Annual Report
31 Dec ember
2022
highfieldresources.com.au
HIGHFIELD RESOURCES LIMITED
ABN 51 153 918 257
Contents
Page
Corporate Directory ...........................................................................................................2
Chairman’s Letter ..............................................................................................................4
Chief Executive Officer’s Letter ...................................................................................6
Sustainability Report .......................................................................................................9
CEO Letter .........................................................................................................................10
About this Report ...........................................................................................................12
ESG Focus .......................................................................................................................14
Planning ...........................................................................................................................18
Our Company ..................................................................................................................20
Unflagging commitment with our community .........................................................31
Caring for the Environment ...........................................................................................43
Caring for Our People .....................................................................................................44
Directors’ Report .............................................................................................................47
Directors ............................................................................................................................48
Board Committees ........................................................................................................52
Interests in the Securities of the Company ..............................................................53
Results of Operations and Finance Review ...............................................................53
Dividends ..........................................................................................................................54
Risk Management ...........................................................................................................54
Corporate Structure .......................................................................................................56
Nature of Operations and Principal Activities ..........................................................56
Review of Operations ....................................................................................................58
Geoalcali Foundation .....................................................................................................64
Corporate .........................................................................................................................64
Annual Review of Ore Reserves and Mineral Resources ........................................65
Corporate Governance – Resource and Reserve Estimation and Reporting ....69
Significant Changes in the State of Affairs ...............................................................69
Significant Events After the Reporting Date .............................................................69
Likely Developments and Expected Results of Operations ...................................69
Environmental Regulations and Performance .........................................................69
Share Options .................................................................................................................70
Indemnification and Insurance of Directors and Officers ......................................70
Directors’ Meetings ........................................................................................................70
Proceedings on Behalf of the Company ....................................................................71
Corporate Governance ..................................................................................................71
Auditor Independence and Non-Audit Services .......................................................71
Audited Remuneration Report .....................................................................................71
End of Audited Remuneration Report ........................................................................83
Financial Report ..............................................................................................................85
Consolidated Statement of Profit or Loss and Other Comprehensive Income ..86
Consolidated Statement of Financial Position .........................................................87
Consolidated Statement of Changes in Equity .........................................................88
Consolidated Statement of Cash Flows .....................................................................89
Notes to the Consolidated Financial Statements ...................................................90
Directors’ Declaration .................................................................................................. 118
Auditor’s Independence Declaration ........................................................................ 120
Independent Auditor’s Report .................................................................................... 121
ASX Additional Information .................................................................................... 127
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Corporate Directory
Directors
Mr. Paul Harris
Independent Non-Executive Chairman
Mr. Ignacio Salazar
CEO and Managing Director
Ms. Pauline Carr
Independent Non-Executive Director
Mr. Roger Davey
Independent Non-Executive Director
Mr. Brian Jamieson
Non-Executive Director
Company Secretary
Ms. Katelyn Adams
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Highfield Resources Limited
31 December 2022 | Annual Report to Shareholders
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Registered Office & Principal Place of Business
169 Fullarton Road
DULWICH, SA 5065
Telephone +61 8 8133 5000
Facsimile +61 8 8431 3502
Website
highfieldresources.com.au
Share Registry
Advanced Share Registry Pty Ltd
110 Stirling Highway
NEDLANDS, WA 6009
Telephone +61 8 9389 8033
Facsimile +61 8 9389 7871
Auditor
Pricewaterhouse Coopers
Level 11/70 Franklin Street
ADELAIDE, SA 5000
Telephone +61 8 8218 7000
Facsimile +61 8 8218 7999
Stock Exchange
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
ASX Code HFR
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Chairman’s Letter
Dear Shareholders,
This is the first Chairman’s letter I have written for Highfield Resources’ Annual Report,
having had the fortune to be appointed to the Board and as Chair just over one year ago
(25 March 2022). It provides a good opportunity to provide an overview of some of the
significant progress made by our Company over the last 12 months toward the licensing,
financing, and construction of our flagship 100% owned Muga mine – the first new potash
mine to be built in the European Union and western Europe for many years.
This progress included receiving key licenses from local authorities as well as making
substantial strides towards fully financing the project. In addition to focussing on project
approvals and financing, the Highfield team continued to remain very proactive on ESG
matters. The Company made significant progress over the year and was recognised
internationally for its environmental work and sustainability activities. Under our mine
plan we will backfill all residue underground leaving no residue on surface post mining. We
also remain very focused on our communities. One example this year was our successful
rebuild and restoration of the foundations of the municipal cemetery in the historic village
of Javier. We continue to work closely with all the town halls of the region, assisting them
with their local priorities. Once operational the Project is expected to provide employment
and business opportunities for locals and will be a key contributor in stemming one of their
key concerns – the depopulation of the region’s rural villages.
Despite weak and volatile capital markets in 2022 and more uncertainty now in 2023, the
Russian invasion of Ukraine created a strong tailwind for the potash sector and increased
the strategic value in potash assets with security of supply located in politically stable
jurisdictions. This geopolitical backdrop has been particularly acute in Europe given that
close to 40% of Muriate of Potash had been produced from Belarus and Russia prior to the
start of 2022.
This dramatic shift in regional supply lines has been very much in our favour and has
accompanied a groundswell of support for the Project from a broad spectrum of
stakeholders, including regional and national governments in Spain, financing groups, and
other key partners.
We feel privileged to be in the position to be able to bring Europe’s next potash mine online
and in turn alleviate a significant pain point for the European and African agricultural
sectors. Delivering on this presents a tremendous opportunity and I would like to again
thank our previous Chairman, Richard Crookes, for leaving Highfield exceptionally well-
positioned to be able to capitalise on this opportunity.
I would like to also take the opportunity to thank my fellow Board members, the
management team, and our dedicated employees for all their efforts over the year, and
for welcoming me in the role. I would very much like to thank all our shareholders for
their loyalty and continued support over this past challenging year. We are now at the
junction of a very exciting stage in Highfield’s development, and I look forward to Highfield
continuing its positive trajectory towards becoming a successful and sustainable long-life
producer of potash.
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders “The Company made
significant progress over
the year and was recognised
internationally for its
environmental work and
sustainability activities.”
Paul Harris
Independent Non-Executive Chairman
30 March 2023
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Chief Executive
Officer’s Letter
Dear Shareholders,
These are both demanding and very exciting times at Highfield. We started building
our Muga mine last year advancing all the preparatory work around the minegate. That
commenced quickly after the grant of the Undués construction licence. The work that we
have undertaken on site will facilitate the timely construction of the decline ramps in 2023.
We also received the electricity line construction licence last year, and just recently the
pending licence also from Sangüesa for the processing plant construction. I do not think I
am exaggerating by saying that we all feel this licence closes a long chapter for Highfield.
Permitting processes and requirements are not becoming any easier or less demanding in
Europe, globally or in Spain. I want to recognize and give a big thank you to all stakeholders
locally who demonstrated exceptional and unwavering support for the Muga project.
Suppliers, government, local administrations, neighbours, trade unions, politicians from
all sides, professional organizations, former authorities and especially our staff (who have
been on furlough once again in 2023) have gone beyond normal course of action to show
their support and help us to get this licence. Frustrating as it has been, we can modestly say
that the leverage, support and access we are having today locally in Spain is unparalleled.
We have also put a lot of effort into the funding strategy. After a year and a half of
extensive due diligence, we finally executed a €320 million debt facility with four leading
European banks (ING, Société Generale, BNP Paribas, and Natixis) with attractive terms
and conditions for Highfield. This reflects the merits of the robustness of the Muga project
and the quality of our team.
After reorganizing the team in 2021, becoming leaner and stronger to tackle the permitting
and financing needs, and as we move ahead, we are only expecting to keep growing in line
with the needs of the Project while we transition through construction into operations.
At the end of 2022, we restated the outstanding economics of Muga by updating the
feasibility study numbers, including recent inflation pressures and due diligence from
the banks. There is massive strategic and intrinsic value in the Muga Project, which is
just waiting to be unlocked as we move through construction and operation. As we have
hopefully demonstrated, we are extremely motivated by this perspective and are prepared
to do what it takes to achieve it.
All my gratitude to the Board which has shown its constant support in this journey. We
have a great team and a great asset. Together with the trust of our shareholders, we are
determined to make Highfield´s vision to become a reality.
Ignacio Salazar
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders “Together with the trust of
our shareholders, we are
determined to make Highfield´s
vision to become a reality.”
CEO and Managing Director
30 March 2023
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders 8 HIGHFIELD RESOURCES LIMITED 31 DECEMBER 2021 ANNUAL REPORT TO SHAREHOLDERS
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Highfield Resources Limited
31 December 2022 | Annual Report to Shareholders
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Sustainability
Report
CEO Letter
About this Report
ESG Focus
Planning
Our Company
Unflagging commitment with our community
Caring for the Environment
Caring for Our People
Highfield Resources Limited
31 December 2022 | Annual Report to Shareholders
9
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders CEO Letter
Dear Readers,
It is with great satisfaction that I report we have finished the preliminary works for the
construction of the Muga Mine in Aragón with zero accidents and zero environmental
incidents. We are now ready to continue the construction works in Navarra. In this
construction phase, more than 1,000 jobs will be created, and hundreds of opportunities
will be generated for suppliers. This is an exciting time for Muga, not only because it is a
long-term project that will boost the economy in this region, but also because Europe has
been exposed to a situation of total dependence on foreign raw materials evidencing that
Muga will be a strategic producer of European potash when it comes on line. Stakeholders
ranging from local communities to Spanish and European institutions, perceive the Muga
project as an opportunity to address this geopolitical and economic situation, further
augumenting the reasons to support an already strong project.
Muga is also a strategic project in the international landscape, particularly as a European
producer which aims to be a zero residue mine which will operate an optimised process
in both water and energy consumption. This is our eighth Sustainability Report and it
highlights those key activities which are ensuring that sustainability is at the core of our
business.
This year we will continue diligently building our relationship with the local communities.
In June 2022 the Government of Navarra launched the Muga Community initiative which
is a partnership between the Company, Governments, and local communities to boost the
socioeconomic potential of our mining project in the region. This initiative is a pioneer
in social innovation and demonstrates the high level of interest afforded to the Project
from the surrounding communities. This initiative has received great support from the
Government, which is acting as a coordinator whilst allocating funding for social projects
that will help newcomers – which includes our future employees – settle in this significantly
depopulated region.
2022 saw us advancing our financing strategy which included a due diligence process
with a comprehensive focus on the ESG thematic. The success in achieving all the
financing milestones which resulted in a €320.6 million Senior Secured Project Financing
demonstrates that Muga is a solid and robust Project with a compelling value proposition.
The Ukraine war, now in its second year has raised the awareness of the strategic
importance of raw materials and their security. Europe depends on Russia and Belarus for
60% of its potash. The European extractive industry plays a strategic role as a supplier and
Europe is currently reviewing its legislation to enhance self-supply. Our potash is therefore
expected to be highly sought after. As a project which is benefiting from positive long-
term fundamentals as well as being in a safe region and close to premium markets, our
potash is expected to be in strong demand. But more importantly, potash, as a fertiliser
component, contributes positively to food security, an urgent priority matter raised by the
UN in the Sustainable Agenda 2030.
We are at the right place and at the right time. Join me in this exciting journey of building
not only the next European potash mine but one which supports modern and sustainable
principles.
10
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Highfield Resources CEO, Mr.
Salazar, said: “In this time
of heightened geopolitical
instability around potash
supply, especially in Europe, we
have begun the construction of
Muga Mine. Our project’s ESG
credentials make it a mine at
the forefront of sustainability
with significant endorsement
of stakeholders.”
Ignacio Salazar
CEO and Managing Director
30 March 2023
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders About this Report
This report highlights all ESG activities carried out during 2022 by Highfield
Resources Limited (the “Company” or “Highfield”) and its Spanish subsidiary
Geoalcali SLU (“Geoalcali”), together “the Group”.
This report has been prepared in accordance with the GRI Standards: Core
option. GRI is an international independent organisation that helps businesses,
governments and other organizations understand and communicate the impact
of business on critical sustainability issues such as climate change, human rights,
corruption and many others. Additionally, as a signatory member to the United
Nations Global Compact, this report also sets out the information required by the
Communication on Progress guidelines of Global Compact reporting initiative.
The Group is committed to adopting sustainable practices and is carrying out a
number of actions to align its processes and policies to international guidelines
as part of its strategy to build a resilient and robust project. The Group remains
supportive of the Sustainable Development Goals (SDGs), which seek to encourage
measures to build a sustainable world. We continue to work towards this vision by
committing to implement a large project with integrated initiatives that contribute
to those objectives, with special emphasis on our social and natural environment.
At the same time, the report highlights our performance in other relevant areas
included in what we have defined our Sustainability Framework: Our Business, Our
Environment, Our People, and Our Community.
For further information visit:
https://www.highfieldresources.com.au/sustainability-reports/
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders 31 December 2022 | Annual Report to Shareholders 13
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HIGHFIELD RESOURCES LIMITED 31 DECEMBER 2021 ANNUAL REPORT TO SHAREHOLDERS 13
Highfield Resources Limited
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Ethical
Leadership and
Governance
ESG Focus
The Board of Directors has responsibility for the oversight of the Company´s
sustainability activities. The Group´s committees review policies and ethical
compliance annually. The executive team is responsible for the ongoing monitoring
and development of the Company’s ESG strategy which incorporates safety,
environmental stewardship, health and safety, climate change-related risks and
opportunities as well as cybersecurity. ESG KPIs are shared and common to all team
members.
In 2022, the Company´s Code of Business Ethics and Conduct was reviewed and
updated. No substantial changes were required.
All the information with relation to Corporate Governance can be found in the
Company’s website: https://www.highfieldresources.com.au/corporate-governance/
Sustainability
Roadmap
The Group´s vision is “To build a successful, sustainable, potash business with respect
for stakeholders and the environment.”
The vision of the Company is encompassed by its core values known as CREA which
encompass Commitment, Respect, Excellence and Attitude which form the basis of
the eight principles of our Sustainaibility Roadmap outlined below:
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This roadmap is what drives the Board and Committees, the Executive Team, ESG workgroups and staff members to implement
standards that help the Company manage risk, plan, monitor, review and improve sustainable performance throughout the evolution
of the Project.
ESG
Framework
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Understanding
Our Impact
The Group has in place several methods to communicate with its stakeholders and will
continue to do so throughout the life of the project. The methods that the Company
uses in its continuous engagement are one-to-one meetings, information events,
forums, direct and indirect communications as well as a grievance mechanism which
allows community members to express a concern or complaint. The information
received and the monitoring of the media coverage of our activities form the basis
of our stakeholder plan and its ongoing refinement and will contribute to continuous
improvement of our stakeholder engagement processes and activities.
Stakeholder Type
How
Frequency Material Topics
Local Communities
Physical suggestion boxes located in the
communities involved in the project
Monthly
4
7
10
Online access through the “We want to listen
to you” tab for suggestions, consultations and
questions from citizens and residents of the area
Daily
1
4
6
7
8
Muga Community (local liaison group), events and
forums
Twice a
year
1
4
5
11
Monitoring Press
Daily
1
3
4
5
6
7
8
Town Councils
Official application process
Weekly
1
5
Regular meetings
Monthly
1
4
Physical suggestion boxes located in the
communities involved in the project
Monthly
10
Suppliers
Directly related with relevant department
Daily
1
4
7
Government Organisations
Official application process and regulatory affairs Weekly
1
Non-Governmental
Organisations and Local
Organisations
Online access through the “We want to listen
to you” tab for suggestions, consultations and
questions from citizens and residents of the area
Daily
1
4
7
Informative events
5
6
8
10
Monitoring press
Daily
1
5
8
Investor Relations Department
Weekly
1
HR Department
Daily
1
2
4
7
Investors
Employees
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Material Topics
Identified
With the input of our stakeholders and taking into consideration the feedback from our
communication channels the Company has defined the following topics as material
to our business.
Business
Development
Environmental
Topics
Safety
Issues
Sustainable
Approach
1
6
2
11
Receipt of
Necessary
Permits
Water
Management
Ensure
Employee Health
and Safety
Community
Involvement
3
Anti-Corruption
Measures
8
Waste
Management
5
Prioritise Health
and Safety in the
Community
4
Wealth Creation
9
Restoration
of the Area
10
Climate Change
12
Sustainable
Development
7
Generation
of Quality
Employment
13
Project
Feasibility
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Planning
Our Commitment
to the Sustainable
Development
Agenda
We continue to analyse and incorporate international ESG standards to help us assess
and measure our performance. Currently, the Company supports and seeks to actively
contribute to the achievement of the Sustainability Development Goals (“SDGs”).
Geoalcali continues to be a signatory member of the UN Global Compact.
No Poverty
Muga Mine will generate
wealth for several decades
at a time of great social
transformations in labour
matters, especially in times
when economies have been hit
by pandemic events. Muga will
generate direct and indirect
jobs in a highly depopulated
region.
Zero Hunger
The worldwide shortage of
arable land is a real problem,
driven by rapid population
growth and increasing
demand for food. Our Project
will contribute with potash for
fertilsers, key for agriculture
and food production for
generations to come .
Gender Equality
The Group is conscious of
the importance of fighting for
fundamental rights, dignity
and the value of the human
person as well as the equal
rights of women and men. It
also takes work-life balance
measures to help achieve
equality.
Clean Water and
Sanitation
At Muga, all of the water from
the production process will
be reused in the production
process itself or eliminated by
evaporation.
Affordable and
Clean Energy
In relation to energy efficiency
and minimising the impact of
energy consumption, we are
committed to prioritising the
consumption of electricity
from renewable sources.
Decent Work and
Economic Growth
Muga will be one of the
main industrial engines
generating employment in
the area and will provide an
important socio-economic
boost, creating quality
jobs and opening up future
opportunities for the
population.
Reduced
Inequalities
We are committed to
initiatives that promote quality
education and actions that
have an impact on reducing
social inequality. This is one of
the cornerstones of our social
work through our Foundation.
Sustainable Cities
and Communities
We strive for greater
sustainability and high
performance mining by
promoting innovation,
research and investment in
technology in both extraction
and product development.
Climate Action
Environmental protection
and the monitoring and
management of the
environmental impacts of our
activities are fundamental to
the Company, which strives to
position itself as a sustainable
producer, including
environmental protection
measures in all aspects of the
life cycle of each Project.
Life on Land
From the outset, the
Company has put in place
the necessary preventive
measures to protect habitats
and biodiversity, carrying out
several flora and fauna studies
to choose the most suitable
location.
Partnerships for the
Goals
Throughout the life of the
Project, we will strive to deliver
on the key commitments
we have made to all our
stakeholders.
In addition, we will continue
to seek partnerships to raise
awareness and contribute to
the SDGs.
Responsible
Consumption and
Production
Muga’s entire production
process is based on
sustainable and optimised
criteria. In addition, Geoalcali
promotes awareness
campaigns on responsible
consumption both externally
and internally. For the
Company, social awareness
begins with the Company
itself.
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Strategic Objective
Specific Goals
Progress
Material
Topics
SDG Impact
To secure all necessary
environmental,
construction and
operating permits
Approval of all
construction and
other permits
required
To build and to
successfully operate the
Muga Mine
Continue improving
and refining the
Project
The Company received the construction licence form
Aragón. Sangüesa townhall licence is still pending.
The Company has completed the preliminary site works
for the Muga Mine.
In parallel, it finalised construction arrangements with
engineering companies as well as the development
of engineering with process equipment suppliers for
incorporation into construction projects.
1
2
5
8
3
6
9
1
4
7
10
11
12
13
To build, operate and
maintain a high level of
workplace health and
safety
Building a strong
health and safety
culture
Specific H&S training
Simulation of construction crisis to test and refine
health and safety plans and protocols.
2
5
Zero accidents.
To conduct our business
with regard to all
environmental regulations
and best practice
Strive for best
environmental
outcomes of Muga
Monitoring and preventative measures for construction
phase in place.
Quarterly reports based on our Environmental
Surveillance Plan sent to government administrators.
No environmental accidents or incidents.
To work diligently with
the various communities
close to the mine to
optimise our social
performance and thereby
secure and maintain
support for our project
To work with the various
government departments
and regulators in a
transparent and engaging
manner to secure their
trust and enable them to
supervise our activities
appropriately
To secure all necessary
funding for the first phase
of the Muga Project
and have plans and
commitments in place for
the implementation of the
second phase
Increase dialogue
and interaction
with the host
communities
Open and regular dialogue continued. Formalisation of
local liaison group via the creation of Muga Community,
a public-private partnership to boost the socioeconomic
development of the region.
