers on the ASX today, with the company’s share price up more than 31% to $0.895 by midday.