The Company will
continue to work
diligently with the
Administration in all
project phases
Increased communication with the government. Explicit
support from several departments in the Government of
Navarra in external channels.
Continuing with the
development of the
financing strategy
Actively worked with Endeavour Financial which has
included the coordination of the different areas of the
Company in the due diligence process. Successfully
reviewed and updated the Project economic model.
The Company has also analysed alternative sources of
financing.
To become the employer
of choice within our sector
and environment
Uphold high ethical
standards in the
workforce
Active participation in employment fairs.
To return value to our
shareholders
Strong ESG focus
to ensure long-term
value creation
Comprehensive protocols and actions compiled to
address a range of possible adverse situations faced by
the Company.
Rigorous monthly financial reporting for prudential and
managerial purposes. Annual revision of policies and
procedures.
Updated Feasibility Study confirms strong economics of
the project.
6
9
8
10
6
11
5
8
12
5
8
6
10
11
12
3
8
13
1
7
4
11
2
5
8
5
9
3
6
9
3
7
3
7
2
6
1
4
7
10
11
12
13
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Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Our Company
Highfield Resources is committed to an overall reduction of our environmental
footprint by creating and implementing a stewardship system across its operations
and communities.
Developing
a Long-term
Sustainable
Project
Muga Mine ESG
Highlights
Zero Residue Mine
Muga Mine is the only
room and pillar potash
mine in the world that
targets zero residue on
surface at the time of
mine closure.
Environmental
Surveillance Plan
Protecting
Biodiversity
All environmental factors
will be closely monitored
and controls put in place
during the construction
and operation of the
mine.
Protection programme
in partnership with
reputable NGO to monitor
and preserve biodiversity
in the area.
Muga’s waste management
strategy has been carefully
designed to fulfil the Circular
Economy objectives.
Optimised Water Circuit
Reuse of salt water for the
process plant.
Optimised Energy
Consumption
Measures implemented
have reduced our energy
consumption by ~ 15%.
Social Value is at the
centre of our business. Muga
Community, a pioneer CSR
initiative.
Governance is the foundation of ethical behaviour and overall ESG
strategy development.
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Recognitions and
Awards 2022
RSA Seal: Official Government of Aragón
Corporate Responsibility initiative
This
is our seventh consecutive year
implementing sustainable management
in
in
accordance with this programme. The renewal
of this seal is recognition of the efforts made
by the Company in promoting work life through
the promotion of equality, giving priority to
equal opportunities and the principle of non-
discrimination as well as volunteering and the
different actions developed from solidarity and
respect for the environment.
WIM 100 nomination of our employee Susana
Bieberach
The 2022 edition of the Global 100 Inspirational Women in Mining recognises Susana
among nearly 1,000 nominees from around the world for her significant contribution to
a more inclusive, safe and sustainable mining industry. This includes making positive
change and impact, advocacy and a desire to empower others, perseverance in the
face of adversity and the ability to find solutions to challenges.
This is an example of how the Group actively promotes diversity and strives to make
the women in our teams visible, regardless of their role.
Susana Bieberach and international WIM100 females at WIM UK London presentation event.
21
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Alliances for
Transformation
The Company is continuously seeking partnerships and alliances with the aim of driving
transformation of the mining industry into a more sustainable and ESG orientated
business whilst being perceived as a strategic sector among society members.
Forums
Geoalcali at the R+D Agro Forum held in Ejea de
los Caballeros (Aragón)
Geoalcali was one of the companies invited to participate in the R+D Agro Forum
organised by Cadena SER Radio station in Aragón and in 26 May 2022 in the capital
of the Cinco Villas region of Aragón, Ejea de los Caballeros. The forum debated the
present and future of the primary sector such as the agricultural business, a key sector
in Aragón and one which faces immediate challenges to improve crop yields and
food efficiency. The opening ceremony of this event, which was attended by dozens
of representatives of companies and professionals from the world of agriculture in
Aragón, was led by the Aragonese Minister of Agriculture, Joaquín Olona, and the
Mayoress of Ejea de los Caballeros, Teresa Ladrero.
The Company participated in a round table focused on the application of new
technologies applied to the agri-food sector by companies. The Company had the
opportunity to explain the strength of its project and that of its final product, potash,
offers significant benefits to an agricultural communities such as Aragón and at a
time of major geopolitical uncertainties arising from the war in Ukraine.
Rocío Gasca, Geoalcali´s market analyst assistant in Aragón´s agricultural forum.
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Forums
Depopulation Forum
Sangüesa hosted a new edition of the Depopulated Spain national forum on 20 May
2022, organised by Cadena SER Radio. The forum analyses this phenomenon in
the region with the aim of developing solutions and innovative initiatives to attract
newcomers to depopulated regions, like Sangüesa.
Among the speakers were the President of Navarra, María Chivite, the Regional
Minister of Territorial Cohesion of the regional government, Bernardo Ciriza, the
Director General of Local Administration and Depopulation, Jesús Mari Rodríguez, and
the Mayoress of Sangüesa, Lucía Echegoyen.
Geoalcali took part in a round table to explain the initiative “Muga Community”. This is
a pioneering social project which, in collaboration with regional and local governments,
aims to mobilise resources to make the most of the implementation of Muga Mine for
the benefit of the local communities. To this end, a number of sectorial commissions
will be set up to develop plans in specific areas such as housing, employment,
infrastructures and socio-cultural resources.
As Manolo Rodríguez, President of the Navarre College of Sociology and Political
Science, explained at the table, this is a “very innovative experience that can serve
the Government as a best practice example and pilot experience for future projects”.
He described it as “a very innovative experience”, alluding to the fact that it is “taking
advantage of the synergy generated by a company that has a very important
investment forecast and that has taken up this idea of creating a community, and that
from the government’s point of view it has been considered of great interest”.
President Chivite, local leaders and Susana Bieberach participating in the national depopulation
forum hosted in Sangüesa.
23
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Forums
The job of your dreams and the Muga Mine
Project
Geoalcali participated in an employment fair organised by the Navarra Chamber of
Commerce under the title “The job of your dreams”. The Company explained the job
opportunities and the quality of employment offered by Muga project, especially for
young people.
At this meeting, which is part of a programme funded by the PICE programme (a
governmental initiative), young people were able to talk and hand in their CVs to the
representatives of the participating companies.
Javier Olloqui, HR Director, at employment forum.
Geoalcali at the UPNA Employment and
Entrepreneurship Meeting
Geoalcali was present at the 15th Employment and Entrepreneurship Meeting organ-
ised by the Public University of Navarra, an event created to connect organisations
with university degree students who are starting or advancing in their professional
careers.
24
Geoalcali team at employment fair at the Navarra´s public university.
Forums
Advancing towards gender equality
In October 2022 the Company was invited to be a guest speaker at the Business
and Equality conference organised by the Association of Women Entrepreneurs and
Executives of Navarra (AMEDNA).
Our Company was able to share best practices in terms of work-life balance in
accordance to the Reconcilia methodology, a work-life balance seal by which AMEDNA
recognises the work carried out by companies in this area.
Estíbaliz García, HR assistant, speaking about work-life balance meassures in AMEDNA´s forum.
Geoalcali at Navarra Jobs, Navarra’s employment
fair
In June 2022 the Company participated in the new edition of Navarra Jobs, the
employment fair of the region which brings together companies and entities with
recruitment opportunities, at the Baluarte congress space.
Under the slogan The search for employment in the new normality, dozens of people
visited the Geoalcali stand and received
information about the employment
opportunities offered by the Muga Mine project.
Geoalcali team at employment fair in Baluarte.
25
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Forums
At the Comversaciones Forum: Challenges of
Sustainability
The Company participated as a guest speaker in a round table within the
“Comversaciones” forum organised by Brandok, the communications and marketing
agency of Diario de Navarra, which was celebrating its second anniversary. Around
80 marketing and communication professionals from Navarra attended the event,
which addressed the challenges of communication, sustainability and the digital
transformation of companies.
Susana Bieberach speaking about the importance of communicating sustainaibility in
Comversaciones Forum.
Conference on the war in Ukraine and the
commercial activity of companies
The CEO of Geoalcali, Ignacio Salazar, was one of the speakers invited to participate
in the conference organised by the Chamber of Commerce Navarra to discuss the
impact of the war in Ukraine on the commercial activity of Navarran companies.
Mr. Salazar addressed, among other issues, questions relating to the supply of raw
materials and the urgent need to ensure greater autonomy in the EU for minerals such
as potash.
Ignacio Salazar speaks about the geostrategic relevance of potash at the Chamber of Commerce of
Navarra conference.
26
Forums
Geoalcali and young talent
Coinciding with the celebration of Enterprise Week, the European Forum Business
School invited Geoalcali to a round table on retaining young talent and the relevance
of CSR in the Human Resources area. The Director of Human Resources, Javier
Olloqui, and the Company’s Director of Public Affairs, Susana Bieberach, took part
in a discussion about the attraction of employment by companies and spoke about
the job opportunities offered by the Muga Project and its commitment to sustainable
practices.
Geoalcali members speak about the importance of talent retention and CSR practices.
27
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Partnerships
Agreement with the Construction Labor
Foundation of Aragón and Navarra
Geoalcali and the Construction Labour Foundation of Aragón and Navarra (FLC)
signed a collaboration agreement with the aim of generating synergies in the areas of
recruitment, training, employment, and promotion of occupational risk prevention for
the workers who will be involved in the extraction of potash at Muga.
The aim of this collaboration agreement is to contribute towards the qualifications
and professionalism of the workforce, to promote health and safety and to focus on
the employability of the groups present in the area close to the project facilities.
As a result of the agreement, the FLC will be able to assist with the management of
the job application pool for Muga, as well as in the work of raising awareness, care
and preventive training and technical qualification of the professionals involved in this
project.
Both parties have also undertaken to jointly study the actions required for the
development of professional qualification projects for the employed and unemployed
by providing personalised guidance and employability itineraries. The agreement will
also enable the students of the FLC, especially those from its territorial councils in
Aragón and Navarra, to carry out work experience in the company that will contribute
to their qualification.
The FLC has two training centres, located in Aragón and Navarra. Both are Integrated
Concerted Vocational Training Centres, with a complete range of degree cycles; some
of them are taught under a dual training system.
FLC members of Aragón and Navarra with Company team members.
28
Partnerships
The Council of Mines visits our facilities in
Sangüesa
A representation of the National Council of Mining Engineers visited Navarra to
express their support to the mining industry in this province. The Government invited
the Council to learn more about MINERÉTICA, a mining dissemination initiative in
which the Department of Mines in Navarra and the main associations and companies
in the mining sector in Navarra, including Geoalcali, are collaborating with the aim
to promote the value of mining and minerals to society. The Council travelled to our
facilities in Sangüesa, where they were able to visit the permanent exhibition on
minerals located in the Company’s warehouse which forms part of MINERÉTICA.
Government of Navarra Mine department manager explains Minerética initaitive to the National
Council of Mining Engineers.
Successful conference on the importance of
minerals
ANEFA, the National Association of Aggregates Manufacturers, organised a community
open day on the importance of minerals in our lives. The event, which took place in
the Riojan town of Leza del Río Leza, coincided with the celebration of the European
Minerals Day and was a great success in terms of participation. Geoalcali contributed
to the event by transferring didactic material on mining and minerals.
Samples of the Potash Briefcase didactic materials.
29
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Memberships
The Company continues to be a member of the following organisations:
The business association of
The logistics cluster of Aragón
The executive managers
The Spanish mining
Cinco Villas
association of Aragón
confederation
An association of mining
An association of mining
The business association of
International Fertilizer
businessmen of Aragón
companies of Navarra
Australia in Spain
Association
An association of Navarra
A Spanish mining association
A Navarra mining association
companies
A non-profit organisation
created by the Official College
of Industrial Engineers of
Navarra and the Association
of Industrial Engineers of
Navarra.
The Company continued seeking alliances with key associations with the aim of driving
transformation in our sector in an ethical, socially responsible and environmentally
sustainable way.
The Geoalcali Foundation is a member of the Association of Foundations of Navarra.
This association is comprised of the main non-profit associations in Navarra, both
public and private.
30
Muga
Community
Unflagging commitment
with our community
As presented in the 2021 Sustainability Report, the Social Baseline Study of the Muga
Mine was carried out with the aim of forecasting the social impacts of the Muga Mine
project in the region of Sangüesa (Navarra) and the Cinco Villas (Aragón). In order to
manage these social impacts, the Company partnered with the Public Administration
to create the “Muga Community” initiative.
The Government of Navarra has endorsed this initiative and has publicly referred
to Muga Community as an opportunity to concretely implement a series of public
policies that help the development of the area and can serve as a stimulus and as
“good practice” for other regions.
This initiative aims to work collaboratively at multiple levels of governance (Government,
local entities, business and society), with a global perspective that places individual
resources in the achievement of shared goals.
The mining industry must face the new challenges of the future, among which
sustainable development plays a fundamental role. This is understood as that
which satisfies the needs of the present without compromising the needs of future
generations and ethical management, based on management by values that are
oriented to good behavior and good practices of the organisation. Companies must
assume responsibilities in local and national development and direct their activities
towards the satisfaction of society in general.
Under this approach, the International Council on Mining and Metals (ICMM) has
promoted the sustainable development of mining as a source of competitive
advantage. Since 2003, it has established 12 basic principles of good practice, among
which are ethical management, sustainable development, and the contribution to the
social and economic development of the communities in which mines operate.
Mr Jesús María Rodríguez (2nd from the left on the top row), Managing Director of the department of
Local Administration and Depopulation of the Government of Navarra; Ms Miriam Martón (1st from
the left on the top row), Managing Director of the Navarra Employment Service; Mr Tomás Rodríguez
(5th from the left on the top row), Director General of Vocational Training; Mr Luis Campos (2nd
from the right on the top row), Director General of the Social Reality Observatory; Mr Eneko Larrarte
(4th from the left on the top row), Director General of Housing; local communities Mayors and the
Highfield team.
31
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Logically, all the principles influence the territorial context of their implementation, but
specifically in the Muga Community, it is Principle 9 (social performance) that has
the most direct implication. Specifically the performance expectations include the
following:
1
2
Implement inclusive approaches with local
communities to identify their development
priorities and support activities that
contribute to their enjoyment of lasting
socio-economic well-being, in collaboration
with governments, civil society and
development agencies, as appropriate.
Enable local companies access
to procurement and contracting
opportunities throughout the entire project
life cycle, both directly and by encouraging
larger contractors and suppliers, and by
supporting initiatives aimed at improving
the economic opportunities for local
communities.
3
4
Encourage stakeholder participation
based on an analysis of the local context
and provide local stakeholders with
access to effective mechanisms to resolve
complaints related to the company and its
activities.
Collaborate with the government, when
appropriate, to support the improvement
of environmental and social practices of
artisanal and small-scale mining at the
local level.
There are three key players in the proposal implementation activities, beyond the
citizenry as a collective target of policies: the autonomous governments, the local
entities and the Geoalcali company itself. Combining the interests, expectations, and
potential of each of these parties is a clear path to success.
At the same time, the social management of mining operations is committed to the
SDGs, and specifically to the following:
32
With regard to local economic development, work is being done to strengthen the local
and regional economy as follows:
• Support new opportunities and productive initiatives that allow the diversification
of economic activities.
• Generate local employment in the areas of influence of the mining project.
• Support rural production processes and mining formalisation in areas where it
is viable.
• Stimulation of the local economy through the provision of services and supplies
to the Company and its contractors.
Navarra and Aragón local community leaders visit the preliminary works in Undués de Lerda.
As mentioned before, the Muga Community is born from the union of local entities
and the Company, and it has the commitment of the Government of Navarra in the
development of the different proposals that can be addressed from public policies.
The general objective of the Muga Community is to promote local development,
guaranteeing population settlement and the emergence of new opportunities for the
area and its inhabitants from a collective and supportive vision.
The operating model of the Muga Community is based on concepts such as solidarity,
mutual aid, innovation, inclusiveness, gender perspective, sustainability, and social
cohesion. In order to achieve this, a participatory operating model will be established
on the basis of efficiency and effectiveness and from a collective and participatory
commitment.
33
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders The decision-making structure will see decisions being discussed, devised, and built
on a scale. To this end a Coordinating Committee of the Muga Community (CCMC)
has been set up to promote the different projects and refer them to specific work
committees. The aim of the CCMC is to assess the proposals and identify and prioritize
thoseactions with the greatest direct impact on the population and the territory. The
Department of Local Administration and Depopulation, which is a permanent member
of the CCMC, is positioned as the direct interlocutor with the Government of Navarra.
A CCMC has been established in both Navarra and Aragón.
In June 2022, the Muga Community was publicly presented to the village of Javier.
At that meeting a permanent coordinating commission and the governance of the
institution was established to manage its activities. The members of the CCMC of
Navarra are the following municipalities: Sangüesa, the Commonwealth of Sangüesa,
The Rural Development Agency, Javier and Liédena. In addition, the representatives of
Geoalcali, Geoalcali Foundation, and the previously mentioned, Department of Local
Administration and Depopulation of the Government of Navarra are also members of
the CCMC.
Equally, in September 2022 at the village of Undués de Lerda, the public presentation
of Muga Community Aragón took place. Three weeks later the Muga Community
Coordinating Committee was conceived at the Aragonese village of Sos del Rey
Católico. In that meeting the following members committed to take part: the
municipalities of Undués de Lerda, Urriés, Sos del Rey Católico and Longás, as well
as representatives of Geoalcali S.L.U. and Geoalcali Foundation. The addition of the
Commonwealth of Altas Cinco Villas is still pending.
From these first meetings and based on the analysis that is being carried out in the
Muga’s communities of interest (Muga COI) and linked to the Development Plan, a
calendar of sectoral meetings will be established that will seek to address the different
challenges that arise. In order to tackle the main specific working commissions are
going to be created. For example, a specific Housing Commission was convened, as
this is one of the largest deficits and requires urgent decision-making. More of these
types of special purpose “working groups” will be created to deal with the balance of
any other issues as they are identified.
The intention is to keep continue on this path during 2023 and to start on the preparation
of specific measures aimed at improving the living conditions of the local population.
The next steps are the establishment of a roadmap agreed by all the participants in
the Muga Community. This road map will endeavor to include all the concerns of the
local stakeholders.
34
Company´s exhibit area in the town of Javier.
Social Impact
Monitoring
Monitoring and
Mitigation Measures
In order to manage the social impacts of the Muga Mine project, a series of monitoring
protocol and controls have been implemented in the Project’s surrounding area.
The Operational Plan Management of Social Impacts (POGIS) is designed to manage
those actions targeted to mitigate or solve social impacts emanating from the Muga
Mine, during its construction works and operating phases. The construction of the
Muga Mine will produce a series of direct impacts on the social environment and local
infrastructures and these will be monitored. The impacts and measures are listed
below:
Impact on the irrigation infrastructures of
surrounding farms
The Muga Mine’s entrance is located in an area of agricultural activities , some of which
are irrigated with water from the Bardenas Canal. With the passage of machinery and
the movement of earth, the physical integrity of the ditches and the canal itself may
be compromised to the point that they may suffer structural damage. For this reason,
the following actions will be carried out:
1. Replacement of the main ditch: the main ditch will be diverted over the south dike,
ensuring the supply of irrigation water to the irrigators in the area close to the
mine entrance.
2. Repair of the Bardenas Canal: in the event that the canal suffers structural
damage, a budget allowance has been included for the repairs that are necessary
in the section as it passes through the Muga Mine in order to ensure its good
working order and avoid possible damages to irrigators.
Visual impact of the Muga Mine facilities in the
landscape environment
Both the mine entrance facilities and the mineral processing plant are industrial
structures that contrast with the agricultural landscape. In order to minimize the visual
impact on the local population and the pilgrims who transit the Camino de Santiago
visual screens with autochthonous vegetation will be erected during the Muga mine
construction phase. This measure is carefully designed and pays special attention to
preserving the Camino de Santiago and the surrounding farms.
35
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Impact on air and water quality
During the construction of Muga, and especially during the earthmoving phase, dust
will be generated that can accumulate in clouds which will travel with the wind and
potentially impact urban centers. In addition to this, air quality in the areas immediately
close to the work could be impacted, according to the Environmental Surveillance Plan
for Muga (PVA), as a result of:
• The diffusion of particle emissions due to the removal of vegetation, earth
movements and urbanisation processes for the preparation of the area where
the mining infrastructures and associated services will be built.
• Emissions of combustion gases from machinery, transport vehicles and
electricity generators.
Geoalcali will monitor the atmospheric quality of urban centers and the environment
and will also put in place emission controls (at the sources) as well as inmission. The
main measures provided for in the PVA to minimise emissions into the atmosphere
are:
1. Limit the speed
of vehicles in the
mining area to
40 km/h.
2. Turn off vehicle
engines when not
in operation.
3. Periodic
irrigation of roads.
4. Periodic
cleaning of roads
and truck wheels.
6. Preventive
maintenance of
machinery.
5. Cover the
trucks that
transport material
susceptible to
producing dust
with tarpaulins.
7. Requirement
for approvals or
inspections of
machines: CE
marking and ITV
certificates in
force, depending
on the case.
Of the aforementioned measures, POGIS endorses measures 1 and 3.
Impact on rural roads and access roads
The Muga Mine will be located between fields in the municipalities of Sangüesa and
Undués de Lerda. To access the area of the works during the construction phase it will
be necessary to travel on rural agricultural roads and on a section of the Camino de
Santiago. To avoid occupying these roads, one of the measures that will be carried out
as a priority at the start of the works will be the adaptation of the connection roads
with the NA-540 road and, in turn, a section of this road that connects with the A-21
motorway.
36
Grievance System
Community Complaint Boxes
In April 2022, the Company installed additional “complaint boxes” in the town halls
of the main towns in the area of influence of the Muga project. The new boxes were
set up to provide a fixed communication location / channel with the communities
around the Project. The objective of this initiative was that people belonging to the
communities could express their complaints and claims, proposals and suggestions,
in addition to showing their support for the Muga project by placing notes (using a
template) in the boxes.
Seven boxes were placed in the following locations:
Navarra:
Aragón:
• Sangüesa (House of Culture)
• Undués de Lerda
• Javier
• Sos del Rey Católico
•
Liédena (Sociocultural Center)
• Urriés
• Yesa
As well as in the Geoalcali community service offices located in Sangüesa at:
• Rocaforte Industrial Estate, Warehouse A7.
No communication has been received during 2022. The Company’s public affairs team
will review the continued use of this means of receiving information from the public.
Community Complaint Web-Box
At the same time the physical complaint boxes were installed, a digital version was
added. On the Geoalcali website, this complaints web-box is located in the “Muga
Community” section identified as “Community complaints box”. This web-box offers
a stable communication channel with the communities around the Muga project.
Through the messages received through this web-box, people belonging to the
communities can express any complaints and claims they may have about the Muga
project. All information received by this means is carefully processed and analyzed by
the Public Affairs team. Participation can be anonymous.
37
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Sustainability
Development Form
In response to the proposals derived from the Social Baseline Study of the Government
of Navarra, the Company considered it useful to cross-check the information by
launching a Sustainability Development Form to eleven community leaders to
understand their strategic view and priorities to boost the socioeconomic impact of
Muga.
The data collected by these eleven questionnaires included the following:
The questionnaires collected a query about the critical areas identified and the order
of priority when addressing the solutions. In this sense, the responses received so far
indicate that the order of priorities varies depending on each locality consulted, but the
population area and the service area stand out as the critical areas where solutions
should be addressed first. In the case of the population, initiatives to influence the
demographic rebalancing in terms of rejuvenating the population and improving their
replacement rates will be undertaken. Regarding services, the new services needed
would need to be defined with an allowance for a possible increase in the demand for
general services. Each of these two critical areas have been chosen as the number
one priority by a third (33%) of the towns that have completed the questionnaire so far.
In second place in order of priority is labor preparation – specifically maximising the
commitment to local employability and local suppliers in all phases of the project, both
in construction and in operations. This critical area has been chosen as the second
in order of priority to be addressed by 66.7% of the municipal representatives. For the
rest of the priority order, the areas are widely distributed, and there is currently no clear
percentage differentiation between them.
38
Geoalcali
Foundation
Saint Barbara Feast
The Geoalcali Foundation took part in the celebration of Saint Barbara, the patron
saint of mining, organised by the Brotherhood of Miners from the former mine Potasas
de Navarra. This association is more than 50 years old and the annual celebration
highlights the value of their profession.
The President of the St. Barbara Brotherhood and Company´s Geologist Lucía Martín were invited to
a tv programme to commemorate St. Barbara.
School material for the Babyteca in Sos del Rey
Católico
Once again this year, the Geoalcali Foundation has contributed to the financing of
school materials for the Babyteca in Sos del Rey Católico (Aragón), a school that
takes in young children from 0 to 3 years of age every day, thus helping rural females
integrate themselves into the workforce. On this occasion, the Foundation has helped
to purchase school and relaxation fabric to complete a multi-sensory classroom in
which to carry out specific activities that increase the children’s state of relaxation and
help them cope with the stress of learning and interpersonal relationships.
Babyteca in Sos del Rey Católico.
39
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Local and Quality Lunches at the Sierra de Leyre
Secondary School in Sangüesa
As part of the work carried out by the Special Curriculum Units (UCE) of the Sierra de
Leyre Secondary School in Sangüesa (Navarra), a workshop was set up to prepare
“healthy and quality lunches”. The aim of the initiative is to value the use of local
and seasonal produce with a view to improving pupils’ lifestyles, based on more
sustainable and healthy habits. It is the pupils themselves who make products such as
bread, muffins, yoghurts, jams, etc., which they then sell to the rest of the educational
community, although not for profit, with the sole aim of being able to maintain the
activity of the workshop.
Renovation of Javier’s OrganiK Garden
The Geoalcali Foundation continued to support the “OrganiK” urban garden project,
which promotes the consumption of local products, a concept that was born with the
philosophy of promoting responsible and appropriate consumption of local resources,
both of crops and of the fertiliser they receive, in this case potash. The Geoalcali
Foundation provided the village of Javier (Navarra) with the plants and the fertiliser
(potash) which have already borne fruit and produced vegetables which are destined
for local consumption.
Javier residents planting crops at OrganiK garden.
40
School material for the Isidoro Gil de Jaz School
in Sos
The Isidoro Gil de Jaz Infant and Primary School (CEIP) in Sos del Rey Católico
(Aragón) was able to renew some of its educational and didactic material thanks to
the collaboration of the Geoalcali Foundation. These are educational materials for the
infant cycle aimed at promoting new learning opportunities, especially in the field of
music, and with which classes can be taught in a more functional and practical way.
Wifi and fibre optics in Undués de Lerda
The Geoalcali Foundation collaborated in the installation of a fiber optics and Wifi
network in Undués de Lerda (Aragón). This aid has not only contributed to providing an
essential service for local residents but has also managed to attract new inhabitants
to a rural area that is suffering from the phenomenon of ageing and depopulation.
Undués de Lerda town.
Transport service in Undués de Lerda
The Geoalcali Foundation maintained its support for the transport service aimed at
transporting children and young people of school age from the town of Undués de Lerda
(Aragón) to the secondary school in Sangüesa (Navarra). This service involves the
rental of a van and the hiring of a driver to provide the service. This service contributes
to improving and increasing the quality of life of resident families, providing them with
greater comfort in the transport of their children and helping to fix the population in
the area. The transport service is extended to all local residents who wish to use it,
especially the elderly, in order to make it easier for them to carry out daily tasks such
as going to the bank or carrying out formalities of all kinds.
41
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Local Suppliers
Local procurement offers significant opportunities for economic development in host
countries and communities. Mining can contribute to the Sustainability Development
Goal (SDG) 8 – Decent Work by generating new economic opportunities for citizens
and members of local communities, including jobs, training, and business development
relating to mining operations, associated service providers, or new local economies
linked to the mine.
The Group has been working to achieve this SDG by engaging actively with local
suppliers. Several information sessions have been held in local communities. In 2022
again we held an event in Zaragoza. Around 40 self-employed and small and medium-
sized Aragonese entrepreneurs attended the supplier conference organised by the
Zaragoza Federation of Metal Entrepreneurs (FEMZ). The meeting was attended by
Javier Ferrer, FEMZ president, who said that “… it is a great opportunity for Aragonese
companies. We have a very strong metal sector with a lot of potential that can offer a
very competitive response to the needs of the Project.”
Leonardo Torres-Quevedo, Muga’s Construction Director, highlighted the Company’s
interest in initiating a collaboration that will be of mutual benefit and emphasised the
important role that Aragonese suppliers can play in the development of Mina Muga’s
industrial activity.
During the event, representatives from the product and service companies were
able to obtain answers to their queries and requests for information regarding the
opportunities offered by the Muga Project.
To date, Geoalcali has already invested more than €80 million in the development of
the Muga Mine (known locally as Mina Muga). Of this investment, more than 70% has
been allocated to the acquisition of products and services from suppliers in general.
In addition, the Project is expected to have an annual supplier spend of more than €64
million over a mine life of at least 30 years. More than 60% of the Company´s local
suppliers are Spanish.
Company presented the Project opportunities to local suppliers in event organised by FEMZ.
42
Caring for the Environment
We continued working on the implementation of the best environmental outcomes for
Muga. In 2022, the Environmental Surveillance Plan for Muga (PVA) was submitted
to the mining and environmental authorities of Navarra and Aragón. This update
included all the measures and controls required by the Administration in the process
of obtaining the Mining Concession and the positive Environmental Permit (DIA).
With the start of the preliminary construction works in June, the PVA was implemented
and the carrying out the controls corresponding to the construction phase commenced.
Quarterly reports with the results of all the controls in place have been shared with the
Administrations of Navarra and Aragón.
Muga´s PVA controls and monitors the following:
Atmosphere and air quality
• Control of dust and particle
emissions
• Control of plant emissions
• Control of inmission
Hydrology, Hydrogeology
and Water Quality
Geology, Soils and
Orography
• Surface water quality
• Groundwater quality
• Monitoring of drainage and
channelling works
• Monitoring of decanting and
dewatering equipment
• Monitoring of discharges
• Monitoring of erosion levels
• Monitoring of efflorescence
• Monitoring of vibration
Environmental Restoration
and Landscape Integration
Effectiveness of restoration
measures
• Control of topsoil extension
• Hydroseeding, plantations
Fauna, Protected Area,
Natura 2000 Network and
Landscape
Waste Monitoring
• Monitoring of waste
management
• Monitoring of animal
communities
• Control of permeability
• Control of protection
measurements
• Monitoring of revegetated areas
• Monitoring of chemical storage
areas
• Control of mining waste storage
Socio-Economic,
Archaeological and
Cultural Monitoring
• Monitoring of exclusion areas
• Monitoring of archaeological
and cultural resources
• Control of noise
• Monitoring of Bardenas Chanel,
Undués de Lerda and Javier
Subsidence and Seismicity
Monitoring
Monitoring of Mining
Waste Facilities
• Monitoring of subsidence
monitoring devices
• Monitoring of seismicity
monitoring devices
• Meteorological station
• Bottom drainage inspection
chambers (leakage and
seepage control)
• Water level sensors in ponds
and monitoring of the storage
of the deposit
• Dike and slope inspection
• Inspection of ditches
• Inspection of accesses
43
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Work-life
Balance
Embracing
Diversity
Caring for Our People
During 2022 the Company implemented a new holiday, leave and flexibility procedure
with the aim of strengthening the work-life balance measures already in place. In addition
to this improvement, the Company updated the working conditions established by the
applicable Collective Bargaining Agreement and introduced measures to protect and
improve working hours conditions, salaries and leave permits.
The Group values a diverse and inclusive workplace and is committed to finding ways
to actively support and encourage a workforce made up of individuals with diverse
skills, experiences, backgrounds and attributes. The Group intends to promote and
encourage diversity in the workplace and launched a women in mining initiative to give
visibility to our female team members. During the festivities of International Womens
Day, the Company organised a video titled “Reasons to Join Mining”. The video was
also shared with the UK Women in Mining association and with International Women
in Mining and Resources for their International Womens Day events.
In figures
Turnover
2022
11
18
Workforce
Female
Male
Five people left the company (three women
and two men) and four people joined the
company (two women and two men).
44
Health and
Safety
Training
Safety Performance
during Preliminary
Works
Striving for Zero
Accidents
During the first quarter of 2022, the Prevention of Risks at Work training was completed
by a total of 21 workers. This training is required by the Spanish legislation. In addition
to this training a course for one person for the handling of forklift trucks was carried
out.
Before starting the preliminary works in Aragón mining safety training was completed
in accordance with I.T.C. 02.1.02, of the General Regulations on Basic Standards for
Mining Safety for the technical personnel involved in the construction phase as well
as managers. In total, 21 workers were trained.
The Company and its Project Management coordinator (Bovis) carried out continuous
supervision of the execution of the Muga Mine construction works, including the
coordination of all aspects of the works. The objective is to ensure that the contractors
execute the works according to the Project as designed by the engineering company,
complying with both national and the Group’s own rules and regulations, thus creating
a safe and accident-free workplace.
Currently surveillance and access to the site is being controlled to ensure that only
those companies, workers and machinery which meet the defined requirements are
authorised to access the facilities.
There were no work-related accidents involving either our own staff or contractors in
2022.
There was one in-itinere accident on the way home from work at the end of the
working day. One worker required medical care. The accident was classified as a
minor accident and there was no lost time. After the accident, the worker received
training in road safety.
45
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders 46 Highfield Resources Limited
46
31 December 2022 | Annual Report to Shareholders
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Directors’ Report
The Directors present their report for Highfield Resources Limited (“Highfield
Resources”, “Highfield”, or “the Company”) and its subsidiaries (“the Group”) for
the financial year ended 31 December 2022.
Directors
Board Committees
Interests in the Securities of the Company
Results of Operations and Finance Review
Dividends
Risk Management
Corporate Structure
Nature of Operations and Principal Activities
Review of Operations
Geoalcali Foundation
Corporate
Annual Review of Ore Reserves and Mineral Resources
Corporate Governance – Resource and Reserve Estimation
and Reporting
Significant Changes in the State of Affairs
Significant Events After the Reporting Date
Likely Developments and Expected Results of Operations
Environmental Regulations and Performance
Share Options
Indemnification and Insurance of Directors and Officers
Directors’ Meetings
Proceedings on Behalf of the Company
Corporate Governance
Auditor Independence and Non-Audit Services
Audited Remuneration Report
End of Audited Remuneration Report
31 December 2022 | Annual Report to Shareholders 47
47
Highfield Resources Limited
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Directors
The names, qualifications and experience of the Company’s Directors in office
during the period and until the date of this report are as follows. Directors were in
office for the entire period unless otherwise stated.
Mr. Paul Harris
(Appointed effective 25 March 2022)
Independent Non-Executive Chairman, B Comm, M Eng. (Mining) GAICD
Mr. Harris has over 25 years’ experience in financial markets and investment
banking, including roles with Citibank, Bankers Trust and Merrill Lynch advising
mining organisations on strategy, mergers and acquisitions, and capital markets.
He is well known by the Australian investment community and was also Managing
Director – Head of Metals and Mining at Citi for several years.
Most recently Mr. Harris has been working with mining company boards as a non-
executive director as well as providing advisory services on strategy and finance.
He is currently the non-executive Chairman of ASX-listed Aeon Metals Limited (ASX:
AML) and Koonenberry Gold (ASX:KNB) and a non-executive Director of ASX listed
Aurelia Metals Ltd (ASX:AMI). In the three years immediately prior to the end of the
financial year Mr. Harris did not hold any other ASX listed company directorships.
Mr. Harris has a Master of Engineering (Mining) degree and a Bachelor of Commerce
(Finance) from the University of New South Wales and is a graduate of the Australian
Institute of Company Directors.
Mr. Richard Crookes
(Resigned 24 March 2022)
Independent Non-Executive Chairman, BSc (Geology), Grad Dip Applied Finance
Mr. Crookes has over 30 years’ experience in the resources and investments
industries. He is a geologist by training having worked in the industry most recently
as the Chief Geologist and Mining Manager of Ernest Henry Mining in Australia
(now Glencore). Mr. Crookes is currently Managing Partner of Lionhead Resources,
having previously spent six years with EMR Capital as an Investment Director and
prior to that, 12 years as an Executive Director in Macquarie Bank’s Metals Energy
Capital (MEC). Mr. Crookes has extensive experience in Funds Management, deal
origination, evaluation, structuring, and execution of investment entry and exits for
both private and public resources companies in Australia and overseas. In the three
years immediately before the end of the financial year, Mr. Crookes held three other
directorships of listed companies (Chairman Black Rock Mining Ltd BKT:ASX, since
October 2017; Non-executive Director Lithium Power International Ltd LPI:ASX,
since October 2018; Non-executive Director of Barton Gold Holdings Ltd BGD:ASX,
since February 2021 until May 2022).
48
Mr. Ignacio Salazar
Managing Director and Chief Executive Officer
Mr. Salazar is an international executive with more than 30 years of experience
in the natural resources industry. He has lived and worked in various countries in
Europe and South America. Mr. Salazar assumed the position of CEO of Highfield
in July 2020, after coming from Orosur Mining, a Canadian gold mining company
with operations in Colombia, Uruguay and Chile, which is listed in the London and
Toronto stock markets, and in which he worked as CEO and CFO for 12 years.
Mr. Salazar had previously pursued an 18-year international career in oil and gas
exploration and production with Royal Dutch Shell.
Educated at the University of Deusto (Bilbao) where he completed his master degrees
in Economics and Business and in Law, Mr. Salazar has extensive experience in the
exploration, development, construction and operation of open pit and underground
mines, as well as in the development of local relations with communities and
governments, and in international relations within the industry and in the capital
markets in London, North America and Australia, raising capital and in mergers and
acquisitions. In the three years immediately before the end of the financial year, Mr.
Salazar held no other directorships of any Australian listed company.
Ms. Pauline Carr
Independent Non-Executive Director, BEcon, MBA, FAICD, FGIA, FCG (CS CGP)
Originally an accountant Ms. Carr has over 30 years’ commercial experience in
management, corporate governance and compliance, mergers and acquisitions,
investor and stakeholder relations and company reorganisations. She is a
professional non-executive director and also provides business improvement,
risk management, project management and corporate governance solutions to
organisations. Prior to this Ms. Carr held senior positions with Newmont Asia Pacific
and ASX listed Normandy Mining Limited and worked for a number of years in the
oil and gas sector with Exxon Mobil. Her current Board roles include Chancellor of
the University of South Australia, Chair of National Pharmacies and a non-executive
director of ASX listed Australian Rare Earths Limited (appointed 2021). In the three
years immediately before the end of the financial year, Ms. Carr did not hold any
other listed company directorships.
49
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Mr. Roger Davey
Independent Non-Executive Director, ACSM, MSc., C.Eng., Eur.Ing., MIMMM
Mr. Davey is currently a Non-Executive Director of London Listed Atalaya Mining,
Central Asia Metals and Tharisa plc.
He is a Chartered Mining Engineer with over 45 years’ experience in the international
mining industry. Up to December 2010, he was an Assistant Director and the Senior
Mining Engineer at N M Rothschild (London) in the Mining and Metals project
finance team, where for 13 years he was responsible for the assessment of the
technical risk associated with all the current and prospective project loans. Prior
to this his experience covered the financing, development and operation of both
underground and surface mining operations in gold and base metals at senior
management and Director level in South America, Africa and the United Kingdom.
He is fluent in Spanish.
His previous positions include Director, Vice president and General Manager
of Minorco (AngloGold) subsidiaries in Argentina (1994 - 1997), where he had
responsibility for the development of the Cerro Vanguardia, open pit gold-silver
mine in Patagonia; Operations Director of Greenwich Resources plc, London (1984
- 1992), with gold interests in Venezuela, Sudan, Egypt and Australia; Production
Manager for Blue Circle Industries in Chile (1979 - 1984); and various production
roles from graduate trainee to mine manager, in Gold Fields of South Africa (1971
- 1978).
Mr. Davey is a graduate of the Camborne School of Mines, England and holds a
Master of Science degree in Mineral Production Management from Imperial College,
London University. He is a Chartered Engineer (C.Eng.), a European Engineer (Eur.
Ing.) and a Member of the Institute of Materials, Minerals and Mining (MIMMM).
Mr. Davey also holds a Master of Science degree in Water Resource Management
from Bournemouth University. In the three years immediately before the end of
the financial year, Mr. Davey held no other directorships of any Australian listed
companies.
50
Mr. Brian Jamieson
Non-Executive Director, FCA, FAICD
Mr. Jamieson has over 40 years’ experience in the advisory, manufacturing,
resources and technology industries in Australia and offshore.
Mr. Jamieson was Chief Executive of Minter Ellison Melbourne from 2002-2005.
Prior to joining Minter Ellison, Mr. Jamieson was Chief Executive Officer at KPMG
Australia from 1998-2000, Managing Partner of KPMG Melbourne and Southern
Regions from 1993-1998 and Chairman of KPMG Melbourne from 2001- 2002. Prior
to the merger of Touche Ross & Co and Peat Marwick Hungerfords to form KPMG,
Mr. Jamieson was the Managing Partner for Australia for Touche Ross & Co. He
has over 30 years’ experience in providing advisory and audit services to a diverse
range of public and large prívate companies. He is also a Fellow of the lnstitute of
Chartered Accountants in Australia and New Zealand and a Fellow of the Australian
lnstitute of Company Directors.
Mr. Jamieson is currently Non-Executive Chairman of the Audit and Risk Committee
of IODM Limited and is currently the Non-Executive Chairman of Energy Technologies
Limited (EGY.ASX appointed 24 December 2020). Mr. Jamieson was formerly Non-
Executive Chairman of Sigma Healthcare Limited (resigned 13 May 2020), Non-
Executive Chairman of Mesoblast Limited (resigned 31 March 2019), Non Executive
Director of Oxiana/OZ Minerals Limited from 2005 to 2015 and served as Chairman
of Audit Risk and Compliance, Nomination and Remuneration, and Due Diligence
Committees. He was a Non-Executive Director of Tatts Group Limited from 2005 to
December 2017 and served as the Chairman of Audit and Risk Committee, Chairman
of the Due Diligence Committee and member of the Remuneration Committee. He
was also a Non Executive Director of ASX listed Tigers Realm Goal from 2010 to
2015 and chaired various committees.
He has not held any other listed directorships in addition to those set out above in
the past three years.
COMPANY SECRETARY
Ms. Katelyn Adams, B.COM (Acc/Fin), CA
Ms. Adams is a partner of HLB Mann Judd, with over 15 years of accounting and
corporate advisory experience, servicing predominantly ASX listed companies. She
has extensive knowledge in corporate governance, ASX Listing Rule requirements,
IPO and capital raising processes, as well as a strong technical accounting
knowledge.
Ms. Adams is presently a non-executive director of Clean Seas Seafood Limited,
as well as the Company Secretary of Petratherm Limited, 1414 Degrees Limited,
Duxton Water Limited and Duxton Farms Limited.
51
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Remuneration
and Nomination
Committee
Audit, Business
Risk and
Compliance
Committee
Board Committees
The principal purpose of the Committee is to assist the Board in fulfilling its governance
and oversight responsibilities in relation to remuneration practices so that they:
•
Link rewards to the creation of value for shareholders;
• Facilitate operational excellence by attracting and retaining talent;
• Fairly and responsibly reward individuals having regard to individual and Highfield
targets and performance as well as industry remuneration conditions; and
• Comply with applicable regulatory obligations.
In addition, the Committee oversees selected nomination activities so that boards
within the Highfield Group comprise individuals who are best able to discharge the
responsibilities of directors having regard to the law and excellence in governance
standards.
The members of the Remuneration and Nomination Committee are Ms. Pauline Carr
(Chairman), Mr. Paul Harris, Mr. Brian Jamieson and Mr. Roger Davey.
The principal purpose of the Committee is to assist the Board in fulfilling its governance
and oversight responsibilities relating to:
• The integrity of financial accounting practices and reporting;
• Risk management;
•
Internal control framework and internal audit;
• External audit function; and
• Compliance with the Corporations Act, ASX Listing Rules and the ASX Corporate
Governance and Principles.
The members of the Audit, Business Risk and Compliance Committee are Ms. Pauline
Carr (Chairman), Mr. Brian Jamieson and Mr. Roger Davey.
52
Interests in the Securities of the Company
As at the date of this report, the interests of the Directors in the securities of Highfield Resources Limited are as follows:
Director
Paul Harris
Ignacio Salazar
Pauline Carr
Brian Jamieson
Roger Davey
Ordinary Shares
Options over ordinary shares
-
126,700
62,101
66,943
9,251
1,000,000
4,771,053
1,000,000
1,000,000
1,000,000
The table below provides a further breakdown of the options held by Directors:
Director
Options by price and expiry
Paul Harris
$1.07
30 June 2023
31 December 2023
31 December 2024
30 June 2025
31 December 2025
31 December 2026
31 December 2027
-
-
-
1,000,000
-
-
-
$0.47
-
333,333
333,333
-
333,334
-
-
Ignacio Salazar
Pauline Carr
Brian Jamieson
Roger Davey
$0.865
$0.94
$0.81
$0.81
$0.81
-
-
591,803
-
509,961
459,971
-
-
-
-
-
736,440
736,439
736,439
1,000,000
1,000,000
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
Results of Operations and Finance
Review
The Company’s net loss after taxation attributable to the members of Highfield Resources Limited for the financial year ended 31
December 2022 was $5,789,353 (year ended 31 December 2021: $6,699,579).
As the Group is still at the exploration phase, revenue obtained related to interests earned from the cash positions held by the
Company.
Total consolidated cash on hand at the end of the financial year was $19,446,084 (31 December 2021: $22,241,425).
Net cash outflow from operating activities utilised $4,000,869 (31 December 2021: $4,343,614) mainly to fund General and
Administrative costs.
Net cash outflow from investing activities of $12,145,643 (31 December 2021: $10,701,325) was predominantly expenditure to
advance the Muga-Vipasca Project in relation to:
53
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders • Equipment, ramps and civil engineering fees;
• Advances to landowners under agreements to acquire land for the Project;
• Deposits paid upon signing process plant’s equipment supply agreements;
• Construction license tax for Undués de Lerda townhall on the back of the construction license award;
• Payment of the financial guarantee for the restoration activities to be carried out in the town of Undués de Lerda;
• Project Finance related expenditure, including payments for due diligence conducted by independent consultants’; and
• Payments relating to preliminary works at the mine gate.
Net cash inflow from financing activities of $13,473,000 in the financial year to 31 December 2022 was attributable to net proceeds
from the issue of ordinary shares via an institutional placement and conversion of unlisted options (31 December 2021: $17,286,500).
Dividends
No dividend was paid or declared by the Company during the financial year ended 31 December 2022 or up to the date of this report.
No recommendation for payment of dividends have been made.
Risk Management
The Group has developed a Risk Management Framework (“RMF”) that embeds robust practices into the Group’s risk culture and
is the cornerstone of HFR’s financial future. The Group’s RMF is based on three overriding risk management principles that are in
line with the ISO 31000-2018:
• Empowering managers and risk owners;
• Developing risk management as a cultural discipline; and
• Supporting managers with the assistance they need to manage risks.
The RMF has a number of policies at its apex which set high level strategic objectives. These policies are supported by Group
procedures, manuals, and handbooks which define the necessary steps to carry out certain required tasks. The main purpose
for this is to establish a sound framework of risk oversight, risk management and internal controls to underpin to the Company’s
commitment towards a good corporate governance.
The RMF requires that the CEO and CFO report to the Board at least annually as to the effectiveness of the Group’s management
of its key business risks. In addition, the RMF is subject to annual review by the Audit, Business Risk and Compliance Committee.
The Directors have assessed the Group’s current and future situation and have concluded that business risks are at this stage
well managed and are being regularly monitored. Management has classified the key risks facing the Group into the following
categories, namely:
54
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Risk Category
Risk Description
Mitigation Strategy
Strategic Risks – Permitting
A delay in the award of the definitive construction
license by the townhall of Sangüesa could delay the
main construction start.
Management is proactively dealing with the townhall of Sangüesa
municipality and in constant dialogue with it to ensure the process
is finalised as quickly as possible.
Financial Risks – Cash availability
In the event that the equity financing for the Project is
delayed the Group’s cash could potentially deteriorate.
Financial Risks – Project Funding
Inability to find suitable options to fund the equity
shortfall on acceptable terms, leading to a fall in
the Company’s share price and a reduction in the
Company’s market capitalisation.
As at 31 December 2022 HFR had A$19.4m in cash (€12.4m). The
Group maintains a strict discipline in managing its cash flow while
trying to advance the Project. In this respect, a very tight cash
expenditure policy was implemented to hold off non-essential
expenditure.
Management is working to fully fund the Project before the
commencement of construction. The execution of the definitive
documentation for the €320.6 million Senior Secured Project
Financing has significantly contributed towards this objective. The
Group is currently in meaningful dialogue with several potential
strategic partners and is analysing a number of alternatives
including royalties and convertible financing structures for the
remainder of the funding.
Financial Risks – Capex Overruns
During construction a number of adverse events could
occur that would require additional funding to ensure
continuing compliance with bank covenants.
The Updated Feasibility Study was completed in November 2022
using a prudent approach to costs in line with the banks’ financial
model and factoring in inflation pressure.
Operational Risks – Health & Safety
(H&S)
Hazards and incidents require early identification, root
cause analysis and a response strategy.
Operational Risks – Key personnel
The Group is reliant on a number of key personnel. The
loss of one or more of its key personnel could have an
adverse impact on the business of the Group.
Construction Risks – Construction
execution
Significant problems for construction or future
operations due to lack of employee skills/training.
Construction costs could exceed those contemplated
in the latest Feasibility Study.
A Cost Overrun Debt Facility of €20.6 million was approved by the
banks and an additional €36.7 million was requested as a Condition
Precedent for first Project Finance drawdown.
Safety performance forms part of employees’ variable at risk
remuneration. Safety indexes are constantly monitored and results
reported to the Board monthly. The Group has enacted a Crisis
Management Manual to enable accurate and early capture of
incidents, especially high potential issues. Crisis simulations are
conducted every year and a lessons learnt document duly drafted.
Staff retention programs are in place to retain talent. A competitive
remuneration package is offered to the Group’s employees and
when recruiting special attention is given to identifying applicants’
career motivations and expectations and alignment with the
Company’s values.
The Group is working with the Regional Employment Offices of
Navarra and Aragón to build a pool of potential local candidates.
In addition, talent and development management initiatives have
been implemented in the Group to ensure the development and
training of staff.
In addition, external consultants are commissioned to provide
specialist expertise to supplement the in-house team.
Technical Risks
Although the Muga plant will be based on established
technology, its actual performance will depend on
successful detailed engineering, quality construction,
and the plant responding as expected to Muga ore.
The detailed engineering has been undertaken by an experienced
and reputable consultant. The Group is working to ensure the
same consultant is involved as the Owner’s Engineer throughout
the installation and commissioning phases.
Plant commissioning is currently being negotiated with a company
which has the proven experience, expertise and capability.
Marketing & Logistics Risks – Offtake
agreements
As a new entrant in the market, the Group expects
to achieve offtake agreements with standard market
reference prices. Competitive pressure in the market
may result in poorer agreements for the company.
MOUs have been signed with fertiliser traders with deep potash
market experience and contacts to help mitigate the risk. Muga´s
location is expected to allow it to achieve local premiums including
logistics benefits.
Marketing & Logistics Risks – Port
facilities
in finalising the sale mix and shipping
Delays
destinations will mean that a dedicated port facility
may not be available in time, or at all.
MOUs have been signed with three nearby ports (Pasajes, Bilbao
and Bayonne) and a regular dialogue is maintained with them with
a view to building the future partnership.
55
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Corporate Structure
Highfield Resources Limited is a company limited by shares, which is incorporated and domiciled in Australia. Through its 100%
owned subsidiary, KCL Resources Limited, Highfield owns 100% of Geoalcali SLU (“Geoalcali”), a Spanish incorporated company
which holds the Group’s three exploration projects.
Nature of Operations and Principal
Activities
The principal activity of the Company during the financial year was mineral exploration and progressing its flagship Muga-Vipasca
Project. There was no significant change in the nature of the Group’s activities during the financial year ended 31 December 2022.
56
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders 31 December 2022 | Annual Report to Shareholders 57
57
Highfield Resources Limited
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Muga-Vipasca
Project
Review of Operations
Highfield Resources Limited is a potash company listed on the Australian Securities
Exchange (ASX) with three 100% owned potash projects located in Spain´s potash
producing Ebro Basin.
Highfield’s flagship Muga Project (“Muga” or “the Project”) is targeting the relatively
shallow sylvinite beds in the Muga Project area that covers about 46km2 located in
the Provinces of Navarra and Aragón. Mining is planned to commence at a depth of
approximately 350 metres from surface and is, therefore, ideal for a relatively low-cost
conventional mine accessed via a dual decline.
The Vipasca permit extends over 14km2 adjacent to the Muga Project. Its geological
characteristics make Vipasca’s potash unit a natural continuation of the Muga
deposit. However, the geological data obtained in recent years show that only the
section located at the east of the permit is economically viable at the present time,
while the potash in the central and western sectors is too deep, situated at more
than 1100 metres depth. Accordingly, the Company relinquished these areas in 2021
and focused its efforts on the eastern sector, that has upgraded its categorisation
from Exploration Target to Mineral Resource and is considered an extension to the
Muga Mining Concession. Consequently, the Company requested the Government of
Navarra to transfer the Vipasca investigation permit into a mining concession during
the first quarter of 2022, thus taking the first step in the process to add Vipasca into the
operations of the Company. This process will be run in parallel with the construction
of the Muga mine.
During the first quarter of 2022 Highfield relinquished Goyo Sur and Muga P.I. areas
within the Muga project due to their lack of geological interest.
58
Permitting
Update
Following the award of the positive environmental declaration, Declaración de Impacto
Ambiental (“DIA”), for the Muga Project on 31 May 2019, and the granting of the Mining
Concession (“MC”) on 1 July 2021 for the three areas comprising the Muga Project
(namely Fronterizo, Muga and Goyo), which are two key permitting milestones to move
the Project forward, the Company has focused its efforts on obtaining the construction
licences. To this end, Highfield intensified dialogue with the townhalls of Sangüesa
(Navarra) and Undués de Lerda (Aragón), which are responsible for the construction
licences of the processing plant and the mine gate and ramps, respectively.
As reported on 24 June 2022 (refer ASX release 24 June 2022, “Construction Licence
Granted, Muga Mine Gate and Declines”), the townhall of Undués de Lerda in Aragón
issued the licence for the construction of the mine gate and the two underground
declines required to access the ore body. The work started immediately in Undués,
and the mine gate works are now complete.
The construction licence from the townhall of Sangüesa was split into two components
– the electricity line and the process plant. In accordance with Navarran licensing and
procedural laws, the townhall of Sangüesa requested the Government of Navarra for
authorisation to construct the electricity line on non-urbanised land. This was granted
during the first quarter of 2022.
Afterwards, in order to continue moving towards completion of the permitting
procedure, the municipality of Sangüesa requested a second authorization from the
Government of Navarra to construct the processing plant on non-urbanised land. This
required an extensive review of the processing plant against Sangüesa’s urbanistic
plan and other land management legislation to exclude potential constraints related
to its location. The Government issued this authorisation during the fourth quarter
of 2022 (refer ASX release 13 November 2022, “Process Plant Licence Authorisation
Received”).
Following this, as reported on 29 March 2023 (refer ASX release 29 March 2023,
“Construction Licence Granted for Muga Mine Process Plant”), the townhall of
Sangüesa issued the licence for the construction of the process plant. With this permit
the Company has the required permits to begin the full-scale construction of Muga
comprising the civil works, the process plant and the ramps in the second half of 2023.
The Project continues to receive support from the local authorities. Examples include
the Social Baseline Study (an independent study commissioned by the Government
of Navarra which analyses the Project from an economic and social perspective)
published in March 2021 and the attendance of Ms. María Chivite, the President
of Navarra, at an official Company event at the Mine site in June 2021 where she
reiterated the strategic importance of the Muga Mine for the economic recovery of
the region.
Following the Social Baseline Study, the Government of Navarra officially launched
in July 2022 the Muga Community Initiative (refer ASX release 1 July 2022, Muga
Community Initiative launched), a public-private partnership that materialised the
Government support by allocating specific resources and funds. This initiative aims to
boost the socio-economic impact of the mine by working collaboratively with different
Government departments such as housing, transport, depopulation, employment and
training with local communities and the Company.
The Company hosted a site visit to the preliminary works in Undués de Lerda. More
than 40 local leaders attended the visit in September 2022 coinciding with the Muga
Community initiative launch in Aragón.
59
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Technical
Update
In order to continue advancing towards construction, the Company announced in
the first quarter of 2022 (refer ASX release 15 February 2022, “Remaining Purchase
Contract Signed”) that all remaining key process plant equipment purchase contracts
had been signed with its suppliers. Following the signing of these contracts the
Company received equipment engineering drawings that allowed for the further
finetuning and optimisation of the detailed engineering of the processing plant.
Apart from some minor updates that were incorporated following comments as part
of the due diligence process with the financing banks, the processing plant design is
the same as was presented in the December 2021 Muga Feasibility Study Update.
Construction
Update
Preliminary construction works commenced at the end of the second quarter of 2022
shortly after the receipt of the construction licence for the mine gate and ramps, The
Company signed a construction contract with Acciona Construcción SA (“Acciona”)
for these preliminary works comprising the following activities.
• Fencing of the plot;
•
Installation of the above ground construction staff facilities;
• Clearing and stockpiling of topsoil;
• Excavation of the mine entrance;
• Formation of embankments; and
• Stabilisation of the slopes with bolts and gunite (dry gun shotcrete).
During the second half of the year, the initial construction work continued to progress
according to schedule and within budget. By the end of the year, the slopes were
finished, bolted and shotcreted to ensure long-term stability. The mine-gate area is
ready to commence the excavation of the ramps.
Negotiation between Highfield and Acciona continues for the remainder of the
construction agreement, while the two partners are running a parallel tendering
process on an open book basis for the whole of Project construction works.
During the first half of 2022, the Unites States and the European Union imposed a
series of trade sanctions on Russia and Belarus on the back of the Ukrainian invasion.
As well as having a long-term impact on grain prices, the conflict has worsened the
supply constraints the potash market has been experiencing since 2021. The ongoing
Ukrainian conflict has spurred discussions with traders, potential offtake partners and
logistics partners who are interested in a strategic participation in the Project.
During 2022, Highfield continued to engage with the three ports it signed MOUs with,
namely Pasajes, Bilbao and Bayonne, with a view to continued development of the
Company’s transport and logistics strategy. The strategy is a key component in the
development and implementation of the Company’s sales and marketing plan.
As well as the transport and logistics strategy the salt sales and marketing plan has
also progressed significantly in 2022. The Company has also maintained engagement
with all local potash buyers, who are currently experiencing major supply disruptions,
to position itself a key supplier of choice for the nearby market in the future.
Sales and
Marketing
Update
60
Financing Update
Economic
Update
Towards the end of 2021, Highfield undertook a comprehensive due diligence process
for the banks in conjunction with a group of specialised consultants in technical,
ESG, marketing and legal matters. The due diligence reports underpinned the banks’
assurance in the debt financing process.
In the first quarter of 2022 the Company agreed a non-binding indicative term sheet
for a €312.5 million senior secured project financing package with four international
financial institutions, comprising BNP Paribas S.A., ING Bank N.V., Natixis and Société
Generale (London Branch), (refer ASX release 31 March 2022, “Non-binding indicative
term sheet for a €312.5m senior secured project financing package agreed”).
Shortly after, the Company executed a mandate letter for the €312.5m financing
package to finance the construction of Muga with the same institutions, which will be
the Mandated Lead Arrangers (refer ASX release 4 May 2022, “Highfield signs €312.5
million Senior Secured Project Financing Mandate Letter”).
In the third quarter of 2022 the Company received credit approval for the senior secured
project finance facility for an amount up to €320.6m. This facility comprises two
financing agreements, a Senior Debt Facility of €300 million to fund the construction
and development of the Project, and a Cost Overrun Debt Facility of €20.6 million to be
used, if required, in the construction and development of the Project (refer ASX release
24 October 2022, “Highfield secures credit approval for €320.6 million Senior Secured
Project Financing for Muga Project Development”).
During the fourth quarter of 2022, Highfield announced (refer ASX release 23
December 2022, “Project Financing – Definitive Documentation Signed”) that it had
signed the principal credit facilities with the above syndicate of financial institutions.
Credit drawdown is ultimately dependent upon raising and expending the equity gap
to fully fund the Project.
As announced on 4 July 2022, the Company also signed a non-binding indicative
term sheet for €23.3 million for an equipment operating lease facility with Macquarie
Group for the Muga Potash Mine. This additional facility is subject to contract and
the requisite approvals and will provide financing for the Project’s various units of
underground mining equipment (refer ASX release 4 July 2022, “€23.3 million Non-
Binding Indicative Equipment Operating Lease Financing Term Sheet”).
Finally, towards the end of the fourth quarter, Highfield successfully raised A$13 million
via an institutional placement (refer ASX release 12 December 2022, Successful Equity
Raising of A$13 million to Fund Continued Progress at the Muga Mine). The Company
received firm commitments from
institutional, sophisticated and professional
investors for the placement of ordinary shares of the Company. The placement was
oversubscribed with strong support from new and existing shareholders, including
high-quality institutional investors based both in Australia and offshore.
An update of the Project’s Feasibility Study was undertaken by the Company during the
fourth quarter of 2022 (refer ASX release 3 November 2022, “Muga Feasibility Study:
Compelling Economics Reconfirmed”). The study is based on the results of a robust
external due diligence undertaken during the Project finance process and incorporates
the progress that the Project’s technical team has made during the second half of
2022 and incorporates updated offers, prices and contracts related to construction
of the Project.
The updated project economics resulted in an NPV of €1.82 billion and an IRR of 21%
over a 30-year mine life. A sensitivity analysis using the November 2022 flat real spot
prices for the whole life of mine resulted in a post-tax NPV of €3.1 billion and an IRR of
42%. The updated capex for Phase 1 is €436 million, and €226 million for Phase 2. At
full production, the EBITDA will be approximately €410 million per annum.
61
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Pintanos
Project
Adjacent to the Muga Project, the Pintanos tenement area comprises the three permits
of Molineras 1, Molineras 2 and Puntarrón and covers an area of 65km2. The drilling
permit at Molineras 1 was extended for three years in 2020. The Company re-initiated
the application process for the drilling permits at Molineras 2 and Puntarrón in 2019
and continues to await the award of the permit from the authorities.
The current priority for the Company remains the development of the Muga Mine.
62
Sierra del
Perdón Project
Located southeast of Pamplona, the Sierra del Perdón tenement area (“SdP”) covers
approximately 120km2 and comprises the three permits of Quiñones, Adiós and
Ampliación de Adiós. SdP is a brownfield target which previously hosted two potash
mines operating from the 1960s until the late 1990s and which produced nearly
500,000 tonnes of potash per annum. The Company believes that there is potential
for potash in new unmined areas in the SdP area.
The Company was advised in the fourth quarter of 2018 that the second three-year
extension application for the Adiós and Quiñones permits had been rejected by the
mining department of the Government of Navarra. Highfield appealed this decision
in 2019 and to date has not obtained a resolution. In the fourth quarter of 2020, the
second three-year extension application for the Ampliación de Adiós permit had been
rejected by the mining department of the Government of Navarra, a decision that was
appealed by the Company in the same quarter. Based on local Spanish legal advice,
the continued lack of a resolution to these appeals does not represent a significant
change with an adverse effect on the entity.
No drilling took place at SdP during 2022.
63
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Projects
Geoalcali Foundation
The Geoalcali Foundation is a not-for-profit Spanish foundation, funded exclusively
by Geoalcali. It was established to support projects in the communities in which the
Company will operate.
Since its establishment in September 2014 Geoalcali Foundation has provided
support to over 180 community projects in close collaboration with town halls, social
associations, foundations, and other local organisations. The wide range of initiatives
supported by the Company are well known and appreciated by the local community,
with a number of them having received awards and recognition as sustainable
initiatives.
During 2022 the Foundation worked closely with the Geoalcali’s Public Affairs team to
enhance stakeholder relationships and create the Muga Community. This is a working
group comprising the Government of Navarra, the mayors of the villages around the
mine and Geoalcali. Its main purpose is to maximise the socio-economic impact the
Muga mine will have on the local area (refer ASX release 1 July 2022, Muga Community
Initiative launched).
Corporate
Directors
On 16 March 2022, the Company announced that Mr. Paul Harris was appointed as
an Independent Non-Executive Director and Chairman of the Board with effect from
25 March 2022. Mr. Harris replaced former Chairman, Mr. Richard Crookes, who was
stepping down from the Board to focus on his new business interest as Managing
Partner of Lionhead Resources.
64
Annual Review of Ore
Reserves and Mineral
Resources
In accordance with ASX Listing Rule 5, the Company has performed an annual review
of all JORC-compliant Ore Reserves and Mineral Resources as at 31 December 2022.
Rounding differences may occur.
A maiden Ore Reserve for the Muga Project was derived as part of the Definitive
Feasibility Study as released to the ASX on 30 March 2015.
An updated Ore Reserve for the Muga Project was derived as at December 2018 and
released to the ASX on 22 January 2019. The data in this study was considered by the
Company to remain valid as at 31 December 2019 and 31 December 2020.
On 23 November 2021 the Company released to the ASX an updated Ore Reserve
which included both the Muga and Vipasca projects. The updated Ore Reserve was
audited by SRK Consulting (UK) Ltd (“SRK”) with an effective date 31 October 2021
and was used as the basis for the updated Feasibility Study released on 8 December
2021. The Company considers this Ore Reserve, which is presented below in terms of
future plant feed, to remain valid as at 31 December 2022.
Muga-Vipasca
Project
Table 1: Muga-Vipasca Ore
Reserves Summary
Proved
Probable
Total Proved & Probable
31 December 2022
31 December 2021
31 December 2020
Tonnes
(Mt)
45.3
59.0
104.3
Grade
K2O (%)
10.5%
10.0%
10.2%
Tonnes
(Mt)
45.3
59.0
104.3
Grade
K2O (%)
10.5%
10.0%
10.2%
Tonnes
(Mt)
42.9
65.8
108.7
Grade
K2O (%)
10.2%
10.2%
10.2%
Additional notes to consider for the purposes of the Ore Reserves statement are as
follows:
1. All figures are rounded to reflect the relative accuracy of the estimate and have
been used to derive sub-totals, totals and weighted averages. Such calculations
inherently involve a degree of rounding and consequently introduce a margin of
error. Where these occur, SRK does not consider them to be material.
2. The Concession is wholly owned by and exploration is operated by Geoalcali
S.L.U., the wholly owned Spanish subsidiary of Highfield Resources.
65
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders 3. The standard adopted in respect of the reporting of the Ore Reserve for the
Project, following the completion of required technical studies, is the 2012 Edition
of the Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves (the JORC Code).
4. SRK and the Company reasonably expect the Muga deposit to be amenable to
a variety of underground mining methods for the shallow and inclined potash
seams. The Ore Reserve is reported at an 8% K2O cut-off which is based on potash
price assumptions, metallurgical recovery assumptions from initial testwork,
mining costs, processing costs, general and administrative (G&A) costs, and
other factors.
5. The Ore Reserve is reported in wet tonnes with a low moisture content of 0.8%.
Highfield released an updated JORC-compliant Mineral Resource Estimate (“MRE”)
for the Muga Project to the ASX on 10 October 2018 that was deemed valid for the
year ended 31 December 2019.
On 30 March 2021, an updated MRE for the combined Muga-Vipasca Project, valid as
at 31 August 2020, was released to the ASX. This MRE, which is inclusive of all Ore
Reserves shown above in Table 1, is presented below in Table 2 and was also audited
by SRK. The Company believes this remains valid as at 31 December 2022.
Table 2: Muga-Vipasca
Mineral Resources
Summary
31 December 2022
31 December 2021
31 December 2020
Tonnes In Place
(Mt)
Grade
K2O (%)
Tonnes In Place
(Mt)
Grade
K2O (%)
Tonnes In Place
(Mt)
Grade
K2O (%)
Measured
Indicated
Total Measured & Indicated
Inferred
Total
103.2
134.1
237.3
44.9
282.2
12.3%
11.7%
12.0%
10.8%
11.8%
103.2
134.1
237.3
44.9
282.2
12.3%
11.7%
12.0%
10.8%
11.8%
103.2
134.1
237.3
44.9
282.2
12.3%
11.7%
12.0%
10.8%
11.8%
Additional notes to consider for the purposes of the Mineral Resources statement are
as follows:
1. Reported above a cut-off grade of 8% K2O and a minimum mining thickness
(where horizons will be mined separately) of 1.5m.
66
Sierra del Perdón
Project
Table 3: Sierra del Perdón
Mineral Resources Summary
Highfield released a maiden MRE for the Sierra del Perdón Project to the ASX on 7
April 2015. The Company considers this MRE to remain accurate as at 31 December
2022.
31 December 2022
31 December 2021
31 December 2020
Tonnes In Place
(Mt)
-
41.8
41.8
40.3
82.1
Grade
K2O (%)
-
10.7%
10.7%
10.5%
10.6%
Tonnes In Place
(Mt)
Grade
K2O (%)
Tonnes In Place
(Mt)
-
41.8
41.8
40.3
82.1
-
10.7%
10.7%
10.5%
10.6%
-
41.8
41.8
40.3
82.1
Grade
K2O (%)
-
10.7%
10.7%
10.5%
10.6%
Measured
Indicated
Total Measured & Indicated
Inferred
Total
Pintanos Project
Table 4: Pintanos Mineral
Resources Summary
Highfield released a maiden MRE for the Pintanos Project to the ASX on 20 November
2013. During the year ended 30 June 2017, two drill holes were completed at the
Pintanos Project (see the Company’s ASX Quarterly Activities Report released on 24
April 2017). The results of both holes were unfavourable compared with the former
block model which informed the maiden MRE released on 20 November 2013 and
therefore adversely impacted the tonnage available to be classified as inferred
resources. As a result, a revised MRE was prepared and reported in the ASX Additional
Information section of the Company’s annual report for the year ended 30 June 2017,
as summarised in Table 4 below. The Company continues to believe the exploration
potential for Pintanos remains strong and will continue exploration of the project.
The Company considers this MRE remains accurate as at 31 December 2022.
31 December 2022
31 December 2021
31 December 2020
Tonnes In Place
(Mt)
Grade
K2O (%)
Tonnes In Place
(Mt)
Grade
K2O (%)
Tonnes In Place
(Mt)
Grade
K2O (%)
Measured
Indicated
Total Measured & Indicated
Inferred
Total
-
-
-
70.7
70.7
-
-
-
11.9%
11.9%
-
-
-
70.7
70.7
-
-
-
11.9%
11.9%
-
-
-
70.7
70.7
-
-
-
11.9%
11.9%
67
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders A summary of Highfield’s total Ore Reserves and Mineral Resources is shown below.
Summary
Table 5: Highfield Total Ore
Reserves Summary (all
projects)
Proved
Probable
Total Proved & Probable
31 December 2022
31 December 2021
31 December 2020
Tonnes
(Mt)
45.3
59.0
104.3
Grade
K2O (%)
10.5%
10.0%
10.2%
Tonnes
(Mt)
45.3
59.0
104.3
Grade
K2O (%)
10.5%
10.0%
10.2%
Tonnes
(Mt)
42.9
65.8
108.7
Grade
K2O (%)
10.2%
10.2%
10.2%
Table 6: Highfield Total
The MRE includes all Ore Reserves shown above in Table 5.
Mineral Resources Summary
(all projects)
31 December 2022
31 December 2021
31 December 2020
Tonnes In Place
(Mt)
Grade
K2O (%)
Tonnes In Place
(Mt)
Grade
K2O (%)
Tonnes In Place
(Mt)
Grade
K2O (%)
Measured
Indicated
Total Measured & Indicated
Inferred
Total
103.2
175.9
279.1
155.9
435.0
12.3%
11.5%
11.8%
11.2%
11.6%
103.2
175.9
279.1
155.9
435.0
12.3%
11.5%
11.8%
11.2%
11.6%
103.2
175.9
279.1
155.9
435.0
12.3%
11.5%
11.8%
11.2%
11.6%
68
Corporate Governance – Resource and
Reserve Estimation and Reporting
Due to the nature, stage and size of the Company’s existing operations, the Company has historically concluded that there would
be insufficient efficiencies or additional governance benefits gained by establishing a separate mineral resources and ore reserves
committee responsible for reviewing and monitoring the Company’s processes for deriving and reporting mineral resource and ore
reserve estimates and for ensuring that the appropriate internal controls are applied to such estimates. However, the establishment
of such a committee, at an appropriate time, remains under consideration. In the interim, the Company continues to ensure that
all drill results and Mineral Resource calculations are validated by a competent, senior geologist and are reviewed and verified
independently by a qualified person.
Significant Changes in the State of Affairs
There have been no significant changes in the state of affairs of the Group during the financial year, other than as set out in this
report.
Significant Events After the Reporting
Date
As reported on 29 March 2023 (refer ASX release 29 March 2023, “Construction Licence Granted for Muga Mine Process Plant”), the
townhall of Sangüesa issued the licence for the construction of the process plant. With this permit the Company has the required
permits to begin the full-scale construction of Muga comprising the civil works, the process plant and the ramps in the second half
of 2023.
Likely Developments and Expected
Results of Operations
The Directors have excluded from this report any further information on the likely developments in the operations of the Company
and the expected results of those operations in future financial periods, as the Directors believe that it would be speculative and
prejudicial to the interests of the Company.
Environmental Regulations and
Performance
The operations of the Company are presently subject to Environmental Regulation under the laws of the Commonwealth of Australia
and of Spain. The Company has been at all times in full environmental compliance with the conditions of its licences.
69
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Share Options
Refer to note 20 to the consolidated financial statements below for details.
Indemnification and Insurance of
Directors and Officers
The Company has made an agreement indemnifying all the Directors and officers of the Company against all losses or liabilities
incurred by each Director or officer in their capacity as Directors or officers of entities in the Group to the extent permitted by the
Corporations Act 2001. The indemnification specifically excludes willful acts of negligence.
The Company entered into insurance policies in respect of Directors’ and Officers’ Liability Insurance contracts for current Directors
and officers of the Company and of the Company’s controlled entities. The liabilities insured are damages and legal costs that may
be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities
in the Group. The total amount of insurance premiums paid has not been disclosed due to confidentiality reasons.
Directors’ Meetings
The numbers of meetings of Directors and Committees held during the year ended 31 December 2022 and the number of meetings
attended by each Director were as follows:
Director
Richard Crookes
Paul Harris
Ignacio Salazar
Pauline Carr
Roger Davey
Brian Jamieson
Directors’ Meetings
Remuneration and Nomination
Committee
Audit, Business Risk and Compliance
Committee
A
3
5
8
8
8
8
B
3
5
7**
8
8
8
A
2
1
3
3
3
3
B
1
1
3#*
3
3
3#
A
1
3
4
4
4
4
B
1#
2#
4#*
4
4
4
A = number of meetings held during the time the Director held office as a Director or a Committee member.
B = number of meetings attended during the financial year. Note that Directors may attend Committee Meetings without being a member of that
Committee.
# Attendance at meeting by invitation.
* Additional meetings attended in the capacity of CEO.
** Not in attendance as he had a material personal interest in the business of the meeting.
70
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
Proceedings on Behalf of the Company
No person has applied for leave of the Court to bring proceedings on behalf of the Company or intervene in any proceedings
to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the financial year.
Corporate Governance
In recognising the need for robust standards of corporate behaviour and accountability, the Directors of Highfield support and
adhere to the principles of sound corporate governance. The Board recognises the recommendations of the Australian Securities
Exchange Corporate Governance Council and considers that Highfield is in compliance with those recommendations which add
value at its present stage as a listed exploration and resources development company.
The Company has established a set of corporate governance policies and procedures, and these can be found, together with the
Company’s Code of Business Ethics and Conduct, on the Company’s website: www.highfieldresources.com.au.
Auditor Independence and Non-Audit
Services
Section 307C of the Corporations Act 2001 requires the Company’s auditors to provide the Directors of Highfield with an
Independence Declaration in relation to the audit of the financial report. A copy of that declaration is included at page 120 of the
annual report. No non-audit services were provided by the Company’s auditor.
Audited Remuneration Report
This report, which forms part of the Directors’ report, outlines the remuneration arrangements in place for the key management
personnel (KMP) of Highfield Resources Limited for the year ended 31 December 2022. KMP of the Group consists of the Board
(including the CEO), as well as certain individuals who have authority and responsibility for planning, directing, and controlling the
activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Group.
The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001.
71
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Details of
Directors and
Other Key
Management
Personnel
Remuneration
Policy
The following individuals have held their positions and were KMP for the whole year,
unless stated otherwise:
Non-executive Directors
Richard Crookes
Independent Non-Executive Chairman (resigned 24 March 2022)
Paul Harris
Pauline Carr
Roger Davey
Independent Non-Executive Director (appointed 25 March 2022)
Independent Non-Executive Director
Independent Non-Executive Director
Brian Jamieson
Non-Executive Director
Executives
Ignacio Salazar
Javier Aguado
CEO and Managing Director
Chief Financial Officer
The Group has a general remuneration policy aimed at ensuring that emoluments
properly reflect the individuals’ duties and responsibilities, and that remuneration
is fair and competitive in attracting, retaining and motivating quality people with
appropriate skills and experience. The policy is set out in a transparent manner
and communications and engagement with stakeholders provide clarity around all
elements of the policy. At the time of determining remuneration, consideration is
given by the Board to the Group’s financial circumstances and performance.
The Board is responsible for determining and reviewing compensation arrangements
for the Directors and senior executives reporting to the CEO. As part of its suite of
corporate governance policies and procedures, the Board has a majority independent
Remuneration and Nomination Committee to oversee the Group’s remuneration
and nomination responsibilities and related governance as well as formulate the
Company’s remuneration framework and remuneration policy.
The Committee and Board have established the following parameters as part of the
remuneration framework for executives:
Short Term Incentive
Long Term Incentive1
Level
CEO
Up to 75% of fixed remuneration
Senior executives
Up to 50% of fixed remuneration
Up to 85% of fixed remuneration in the form of options subject to
vesting conditions
Up to 50% of fixed remuneration in the form of options subject to
vesting conditions
1 The exercise price of options is set at a premium to the share price at the date of grant, in order to
provide an incentive linked to the longer term performance of the Company relative to the market.
The premium for options granted during the year was 25%. For the options to vest the participant
must remain employed with the Company at the vesting assessment date of each tranche of
options.
72
Remuneration
Philosophy
Use of
Remuneration
Consultants
The Company and its controlled entities aim to position themselves so that the
total remuneration paid to employees will be competitive relative to the market.
The Remuneration and Nomination Committee generally undertakes a market
benchmarking review of executive positions at least once every three years to ensure
that the Company’s remuneration offerings remain competitive with its contemporary
peer group.
The Board and the Remuneration and Nomination Committee seek and consider
advice from independent remuneration consultants to ensure that they have relevant
information for the determination of all facets of remuneration relating to the KMP
and senior executives. The engagement of remuneration consultants is governed by
the Remuneration and Nomination Committee Charter which sets the protocols and
restrictions around the interaction between management and the consultants with a
view to minimising the risk of any potential conflict of interest and/or undue influence
occurring and ensuring compliance with the Corporations Act 2001 requirements.
The advice and recommendations of consultants are used by the Board and Committee
as a guide in formulating remuneration and policy. Decisions are made by the Board
after its own consideration of the issues but having regard to the recommendations
from the Committee and consultants.
During the year the Company did not engage any remuneration consultants.
Review of KMP
Remuneration
To ensure that the KMP remuneration remains consistent with the Company’s
remuneration policy, KMP and senior executive remuneration is reviewed annually by
the Board with the assistance of the Remuneration and Nomination Committee and,
as required, external remuneration consultants.
When performing the remuneration review, the Board considers:
•
•
•
•
the Company’s remuneration policy and practices;
relevant market benchmarks;
the skills and experience required of each role in order to grade positions
accurately and attract high calibre people; and
strategy, business plans and budgets.
73
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Total Fixed Remuneration
(“TFR”)
Base remuneration that
reflects the job size,
role, responsibilities, and
professional competence of
each executive, according to
their knowledge, experience
and accountabilities and
considering external market
relativities.
The pay of executives is
reviewed on promotion. There
is no guaranteed pay increase
included in any executive’s
contract.
At-risk remuneration
Short Term Incentive (“STI”)
Long Term Incentive (“LTI”)
The equity component of the at-
risk reward opportunity, linked
to the creation of shareholder
value and foster employee
retention.
Variable, performance based, annual
cash incentive plan designed to
reward high performance against
challenging, clearly defined, realistic
and measurable objectives that
are based on Company KPI targets
(scorecard) that are set to encourage
superior performance.
The Board has the flexibility to pay
the STI in shares if it deems this is
a more appropriate mechanism as
befits the Company’s circumstances
at different junctures in time.
The mix of fixed and at-risk remuneration varies depending on the role and level of
executive, and also depends on the performance of the Company and an employee’s
individual plan. Compared with other employees, senior positions have a greater
proportion of at-risk remuneration and have a higher proportion of their at-risk
remuneration assessed on Company performance KPIs.
In addition to fixed and at-risk remuneration, share options may be issued to KMPs
at the commencement of their employment, where the Board determines this to be
appropriate.
NED remuneration is reviewed periodically by the Remuneration and Nomination
Committee to ensure it remains competitive. With the exception of the Chairman,
NEDs receive a fixed fee remuneration consisting of an annual base Board fee with
additional fees for any committee positions they hold. The Chairman receives a fixed
annual fee with no additional amounts payable for Committee memberships. From
time to time and in accordance with the Constitution the Board may also award non-
recurring extra exertion amounts to non-executive Directors where it determines such
payments are warranted.
In addition to fixed fee remuneration, the Board may propose that shareholder
approval be sought for the issue of share options to Directors when it determines this
to be appropriate.
The aggregate remuneration for NEDs was set at an amount not to exceed $1,000,000
per annum after the Shareholders’ approval at the general meeting held on 24 May
2018. This amount may only be increased with the approval of Shareholders at a
general meeting.
Components of
Remuneration
of Other KMP
and Senior
Executives
Non-Executive
Director (“NED”)
Remuneration
74
Details of NED
Remuneration
Key Performance
Indicators for
Short Term
Incentives
Fees
Board of Directors
Remuneration and Nomination Committee
Audit, Business Risk and Compliance Committee
Board Chair per
annum
$
Committee Chair
per annum
$
Member per
annum
$
120,000
-
-
-
18,000
18,000
60,000
9,000
9,000
All NEDs (including the Chairman) are entitled to be reimbursed for travelling and
other expenses properly incurred by them in attending any meeting or otherwise in
connection with the business or affairs of the Company.
Key Performance Indicators (“KPIs”) are aligned to reflect corporate and strategic
objectives. KPIs are reviewed by the Company’s Remuneration and Nomination
Committee and approved by the Board. The KPIs of the CEO and the senior executives
reporting directly to him are also reviewed by the Committee and approved by
the Board. They typically cover targets in respect of safety, environment, social
responsibility, permitting, finance, construction and project delivery.
The aggregate score against the Company’s KPIs determines the total size of the STI
bonus pool to be awarded to participants. A personalised plan related to the level of
responsibility of each of the senior executives helps assess the performance of each
executive and is the base for their individual STI.
The KPIs for the year ended 31 December 2022 were assessed in accordance with the
parameters set out in the Remuneration Policy section above.
As in the previous year, the level of achievement of KPIs was only assessed as Target.
Summary
Company KPI
Performance
For the year ended 31 December 2022 the STI corporate and strategic KPI performance
outcomes for KMPs were assessed as follows:
KPI Category
Corporate Objective for the year
Weighting
for 2022
%
2022
Outcome %
Safety, Health,
Environmental
and Community
No injuries or environmental incidents and appropriate
responses to social grievances
Permits
Construction licences from Sangüesa, and Undués, and
Confederación Hidrográfica del Ebro (“CHE”) permits granted
Financing
Successful debt and equity financing
Engineering
Design and Engineering readiness, procurement and
preparation for construction
Construction
Agreement with proposed Major Construction Partner and
tendering
Construction
Construction at project site commenced
Total
10
25
25
10
15
15
100
10
15
15
7.5
7.5
10
65
75
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Short Term
Incentive Award
Long Term
Incentive
Performance and
Outcomes for
2022
The remuneration of the CEO and CFO for the financial year included cash performance
pay in respect of the attainment of company and individual STI KPIs set by the Board.
The STI awards relate to the achievement of KPIs for the year ended 31 December
2022. The 2022 STI cost was approved by the Board in March 2023 for payment in
cash later in 2023. Management proposed payment in the form of 100% cash and at
such time that financing is completed to the satisfaction of the Board and after taking
into consideration the appropriateness of the Company’s cash position.
The STI for the year ended 31 December 2021 was approved by the Board in late 2022
and paid to recipients in early 2023. The CEO has asked that payment of his FY21 STI
be deferred until funds to progress the construction of the Muga project are obtained.
Awards granted under the Highfield Resources Limited LTI Plan consist of share
options which are granted for no consideration and carry no dividend or voting rights.
Following vesting and subsequent exercise of the options one ordinary share in the
Company will be allocated per option.
Vesting of options is subject to employees achieving certain conditions. In this
respect all the outstanding options (except for those granted to the Chairman upon
his appointment) will vest on satisfaction of the recipients’ continued employment set
for the last day of each vesting period. Employee retention has been identified as an
important project success factor and its use as a performance hurdle also reflects the
current Spanish labour market for experienced people. The options are assessed for
vesting in equal instalments over three years.
The exercise price of options is set at a premium to the share price at the date of
grant, in order to provide an incentive linked to the longer term performance of the
Company relative to the market. The premium for options granted during the year
was 25%.
Feature
Description
The total value of options granted is based on a percentage of fixed remuneration. This percentage is approximately
85% for the CEO, between 40% to 50% for senior executives and up to 40% for other employees. The number of options
Opportunity/allocation
granted is determined by dividing the total value by the fair value per option determined by using the binomial method
(which is derived from the Black-Scholes option pricing model but is considered more suitable for companies which do
not pay dividends).
Performance hurdle
addition participants must be current employees at the time each tranche is assessed for vesting in order to receive the
The performance hurdle is represented by the premium that must be achieved before options are in the money. In
options.
Exercise price
In order to provide an incentive linked to the longer term performance of the Company, the exercise price of options is set
at a premium to the share price at the start of the year, as represented by the volume weighted average price (VWAP) of
the preceding month of December. Due to changes in the share price between this VWAP and the grant date, the actual
premium may be greater or less than 25%.
Forfeiture and termination
Options lapse if vesting conditions are not met. Options are forfeited on cessation of employment prior to the vesting
date unless the Board determines otherwise.
76
Details of
Remuneration
Details of the nature and amount of each element of the remuneration of each Director
and other key management personnel of the Group for the year ended 31 December
2022 are as below:
Short term
Post-
employment
Options
Year ended 31 December 2022
Non-executive Directors
Richard Crookes (resigned 24 March 2022)
Paul Harris (appointed 25 March 2022)
Pauline Carr
Roger Davey
Brian Jamieson
Executives
Ignacio Salazar (CEO and MD)
Javier Aguado (CFO)3
677,532
102,291
-
-
338,805
46,061
4,143
4,731
-
-
1,020,480
168,987
153,083
11,214
779,823
363,758
384,866
8,874
6,927 1,544,248
301,101
Base
Salary $
Fees
$
STI
Awards1
$
Other
Benefits2
$
Super-
annuation
$
-
-
-
-
-
30,000
92,258
96,000
78,000
67,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
96,000
78,000
6,927
74,247
-
-
-
Total
Cash
related
$
Share-
Based
Payments4
$
Performance
related
%
30,000
-
-
92,258
120,900
57%
-
-
-
43%
35%
37%
1 The employees’ STI relates to the accrued performance pay for services provided during 2022
which are normally paid at the beginning of the following year. The Board has determined that
the FY22 STI award be paid after the funds to finance the construction of Muga are satisfactorily
obtained.
2 Benefits relate to health insurance allowances.
3 Starting 1 January 2022 Mr. Aguado is deemed to be a Key Management Personnel in accordance
with AASB 124.
4 Share based payments are non-cash remuneration. The value is an estimate based on statistical
calculations of the probability that the share price increases above the exercise price (which
was calculated at a 25% premium at the grant date). In order to realise the potential value of
any options awarded which are in the money, the option holder must first exercise the options
by paying the exercise price in cash and can only realise any potential financial gain by selling
the resultant shares. The sale of any shares must be in accordance with the Company’s share
trading policy.
77
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
Details of remuneration for the year ended 31 December 2021 are shown below:
Short term
Post-
employment
Base
Salary $
Fees
$
STI
Awards1
$
Other
Benefits2
$
Super-
annuation
$
Options
Share-
Based
Payments
$
Total
Cash
related
$
Performance
related
%
-
-
-
-
-
-
100,000
80,000
64,101
52,368
35,000
6,901
-
-
-
-
-
-
-
-
-
-
-
-
518,356
361,042
-
-
317,5624
110,6282
-
373,2253
-
-
-
100,000
80,000
64,101
5,145
57,513
35,000
6,901
-
-
-
-
946,546
86,239
734,267
41,778
-
-
-
-
-
-
879,398
338,370
317,562
483,853
5,145
2,024,328
128,017
-
-
-
-
-
-
39%
5%
21%
1 The employees’ STI relates to the accrued performance pay for services provided during 2021,
which are normally paid at the beginning of the following year. However, the STI for 2021 was paid
out at the beginning of 2023 except for Mr. Salazar who has personally offered the Company to
postpone payment of his 2021 STI award until after funds to finance the construction of Muga
are satisfactorily obtained.
2 Benefits relate to paid private accommodation and in-country residency allowance.
3 Benefits relate to paid private accommodation and in-country residency allowance while employed
and payment of statutory entitlements on cessation of employment.
4 The STI accrued for the CEO has been restated since that disclosed in the prior year Remuneration
Report to reflect the accrued performance pay for services provided and effectively earned during
the year ended 31 December 2021. The prior year report presented the STI on the basis that
service was required up until the milestone dates, rather than representing performance pay for
services provided during the year. The impact of this in the Remuneration Report for 2021 is
an additional $156,017. There has been no change in the quantum of the FY21 awarded to Mr.
Salazar.
Note: Management and staff of the company assumed a partial furlough scheme for five months
in 2021 prior to obtaining the mining concessions in Muga. The Directors’ fees were also reduced
during this time to align with the temporary reductions to management’s salaries.
Year ended 31 December 2021
Non-executive Directors
Richard Crookes
Pauline Carr
Roger Davey
Brian Jamieson
Isaac Querub (retired 27 September 2021)
Jim Dietz (retired 18 February 2021)
Executives
Ignacio Salazar (CEO and MD)
Mike Norris (CFO resigned 10 December 2021)
78
Shareholdings
of Directors
and Other Key
Management
Personnel
No shares were granted as remuneration during the year ended 31 December 2022.
The number of shares in the Company held by Directors and other key management
personnel of the Group, including their personally related parties, is set out below.
Year ended 31 December 2022
Non-executive Directors
Richard Crookes (resigned 24 March 2022)
Paul Harris (appointed 25 March 2022)
Pauline Carr
Roger Davey
Brian Jamieson
Executives
Ignacio Salazar (CEO and MD)
Javier Aguado (CFO)
Balance at the start
of the period
Share Purchase Plan
acquisition
On-market
acquisition
Other changes during
the period1
Balance at the end
of the period
74,987
-
62,101
9,251
66,943
126,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(74,987)
-
-
-
-
-
-
-
-
62,101
9,251
66,943
126,700
-
1 The other change during the period represents an adjustment to exclude shares held by Mr.
Crookes as he was not a Director at the end of the period.
All equity transactions with Directors and other key management personnel other
than those arising from the grant of remuneration options have been entered into
under terms and conditions no more favourable than those the Company would have
adopted if dealing at arm’s length.
79
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
Option Holdings
of Directors
and Other Key
Management
Personnel
Year ended 31 December 2022
Non-executive Directors
The number of options over ordinary shares in the Company held by each Director
and other key management personnel of the Group, including their personally related
parties, is set out below:
Balance at the
start of the
period
Granted as
compensation
during the
period
Expired during
the period1
Exercised
during the
period2
Other changes
during the
period3
Balance at
the end of the
period
Exercisable
Not
exercisable
Richard Crookes (resigned 24 March 2022) 2,000,000
-
Paul Harris (appointed 25 March 2022)
-
1,000,000
Pauline Carr
Roger Davey
Brian Jamieson
Executives
1,000,000
1,000,000
1,000,000
-
-
-
Ignacio Salazar (CEO and MD)
2,561,735
2,209,318
-
-
-
-
-
-
Javier Aguado (CFO)
167,618
157,088
(24,532)
(1,000,000)
(1,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
-
-
-
-
-
4,771,053
2,838,204
1,932,849
300,174
179,248
120,926
1 Options expired during the year were granted in June 2019 with an exercise price of $0.83.
2 Options exercised during the year were granted in May 2019 with an exercise price of $0.81.
3 Other changes during the period represent an adjustment to exclude options held by Mr. Crookes
as he was not Director at the end of the period.
No option holder has any right under the options to participate in any other share
issue of the Company or any other entity.
Options granted as part of remuneration have been valued using the binomial method
(which is derived from the Black-Scholes option pricing model but is considered more
suitable for companies which do not pay dividends) taking into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and
expected price volatility of the underlying share and the risk-free interest rate for the
term of the option.
Options granted under the Company’s employee share option plan carry no dividend
or voting rights. For details on the valuation of options, including models and
assumptions used, please refer to note 20.
Transactions with Directors and other key management personnel were made at
arm’s length at normal market prices and normal commercial terms. There were no
transactions with key management personnel for the year ended 31 December 2022
other than those disclosed above.
Transactions
with Directors
and Other Key
Management
Personnel
80
Options Affecting
Remuneration
The terms and conditions of options granted during the year ended 31 December
2022 affecting remuneration in the current or future reporting periods are as follows:
Number
granted
Expiry date/
last exercise
date
Fair value
per option
at grant
date
Grant date
Exercise
price per
option
Value of
options at
grant date1
Number
of options
vested
Value
vested
Max value
yet to vest
Non-executive Directors
Paul Harris (appointed 25 March 2022)
26/05/22 1,000,000
30/06/25
$0.1209
$1.07
$120,900
1,000,000
$120,900
Executives
Ignacio Salazar (CEO and MD)
26/05/22
736,440
31/12/25
$0.1157
$0.94
$85,206
736,440
$85,206
-
-
Javier Aguado (CFO)
15/08/22
52,363
31/12/25
$0.1249
$0.94
$6,540
52,363
$6,540
-
26/05/22
736,439
31/12/26
$0.1677
$0.94
$123,501
26/05/22
736,439
31/12/27
$0.2207
$0.94
$162,532
-
-
$46,313
$77,188
$37,468
$125,064
15/08/22
52,363
31/12/26
$0.1846
$0.94
$9,666
15/08/22
52,362
31/12/27
$0.2431
$0.94
$12,729
-
-
$2,652
$7,014
$2,021
$10,708
3,366,406
$521,074 1,788,803 $301,101
$219,974
1 The value at grant date has been calculated in accordance with the models and assumptions as
disclosed in note 20.
If the unlisted options granted this year to the KMP are fully exercised, it would have
the following cash effect to the Company:
Options issued
Fair Value of Options
Cash received by Company if
fully exercised
1,000,000
2,209,318
157,088
3,366,406
120,900
371,239
28,935
521,074
1,070,000
2,076,759
147,663
3,294,422
Paul Harris (appointed 25 March 2022)
Ignacio Salazar (CEO and MD)
Javier Aguado (CFO)
KMP Employment
Arrangements
The remuneration arrangements for KMP are formalised in employment agreements.
These agreements provide for the payment of commencement options, fixed
remuneration, performance related STI remuneration, other short-term benefits, and
participation, where eligible, in the Company’s Long Term Incentive Plan.
Non-Executive
Directors
On appointment to the Board, each Non-Executive Director enters into a service
agreement with the Group in the form of a letter of appointment. The letter summarises
the Board’s policies and terms, including compensation, relevant to the Director. The
period of appointment is in accordance with the Company’s Constitution and the
Corporations Act 2001, including the provisions of the Constitution which relate to
the rotation of Directors.
81
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
Chief Executive
Officer and
Managing Director
Mr. Salazar is employed under an employment agreement which has no fixed term.
The notice period is three months. Depending on the reason for a termination of
his employment, Mr. Salazar may be entitled to severance benefits of up to nine
months’ fixed cash remuneration (based on an average of his previous annual fixed
remuneration). Mr. Salazar’s employment may also be terminated at any time without
notice in circumstances of his misconduct or illness.
During the year ended 31 December 2022 Mr. Salazar’s total fixed remuneration was
€446,250 (A$677,532).
Chief Financial
Officer
Mr. Aguado is employed under an employment agreement which has no fixed term.
The notice period is two months. Depending on the reason for a termination of his
employment, Mr. Aguado is entitled to the severance benefits set by Spanish law, as
applicable.
During the year ended 31 December 2022 Mr. Aguado’s total fixed remuneration was
€67,425 (A$102,291).
There were no loans to Directors or other key management personnel during the year
ended 31 December 2022 (year ended 31 December 2021: nil).
Highfield Resources Limited received more than 98.05% of “yes” votes on its
remuneration report for the financial year ended 31 December 2021. The Company
did not receive any specific feedback at the AGM or during the current period on its
remuneration practices.
The table below shows the performance of the Company measured by loss per share:
Loans to
Directors and
Other Key
Management
Personnel
Voting and
Comments Made
at the Company’s
May 2022 Annual
General Meeting
Performance
Measured by
Loss Per Share
and Share Price
Year ended
31 December 2022
Year ended
31 December 2021
Year ended
31 December 2020
Year ended
31 December 2019
Year ended
31 December 2018
Loss per share (cents)
Share price (at period end)
Share price High for the reporting period
Share price Low for the reporting period
(1.58)
$0.58
$1.28
$0.57
(1.96)
$0.90
$0.91
$0.44
(7.40)
$0.69
$0.79
$0.26
(2.28)
$0.68
$1.01
$0.57
(1.28)
$0.64
$1.13
$0.48
82
End of Audited Remuneration Report
Signed on behalf of the Board in accordance with a resolution of the Directors.
Paul Harris
Independent Non-Executive Chairman
Adelaide, Australia
30 March 2023
83
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders 84 Highfield Resources Limited
84
31 December 2022 | Annual Report to Shareholders
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Financial Report
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
31 December 2022 | Annual Report to Shareholders 85
85
Highfield Resources Limited
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 31 December 2022
Continuing operations
Gain/(Loss) on foreign exchange
Listing and share registry expenses
Professional and consultants’ fees
Director and employee costs
Share-based payments expense
Travel and accommodation
Donations
Depreciation
Other expenses
Interest (paid)/received
Loss before income tax
Income tax expense
Net loss for the period
Note
31 December 2022
$
31 December 2021
$
(136,452)
(275,670)
3
20
9
21
22
5
(153,953)
(947,856)
(2,391,652)
(605,551)
(171,743)
(21,379)
(18,507)
(1,375,327)
33,067
(5,789,353)
-
(175.772)
(990,191)
(3,277,015)
(696,315)
(1,139)
(24,269)
(28,070)
(1,188,206)
(42,932)
(6,699,579)
-
(5,789,353)
(6,699,579)
Other comprehensive income
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations
830,372
Other comprehensive income/(loss) for the period net of tax
830,372
Total comprehensive loss for the period
(4,958,981)
(1,674,105)
(1,674,105)
(8,373,684)
Loss per share
Basic and diluted loss per share (cents)
6
(1.58)
(1.96)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
86
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
Consolidated Statement of Financial
Position
as at 31 December 2022
Current Assets
Cash and cash equivalents
Other receivables
Total Current Assets
Non-Current Assets
Other receivables
Property, plant and equipment
Deferred exploration and evaluation expenditure
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Short term bank debt
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Note
31 December 2022
$
31 December 2021
$
7
8
8
9
10
11
12
13
14
15
16
19,446,084
15,932,428
35,378,512
1,224,574
4,783,362
126,574,416
132,582,352
167,960,864
8,715,405
11,323,884
20,039,289
198,843
198,843
20,238,132
22,241,425
256,384
22,497,809
553,700
60,499
118,384,403
118,998,602
141,496,411
2,955,681
-
2,955,681
-
-
2,955,681
147,722,732
138,540,730
203,613,937
29,758,894
(85,650,099)
147,722,732
190,014,905
28,386,571
(79,860,746)
138,540,730
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
87
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
Consolidated Statement of Changes in
Equity
for the year ended 31 December 2022
Year ended 31 December 2021
Balance at 1 January 2021
Total comprehensive loss for the period
Loss for the period
Other comprehensive loss - foreign currency translation
Total comprehensive loss for the period
Transactions with owners in their capacity as owners
Conversion of options
Issue of securities
Cost of issue
Share-based payment
Issued capital
$
Accumulated
losses
$
Share-based
payments
reserve $
Foreign
exchange
translation
reserve
$
Other reserves
$
Total
$
172,653,405
(73,161,167)
25,221,088
4,142,273
1,000
128,856,599
-
-
-
-
18,111,500
(750,000)
-
(6,699,579)
-
(6,699,579)
-
-
-
-
-
-
-
-
-
-
696,315
-
(1,674,105)
(1,674,105)
-
-
-
-
-
-
-
-
-
-
-
(6,699,579)
(1,674,105)
(8,373,684)
-
18,111,500
(750,000)
696,315
Balance at 31 December 2021
190,014,905
(79,860,746)
25,917,403
2,468,168
1,000
138,540,730
Year ended 31 December 2022
Balance at 1 January 2022
Total comprehensive loss for the period
Loss for the period
Other comprehensive gain - foreign currency translation
Total comprehensive loss for the period
Transactions with owners in their capacity as owners
Conversion of options
Issue of securities
Exercised shares from share-based payment reserve
Cost of issue
Share-based payment
Issued capital
$
Accumulated
losses
$
Share-based
payments
reserve $
Foreign
exchange
translation
reserve
$
Other reserves
$
Total
$
190,014,905
(79,860,746)
25,917,403
2,468,168
1,000
138,540,730
-
-
-
(5,789,353)
-
(5,789,353)
810,000
13,400,000
63,600
(674,568)
-
-
-
-
-
-
-
-
-
-
-
(63,600)
-
605,551
-
830,372
830,372
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,789,353)
830,372
(4,958,981)
810,000
13,400,000
-
(674,568)
605,551
Balance at 31 December 2022
203,613,937
(85,650,099)
26,459,354
3,298,540
1,000
147,722,732
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
88
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Consolidated Statement of Cash Flows
for the year ended 31 December 2022
Note
31 December 2022
$
31 December 2021
$
7
Cash flows from operating activities
Payments to suppliers and employees
Interest (paid)/received
Other receipts including GST/VAT received
Net cash used in operating activities
Cash flows from investing activities
Purchase of plant and equipment
Payments for exploration and evaluation expenditure
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of securities
Proceeds from conversion of options
Payments for share issue costs
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of exchange rate fluctuations on cash
Cash and cash equivalents at the end of the period
7
(5,930,779)
25,689
1,904,221
(4,000,869)
(2,889,597)
(9,256,046)
(12,145,643)
13,400,000
810,000
(737,000)
13,473,000
(2,673,512)
22,241,425
(121,829)
19,446,084
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
(5,411,685)
(35,703)
1,103,774
(4,343,614)
(2,226)
(10,699,099)
(10,701,325)
18,111,500
(825,000)
17,286,500
2,241,561
20,202,057
(202,193)
22,241,425
89
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
Notes to the Consolidated
Financial Statements
for the year ended 31 December 2022
1. Corporate
Information
The financial report of Highfield Resources Limited (“Highfield Resources”, “Highfield”
or “the Company”) for the year ended 31 December 2022 was authorised for issue in
accordance with a resolution of the Directors on 28 March 2023.
Highfield is a company limited by shares domiciled and incorporated in Australia
whose shares are publicly traded on the Australian Securities Exchange. The nature
of the operations and the principal activities of the Company are described in the
Directors’ Report.
a) Basis of Preparation
These general-purpose financial statements have been prepared in accordance
with Australian Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (“AASB”) and the Corporations Act 2001. Highfield
Resources Limited is a for-profit entity for the purpose of preparing the financial
statements.
The financial statements have been prepared on a historical cost basis. The
presentation currency is Australian dollars.
The consolidated financial statements have been prepared on a going concern basis
which assumes the continuity of normal business activity and the realisation of assets
and the settlement of liabilities in the ordinary course of business. In this respect, the
execution of the principal credit facilities with a group of four experienced financial
institutions for a total amount of €320.6 million demonstrates the Company is taking
the necessary steps to ensure the availability of funds to move the Project forward.
Credit drawdown is ultimately dependent upon raising and expending the equity gap
to fully fund the Project. In addition, the recent equity raise carried out in December
2022 (A$13.4m) provides evidence of the ongoing support from shareholders in the
Project’s future and strengthens the solvency of the Company.
b) Compliance Statement
The financial report also complies with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
2. Summary of
Significant
Accounting
Policies
90
c) Basis of Consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries (“the Group”) at 31 December 2022 and at 31 December
2021 in the comparative period.
Subsidiaries are those entities over which the Company has the power to govern
the financial and operating policies so as to obtain benefits from their activities.
The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether a Company controls another
entity.
In preparing the consolidated financial statements, all intercompany balances and
transactions, income and expenses and profit and losses resulting from inter-company
transactions have been eliminated in full. Unrealised losses are also eliminated unless
costs cannot be recovered.
d) Foreign Currency Translation
i) Functional currency
The functional currency for each entity in the Group is the currency of the
primary economic environment in which that entity operates. For the
Australian entities, including Highfield Resources Limited, this is Australian
dollars. For the Spanish subsidiary this is Euros.
ii) Transactions and balances
Transactions denominated in other currencies are translated into the
functional currency at the exchange rate prevailing at the date of the
transaction or valuation where items are re-measured. Monetary assets
and liabilities denominated in foreign currency are retranslated at year end
exchange rates.
Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at period end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
iii) Presentation currency
The Group’s financial statements are presented in Australian dollars. On
consolidation, income statement items for each entity are translated from
the functional currency into Australian dollars at average rates of exchange
where the average is a reasonable approximation of rates prevailing on the
transaction date. The Consolidated Statement of Financial Position items are
translated into Australian dollars at period end exchange rates.
91
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders e) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision maker. The chief operating decision maker,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer. The Group has
identified a single segment focused on development of potash mines in Spain. All of
the Group’s activities are interrelated and financial information is reported to the Chief
Executive Officer in this manner.
f) Exploration and Evaluation Expenditure
Exploration and evaluation expenditures in relation to each separate area of interest
are recognised as an exploration and evaluation asset in the period in which they are
incurred where the following conditions are satisfied:
the rights to tenure of the area of interest are current; and
•
• at least one of the following conditions is also met:
»
the exploration and evaluation expenditures are expected to be recouped
through successful development and exploitation of the area of interest, or
alternatively, by its sale; or
» exploration and evaluation activities in the area of interest have not at the
balance date reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves, and active and
significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include
acquisition of rights to explore, studies, exploratory drilling, trenching and sampling
and associated activities and an allocation of depreciation and amortisation of assets
used in exploration and evaluation activities. General and administrative costs are
only included in the measurement of exploration and evaluation costs where they are
related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and
circumstances suggest that the carrying amount of an exploration and evaluation
asset may exceed its recoverable amount. The recoverable amount of the exploration
and evaluation asset (for the cash generating unit(s) to which it has been allocated
being no larger than the relevant area of interest) is estimated to determine the extent
of the impairment loss (if any).
Where an impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but only to the extent that
the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset in previous
periods.
Where a decision has been made to proceed with development in respect of a
particular area of interest, the relevant exploration and evaluation asset is tested for
impairment and the balance is then reclassified to development.
Where an area of interest is abandoned, any expenditure carried forward in respect of
that area is written off.
92
g) Property, Plant & Equipment
Plant and equipment, including mechanical, electrical and computer equipment as
well as furniture, fixtures, and fittings, is stated at historical cost less accumulated
depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items and bring them to the location and condition necessary for
operation.
Depreciation is calculated on a straight-line basis so as to write off the net cost of
each asset over either its expected useful life of 3 to 10 years for furniture, computers
and equipment, or the life of the mine for plant and equipment.
h) Income Tax
The income tax expense or benefit for the period is the tax payable or receivable
on the current period’s taxable income or loss based on the applicable income tax
rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities
and their carrying amounts in the financial statements, and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the end of the reporting period. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at
the amount expected to be recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date
between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences
except when:
•
•
the deferred income tax liability arises from the initial recognition of goodwill or
of an asset or liability in a transaction that is not a business combination and
that, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
the taxable temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, and the timing of the reversal of the
temporary difference can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences
and the carry-forward of unused tax assets and unused tax losses, to the extent that it
is probable that taxable profit will be available against which the deductible temporary
differences and the carry-forward of unused tax credits and unused tax losses can be
utilised, except when:
93
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders •
•
the deferred income tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; or
the deductible temporary difference
is associated with
investments
in
subsidiaries, associates or interests in joint ventures, in which case a deferred
tax asset is only recognised to the extent that it is probable that the temporary
difference will reverse in the foreseeable future and taxable profit will be available
against which the temporary difference can be recognised. The carrying amount
of deferred income tax assets is reviewed at each balance date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be recognised.
Unrecognised deferred income tax assets are reassessed at each balance date and
are recognised to the extent that it has become probable that future taxable profit will
allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is recognised or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted at
the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity
and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable
right exists to set off current tax assets against current tax liabilities and the deferred
tax assets and liabilities relate to the same taxable entity and the same taxation
authority.
i) Other Taxes
Revenues, expenses and assets are recognised net of the amount of GST/VAT, except
where the amount of GST/VAT incurred is not recoverable from the taxation authority.
In these circumstances the GST/VAT is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense. Receivables and payables in the
statement of financial position are shown inclusive of GST/VAT.
The net amount of GST/VAT recoverable from, or payable to, the government is
included as part of receivables or payables in the statement of financial position. Cash
flows are presented in the statement of cash flows on a gross basis, except that the
GST/VAT component of investing and financing activities, which is receivable from or
payable to the government, is disclosed as operating cash flows.
j)
Impairment of Assets
Goodwill and intangible assets that have an indefinite useful life are not subject to
94
amortisation and are tested annually for impairment, or more frequently if events
or changes in circumstances indicate that they might be impaired. Other assets are
tested for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs of disposal
and value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or groups of assets (cash-
generating units). Non-financial assets other than goodwill that suffer an impairment
are reviewed for possible reversal of the impairment at the end of each reporting
period.
k) Cash and Cash Equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly
liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value. Bank overdrafts are shown
within borrowings in current liabilities in the statement of financial position.
For the purposes of the statement of cash flows, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
l) Trade and Other Payables
Trade payables and other payables are carried at amortised cost and represent
liabilities for goods and services provided to the Group prior to the end of the period
that are unpaid and arise when the Group becomes obliged to make future payments
in respect of the purchase of these goods and services.
Trade and other payables are presented as current liabilities unless payment is not
due within 12 months after the reporting period. They are recognised initially at their
fair value and subsequently measured at amortised cost using the effective interest
method.
m) Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Provisions are not recognised
for future operating losses.
When the Group expects some or all of a provision to be reimbursed, for example under
an insurance contract, the reimbursement is recognised as a separate asset but only
when the reimbursement is virtually certain. The expense relating to any provision
is presented in the statement of comprehensive income net of any reimbursement.
Provisions are measured at the present value or management’s best estimate of the
expenditure required to settle the present obligation at the end of the reporting period.
95
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders If the effect of the time value of money is material, provisions are discounted using
a current pre-tax rate that reflects the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time is recognised as an
interest expense.
The Company has obligations to dismantle and remove certain items of property,
plant, and equipment and to restore and rehabilitate the land on which they are
situated.
A provision is raised for the estimated cost of settling the rehabilitation and
restoration obligations existing at reporting date, discounted to present value
using an appropriate discount rate. When provisions for rehabilitation are initially
recognised, the corresponding cost is capitalised as an asset within mine properties
and amortised accordingly.
Where rehabilitation is conducted systematically over the life of the operation, rather
than at the time of closure, costs are charged to the profit or loss in the period in which
the work is undertaken.
At each reporting date the rehabilitation liability is re-measured to account for
any new disturbance, updated cost estimates, changes to the estimated lives of
operations, new regulatory requirements, and revisions to discount rates. Changes
to the rehabilitation liability are added to or deducted from the related rehabilitation
asset and amortised accordingly.
n) Issued Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the
issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds. Incremental costs directly attributable to the issue of new shares or options
for the acquisition of a new business are not included in the cost of acquisition as part
of the purchase consideration.
o) Revenue
The Company currently has no contracts with customers.
Interest income is recorded using the effective interest method.
p) Earnings Per Share
Basic earnings/loss per share is calculated as net profit/loss attributable to members,
adjusted to exclude any costs of servicing equity (other than dividends) and preference
share dividends, divided by the weighted average number of ordinary shares, adjusted
for any bonus element.
Diluted earnings per share is calculated as net profit/loss attributable to members,
adjusted for:
•
costs of servicing equity (other than dividends) and preference share dividends;
96
•
the after tax effect of dividends and interest associated with dilutive potential
ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that
would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
q) Share-based Payment Transactions
i) Equity settled transactions:
The Company provides benefits to individuals acting as, and providing services
similar to, employees (including Directors) of the Company in the form of
share-based payment transactions, whereby individuals render services in
exchange for shares or rights over shares (“equity settled transactions”).
There is currently an Employee Share Option Plan (ESOP) in place, which
provides benefits to employees (including Directors) and individuals providing
services similar to those provided by an employee. The cost of these equity
settled transactions is measured by reference to the fair value at the date at
which they are granted. The fair value is determined by using the binomial
method (which is derived from the Black-Scholes option pricing model but is
considered more suitable for companies which do not pay dividends) taking
into account the terms and conditions upon which the instruments were
granted, as discussed in note 20. The expected price volatility is based on the
historic volatility of the Company’s share price on the ASX.
The cost of equity settled transactions provided to employees (including
Directors) by issue of shares is measured by reference to the fair value of
services received unless this cannot be measured reliably, in which case the
cost is measured by reference to the fair value of the shares issued.
The cost of equity-settled transactions with non-employees is measured by
reference to the fair value of goods and services received unless this cannot
be measured reliably, in which case the cost is measured by reference to
the fair value of the equity instruments granted. The dilutive effect, if any,
of outstanding options is reflected in the computation of earnings/loss per
share (refer to note 6).
In valuing equity settled transactions, no account is taken of any performance
conditions, other than conditions linked to the price of the shares of Highfield
Resources Limited (“market conditions”).
The cost of the equity settled transactions is recognised, together with a
corresponding increase in equity, over the period in which the performance
conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (“vesting date”).
The cumulative expense recognised for equity settled transactions at each
reporting date until vesting date reflects (i) the extent to which the vesting
period has expired and (ii) the number of awards that, in the opinion of the
97
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Directors of the Company, will ultimately vest. This opinion is formed based
on the best available information at balance date. No adjustment is made for
the likelihood of the market performance conditions being met as the effect
of these conditions is included in the determination of fair value at grant date.
The charge or credit to profit or loss for a period represents the movement in
cumulative expense recognised at the beginning and end of the period.
No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition. Where the
terms of an equity settled award are modified, as a minimum an expense is
recognised as if the terms had not been modified. In addition, an expense is
recognised for any increase in the value of the transaction as a result of the
modification, as measured at the date of the modification.
Where an equity settled award is cancelled, it is treated as if it had vested
on the date of the cancellation, and any expense not yet recognised for the
award is recognised immediately. However, if a new award is substituted for
the cancelled award, and designated as a replacement award on the date
that it is granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
ii) Cash-settled transactions:
The Company may also provide benefits to employees in the form of cash-
settled share-based payments, whereby employees render services in
exchange for cash, the amounts of which are determined by reference to
movements in the price of the shares of the Company.
The cost of cash-settled transactions is measured initially at fair value at
the grant date using the binomial method taking into account the terms
and conditions upon which the instruments were granted. This fair value is
expensed over the period until vesting with recognition of a corresponding
liability. The liability is remeasured to fair value at each balance date up to and
including the settlement date with changes in fair value recognised in profit
or loss.
r) Critical Accounting Estimates and Judgements
The application of accounting policies requires the use of judgements, estimates
and assumptions about carrying values of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based
on historical experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions are recognised in the period in which the estimate is revised if it affects only
that financial period, or in the period of the revision and future periods if the revision
affects both current and future periods.
Exploration and evaluation expenditure
The application of the Group’s accounting policy for exploration and evaluation
98
expenditure requires judgement in determining whether future economic benefits
are likely either from future development or sale or where activities have not reached
a stage which permits a reasonable assessment of the existence of reserves. The
determination of a Joint Ore Reserves Committee (JORC) resource is itself an
estimation process that requires varying degrees of uncertainty depending on sub-
classification and these estimates directly impact the point of deferral of exploration
and evaluation expenditure. The deferral policy requires management to make certain
estimates and assumptions about future events or circumstances, in particular
whether an economically viable extraction operation can be established. Estimates
and assumptions made may change if new information becomes available.
Property, Plant and Equipment
The Group’s Property, Plant and Equipment is assessed for impairment if facts and
circumstances suggest that the carrying amount exceeds the recoverable amount.
s) New and Amended Standards Adopted by the Group
New standards and amendments applied for the first time for the annual reporting
period commencing 1 January 2022 did not have any impact on the amounts
recognised in the current or prior periods and are not expected to significantly affect
future periods.
t) New Standards and Interpretations Not Yet Adopted
Certain new accounting standards and interpretations have been published that are
not mandatory for 31 December 2022 reporting periods and have not been early
adopted by the Group. These standards are not expected to have a material impact
on the entity in the current or future reporting periods and on foreseeable future
transactions.
3. Expenses
Professional and consultants’ fees
Corporate advisory fees
Legal fees
Financial advisory fees
Other
31 December 2022
$
31 December 2021
$
(391,144)
(76,865)
(373,568)
(106,279)
(947,856)
(206,517)
(24,033)
(680,303)
(79,338)
(990,191)
99
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
4. Auditor’s
Remuneration
The auditor of Highfield Resources Limited is PricewaterhouseCoopers Australia
“PwC”.
Amounts received or due and receivable by the parent auditor for:
- an audit or review of the financial report
- other services
31 December 2022
$
31 December 2021
$
54,754
-
53,550
-
Remuneration of other related entities of “PwC”
Amounts received or due and receivable by the subsidiary auditor for:
- an audit or review of the financial report
27,324
82,078
29,028
82,578
5. Income Tax
a) Income tax expense
Major component of tax expense for the period:
Current tax
Deferred tax
31 December 2022
$
31 December 2021
$
-
-
-
-
-
-
b) Numerical reconciliation between aggregate tax expense
recognised in the statement of profit or loss and other
comprehensive income and tax expense calculated per
the statutory income tax rate
The tax on the Group’s loss before tax differs from the theoretical amount that
would arise using the applicable tax rate prevailing in the countries in which the
Group operates as follows:
Loss from continuing operations before income tax expense
Tax calculated at domestic tax rates applicable to profit/(losses) in the respective countries
(Spain 28.0%, Australia 30.0%)
Non-deductible expenses
Net income tax benefit not brought to account
Income tax expense
31 December 2022
$
31 December 2021
$
(5,789,353)
(1,671,969)
37,171
1,634,798
-
(6,699,579)
(1,927,176)
7,475
1,919,701
-
100
c) Deferred tax
The following deferred tax balances have not been brought to account:
31 December 2022
$
31 December 2021
$
Net deferred tax asset not recognised
17,737,983
16,125,105
d) Unused tax losses
Unused tax losses
31 December 2022
$
31 December 2021
$
43,504,420
38,592,124
The benefit for tax losses will only be obtained if:
i) the Company delivers future assessable income of a nature and of an amount
sufficient to enable the benefit from the deductions for the losses to be
realised;
ii) the Company continues to comply with the conditions for deductibility
imposed by tax legislation; and there are
iii) no changes in tax legislation which adversely affect the Company in realising
the benefit from the deductions for the losses.
6. Loss Per Share
Loss used in calculating basic and diluted EPS
31 December 2022
$
31 December 2021
$
(5,789,353)
(6,699,579)
Number of Shares
Number of Shares
Weighted average number of ordinary shares used in calculating basic loss per share
365,436,339
342,533,288
Effect of dilution:
Share options
-
-
Adjusted weighted average number of ordinary shares used in calculating diluted loss per share
365,436,339
342,533,288
Basic and diluted loss per share (cents)
(1.58)
(1.96)
The 25,013,617 options outstanding at 31 December 2022 (31 December 2021:
24,962,030) are deemed non-dilutive in accordance with AASB 2 as they reduce the
loss per share. These options could potentially dilute basic EPS in the future. There
have been no transactions involving ordinary shares or potential ordinary shares that
would significantly change the number of ordinary shares or potential ordinary shares
outstanding between 31 December 2022 and the date of completion of these financial
statements.
101
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
7. Cash and Cash
Equivalents
Reconciliation of cash
Cash at bank
31 December 2022
$
31 December 2021
$
19,446,084
22,241,425
Reconciliation of operating loss after tax to net cash flow from operations
Loss after tax
(5,789,353)
(6,699,579)
Non-cash and non-operating items in operating loss after tax:
Share-based payments
Net loss/(gain) on foreign exchange
Depreciation
Accrued interests not paid
Change in assets and liabilities
(Increase)/Decrease in trade and other receivables
(Decrease)/Increase in trade and other payables
Net cash used in operating activities
605,551
136,452
18,507
(7,378)
490,382
544,970
696,315
275,670
28,070
7,229
358,999
989,682
(4,000,869)
(4,343,614)
31 December 2022
$
31 December 2021
$
106,588
151,730
1,025
15,673,085
15,932,428
1,224,574
1,224,574
72,758
159,806
23,820
-
256,384
553,700
553,700
GST/VAT receivable and other receivables are non-interest bearing and generally re-
ceivable on terms between 30 and 45 days. They are neither past due nor impaired.
The amount is fully collectible. Due to the short-term nature of these receivables, their
carrying value is assumed to approximate their fair value.
Guarantees and deposits represent amounts provided to third parties, mainly the res-
toration deposit handed over to the relevant Administrations to ensure the cost of
dismantling and removing the mine gate construction and rehabilitate the land on
which they are situated.
8. Other
Receivables
Current
GST receivable
VAT receivable
Deposits
Prepaid expenses
Non-current
Guarantees
102
Prepaid expenses
Banks’ upfront fees
Legal fees
Financial adviser success fees
Due diligence costs
9. Property,
Plant and
Equipment
Cost
Accumulated depreciation and impairment
Net carrying amount
Movements in Property, Plant and Equipment
Opening balance
Additions
Net exchange differences on translation
Depreciation charge for the period
Closing balance
Prepaid expenses reflect the transaction costs directly attributable to the formalisa-
tion of the Project financing for Muga referred to note 2 a) above, to be included as
part of amortised cost of debt facility when drawn down. The breakdown of these
prepaid expenses is as follows:
31 December 2022
$
31 December 2021
$
11,320,266
915,893
2,896,237
540,689
15,673,085
-
-
-
-
-
31 December 2022
$
31 December 2021
$
5,396,519
(613,157)
4,783,362
60,499
4,768,403
(27,033)
(18,507)
4,783,362
651,578
(591,079)
60,499
89,857
-
(1,288)
(28,070)
60,499
Additions to Property, Plant and Equipment represent the construction works carried
out during the second half of the year in the mine gate area.
103
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
10. Deferred
Exploration
and Evaluation
Expenditure
Exploration and Evaluation phase - at cost
Opening balance
Exploration and evaluation expenditure incurred during the period
Net exchange differences on translation
Closing balance
31 December 2022
$
31 December 2021
$
118,384,403
7,679,672
510,341
126,574,416
112,296,472
8,018,643
(1,930,712)
118,384,403
Capitalised Exploration and Evaluation Expenditure exclusively refers to the Muga-
Vipasca Project. The Company has capitalised these costs on the basis that it is
expected to be recouped through future successful development (or alternatively
sale) of the respective mining areas.
No impairment on these capitalised assets was recorded as the Company has
concluded that there are no indications of impairment and that the Project’s combined
carrying value is appropriately covered by the current estimated NPV of the Project.
31 December 2022
$
31 December 2021
$
2,519,996
11,976
6,183,433
8,715,405
1,440,357
27,152
1,488,172
2,955,681
Trade payables, other payables and accruals are non-interest bearing and generally
payable on terms between 30 and 45 days. Due to the short-term nature of these
payables, their carrying value is assumed to approximate their fair value.
11. Trade
and Other
Payables
Trade payables
Other payables
Accruals
104
12. Short Term
Bank Debt
Short Term Bank Debt
13. Non-Current
Liabilities
Rehabilitation
31 December 2022
$
11,323,884
11,323,884
31 December 2021
$
-
-
Short-Term Bank Debt refers to the fees payable to the banks that participate in
the Project financing for Muga. Upon execution of the Financial Agreement on 22
December 2022 front-end fees, amounting up to 2.25% on the total amount of the
Facility and the COF were payable to the Facility Agent within 90 days of Signing Date.
Due to the short-term nature of these payables, their carrying value is assumed to
approximate their fair value.
31 December 2022
$
31 December 2021
$
198,843
198,843
-
-
The Company has a legal obligation to dismantle and remove all the installations
it constructs on the mining area and to restore and rehabilitate the land on which
they are situated. A provision has therefore been established which reflects the
estimated rehabilitation costs based on the site works undertaken as at 31 December
2022. The rehabilitation provision represents the best estimate of the expenditure
required to meet this obligation when the mine ceases to operate. When provisions
for rehabilitation are initially recognised, the corresponding cost is capitalised as an
asset and amortised accordingly. At each reporting date the rehabilitation liability
is to be reviewed and adjusted to reflect the current best estimate. Changes to the
rehabilitation liability are added to or deducted from the related rehabilitation asset
and amortised in a consistent way.
14. Issued Capital
a) Issued and paid-up capital
Issued and fully paid
203,613,937
190,014,905
31 December 2022
$
31 December 2021
$
105
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
b) Movements in ordinary shares on issue
31 December 2022
31 December 2021
Number of shares
$
Number of shares
$
Opening balance
364,429,887
190,014,905
329,600,171
172,653,405
Shares issued upon conversion of unlisted options1
Shares issued1
Employee share options exercised
Transaction costs on share issue
1,000,000
21,612,904
-
810,000
13,400,000
63,600
(674,568)
-
-
34,829,716
18,111,500
-
(750,000)
387,042,791
203,613,937
364,429,887
190,014,905
1 December 2022
• 21,612,904 ordinary shares were issued during the year ended 31 December 2022
via an institutional placement (A$13.4m) carried out in December 2022.
• 1,000,000 shares were issued upon conversion of unlisted options exercisable at
$0.81, expiring on 30 June 2023.
1 December 2021
• 34,829,716 ordinary shares were issued during the year ended 31 December
2021 via a single-tranche placement (A$15m) carried out in August 2021 and a
subsequent Share Purchase Plan in September (A$3m) that was offered to all
eligible retail shareholders.
c) Ordinary shares
The Company does not have authorised capital nor par value in respect of its issued
capital. Ordinary shares have the right to receive dividends as declared and, in the
event of a winding up of the Company, to participate in the proceeds from sale of
all surplus assets in proportion to the number of and amounts paid up on shares
held. Ordinary shares entitle their holder to one vote, either in person or proxy, at a
meeting of the Company.
d) Capital risk management
The Company’s capital comprises share capital and reserves less accumulated
losses amounting to a net equity of $147,722,732 at 31 December 2022. The
Company manages its capital to ensure its ability to continue as a going concern
and ultimately to optimise returns to its shareholders. The Company was ungeared
at period end and not subject to any externally imposed capital requirements. Refer
to note 19 for further information on the Company’s financial risk management
policies.
106
15. Reserves
Share-based payments reserve
Foreign exchange translation reserve
Other reserves
Movements in reserves
Share-based payments reserve
Opening balance
Share-based payments expense
Options exercised
Closing balance
31 December 2022
$
31 December 2021
$
26,459,354
3,298,283
1,000
29,758,894
25,917,403
605,551
(63,600)
26,459,354
25,917,403
2,468,168
1,000
28,386,571
25,221,088
696,315
-
25,917,403
The share-based payment reserve is used to record the value of equity benefits provided to Directors and executives as part of
their remuneration and non-employees for their goods and services. Refer to note 20 for further details of the securities issued
during the year ended 31 December 2022.
Foreign exchange translation reserve
Opening balance
Foreign exchange translation difference
Closing balance
2,468,168
830,372
3,298,540
4,142,273
(1,674,105)
2,468,168
The foreign exchange differences arising on translation of foreign controlled entities are taken to the foreign exchange
translation reserve.
Other reserves
Opening balance
Issue of unlisted options
Closing balance
1,000
-
1,000
1,000
-
1,000
Other reserves is used to record the amount received on the issue of unlisted options.
16. Accumulated
Losses
Movements in accumulated losses were as follows
Opening balance
Loss for the period
Closing balance
31 December 2022
$
31 December 2021
$
(79,860,746)
(5,789,353)
(85,650,099)
(73,161,167)
(6,699,579)
(79,860,746)
107
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
17. Directors and
Other Key
Management
Personnel
Disclosures
Short term employee benefits1
Share-based payments
Post-employment
Total
Remuneration of Directors and Other Key Management
Personnel
Details of the emoluments of the Directors and other key management personnel of
the Company for the period are as follows:
31 December 2022
$
31 December 2021
$
1,537,321
301,101
6,927
1,845,349
2,019,183
128,017
5,145
2,152,345
Key management personnel are defined as those persons having authority and
responsibility for planning, directing, and controlling the major activities of the Group,
directly or indirectly, including any Director (whether executive or otherwise) of the
Group.
1The comparative short-term employee benefits disclosure has been restated to be
consistent with the amount reflected in the financial statements.
18. Related Party
Disclosures
a) Key management personnel
Please refer to note 17 Directors and Other Key Management Personnel
Disclosures.
b) Subsidiaries
The consolidated financial statements include the financial statements of Highfield
Resources Limited and the subsidiaries listed in the following table:
Name of Entity
KCL Resources Limited
Geoalcali SLU
Equity Holding
Country of Incorporation
31 December 2022
31 December 2021
Australia
Spain
100%
100%
100%
100%
108
19. Financial Risk
Management
Exposure to foreign currency risk, credit risk, liquidity risk and interest rate risk
arises in the normal course of the Company’s business. The Company uses different
methods as discussed below to manage these risks that arise from these financial
instruments. The objective is to support the delivery of the financial targets while
protecting future financial security.
a) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial
obligations as they fall due. The Company manages liquidity risk by maintaining
sufficient cash facilities to meet the operating requirements of the business and
where appropriate investing excess funds in highly liquid short-term investments. At
31 December 2022, the Company has sufficient liquid assets to meet its financial
obligations. The responsibility for liquidity risk management rests with the Board of
Directors.
Alternatives for sourcing future capital needs include the Company’s cash position
and the issue of equity instruments, as well as debt financing. These alternatives are
evaluated to determine the optimal mix of capital resources for capital needs. The
Directors expect that present levels of liquidity along with future capital raising will be
adequate to meet expected capital needs.
Maturity analysis for financial liabilities
Financial liabilities of the Company comprise trade and other payables. The contractual
maturities of all trade and other payables are less than 6 months.
b) Interest Rate Risk
The Group’s exposure to the risk of changes in market interest rates relates primarily
to cash and cash equivalents with a floating interest rate.
These financial assets with variable rates expose the Group to cash flow interest
rate risk. All other financial assets and liabilities, in the form of receivables, security
deposits and payables are non-interest bearing.
At 31 December 2022, the variable interest rate exposure of the Group was:
Interest bearing financial instrument
Cash at bank or at hand
31 December 2022
$
31 December 2021
$
19,446,084
22,241,425
The Company holds substantially all of its cash and cash equivalents in Euros, being
the primary currency in which it expects to make expenditure for the development of
the Muga Mine. In the year ended 31 December 2022, $33,067 was earned due to the
positive change in the interest rate values. In contrast, in 2021 no interest was earned
and $42,932 was charged on Euro balances, reflecting the fact that interest rates on
Euro balances were negative.
109
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders The Group currently does not engage in any hedging or derivative transactions to
manage interest rate risk.
Interest rate sensitivity
The Company’s interest rate sensitivity is determined by the amount of cash it holds
in both Euros and Australian Dollars. The Australian dollar interest rate is currently
positive at 1.15%.
A sensitivity of 75 basis points has been selected as this is considered reasonable
given the current level of both short term and long-term interest rates. A 0.75%
movement in interest rates at the reporting date would have increased (decreased)
profit and loss by the amounts shown below based on the average amount of interest-
bearing financial instruments held. This analysis assumes that all other variables, in
particular foreign currency rates, remain constant. The analysis has been performed
on the same basis for 2021.
Increase 75 basis points
Decrease 75 basis points
Effect on Post Tax Loss ($)
(Increase)/decrease
Effect on Equity incl. accumulated losses ($)
Increase/(decrease)
31 December 2022
31 December 2021
31 December 2022
31 December 2021
145,846
(145,846)
166,811
(166,811)
145,846
(145,846)
166,811
(166,811)
c) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial instrument
will fail to discharge an obligation and cause the Company to incur a financial
loss. The Company’s maximum credit exposure is the carrying amounts in
the statement of financial position. The Company holds financial instruments
with credit worthy third parties. At 31 December 2022, 99.9% of the Company’s
cash and cash equivalents were held in financial institutions with a rating from
Standard & Poors of A - or above (long term). The Company had no past due or
impaired debtors as at 31 December 2022.
110
Euro
US dollars
GB pounds
Total
31 December 2022
Profit or loss
Translation Reserve
31 December 2021
Profit or loss
Translation Reserve
d) Foreign Currency Risk
The Company undertakes certain transactions denominated in currencies other
than the functional currency of the Company, hence exposures to exchange rate
fluctuations arise. Exchange rate exposures may be managed within approved
policy parameters utilising forward foreign exchange contracts. The carrying
amounts of the Group’s foreign currency denominated monetary assets and
monetary liabilities at the balance date expressed in Australian dollars were as
follows:
Liabilities ($)
Assets
31 December 2022
31 December 2021
31 December 2022
31 December 2021
19,871,361
2,667,090
2,910,931
-
-
-
65,219
-
-
5,277,780
13,448
-
19,871,361
2,732,309
2,910,931
5,291,228
The monetary assets and liabilities in the table above for the current period include
the balances of the Company’s Spanish subsidiary as well as of the Company itself.
Foreign currency sensitivity analysis
The Company is exposed to Euro currency fluctuations. The following table details the
Group’s sensitivity to a 10% increase and decrease in the Euro against the Australian
dollar on the above foreign currency denominated monetary assets and liabilities,
expressed in Australian dollars.
Euro Movement
Increase ($)
Decrease ($)
-
(1,884,493)
-
284,323
-
1,553,526
-
(232,630)
e)
Fair Value
The carrying amounts of current receivables and current payables are
considered to be a reasonable approximation of their fair value. The Company
did not hold any derivative instruments measured at fair value at 31 December
2022 or 31 December 2021.
111
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders 20. Share-Based
Payments
Share-based payment transactions recognised as operational expenses in the
Consolidated Statement of Profit or Loss and Other Comprehensive Income during
the period were as follows:
Options granted during the period
Options granted in prior periods
31 December 2022
$
31 December 2021
$
409,286
196,265
605,551
117,199
579,116
696,315
The Company operates an equity incentive plan known as ‘Highfield Resources
Limited Employee Long Term Incentive Plan’ (“ELTIP”). Subject to the attainment of
vesting conditions participants in this plan may receive options. The objective of this
plan is to assist in the recruitment, reward, retention, and motivation of employees.
The fair value at grant date of options granted during the period was determined using
the binomial method, as described in note 2(q), taking into account the exercise price,
the term of the option, the share price at grant date, the expected price volatility of the
underlying share and the risk-free interest rate for the term of the option.
The table below summarises options granted during the year ended 31 December
2022:
Grant Date
Expiry date
Exercise price
Number at start
of the period
Granted during
the period
Exercised during
the period
Cancelled during
the period
Number at end
of the period
Exercisable
at end of the
period
26/05/2022
30/06/2025
26/05/2022
31/12/2025
26/05/2022
31/12/2026
26/05/2022
31/12/2027
15/08/2022
31/12/2025
15/08/2022
31/12/2026
15/08/2022
31/12/2027
$1.07
$0.94
$0.94
$0.94
$0.94
$0.94
$0.94
-
-
-
-
-
-
-
1,000,0001
736,4402
736,4393
736,4394
815,3345
815,3326
815,3237
5,655,307
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
1,000,000
736,440
736,439
736,439
815,334
815,332
815,332
736,440
-
815,334
-
5,655,307
2,551,774
1 Options granted to the new Non-Executive Chairman appointed at the Company´s AGM on 25 March 2022. There are no service vesting or
performance vesting conditions in respect of these options.
2 Options granted to the Chief Executive Officer. The options vested on satisfaction of the recipient’s continued employment vesting condition
at 31 December 2022.
3 Options granted to the Chief Executive Officer. The options will vest on satisfaction of the recipient’s continued employment vesting condition
at 31 December 2023.
4 Options granted to the Chief Executive Officer. The options will vest on satisfaction of the recipient’s continued employment vesting condition
at 31 December 2024.
5 Options granted to the Chief Financial Officer and other employees. The options will vest on satisfaction of the recipients’ continued
employment vesting condition at 31 December 2022 or meeting the good leaver requirement as determined by the Board.
6 Options granted to the Chief Financial Officer and other employees. The options will vest on satisfaction of the recipients’ continued
employment vesting condition at 31 December 2023 or meeting the good leaver requirement as determined by the Board.
7 Options granted to the Chief Financial Officer and other employees. The options will vest on satisfaction of the recipients’ continued
employment vesting condition at 31 December 2024 or meeting the good leaver requirement as determined by the Board.
112
The model inputs for options granted during the year ended 31 December 2022
included:
a) options were granted for no consideration;
b) expected lives of the options range from 3.6 to 5.6 years;
c) share price at grant date of $0.90 (26 May 2022) and $0.95 (15 August 2022);
d) expected volatility at 45%;
e) expected dividend yield of Nil; and
f) a risk free interest rate from 2.89% to 3.08%.
The table below summarises options granted during the year ended 31 December
2021:
Grant Date
Expiry date
Exercise price
Number at start
of the period
Granted during
the period
Exercised during
the period
Cancelled during
the period
Number at end
of the period
Exercisable
at end of the
period
20/09/2021
31/12/2024
20/09/2021
31/12/2024
20/09/2021
31/12/2025
20/09/2021
31/12/2025
20/09/2021
31/12/2026
20/09/2021
31/12/2026
$0.865
$0.865
$0.865
$0.865
$0.865
$0.865
-
-
-
-
-
-
1.356,5881
591,8032
1,168,9843
508,9614
1,054,3935
459,9716
5,141,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,356,588
1,356,588
591,803
591,803
1,168,984
508,961
1,054,393
459,971
-
-
-
-
5,141,700
1,948,391
1 Options granted to the then Chief Financial Officer and other employees. The options vested on satisfaction of the recipients’ continued
employment vesting condition at 31 December 2021 or meeting the good leaver requirement as determined by the Board.
2 Options granted to the Chief Executive Officer. The options vested on satisfaction of the recipient’s continued employment vesting condition
at 31 December 2021.
3 Options granted to the then Chief Financial Officer and other employees. The options will vest on satisfaction of the recipients’ continued
employment vesting condition at 31 December 2022 or meeting the good leaver requirement as determined by the Board.
4 Options granted to the Chief Executive Officer. The options will vest on satisfaction of the recipient’s continued employment vesting
condition at 31 December 2022.
5 Options granted to the then Chief Financial Officer and other employees. The options will vest on satisfaction of the recipients’
continued employment vesting condition at 31 December 2023 or meeting the good leaver requirement as determined by the Board.
6 Options granted to the Chief Executive Officer. The options will vest on satisfaction of the recipient’s continued employment vesting
condition at 31 December 2023.
The model inputs for options granted during the year ended 31 December 2021
included:
a) options were granted for no consideration;
b) expected lives of the options range from 3.2 to 5.2 years;
c) share price at grant date of $0.49;
d) expected volatility from 62%;
e) expected dividend yield of Nil; and
f) a risk free interest rate from 0.19%.
113
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
As at the date of this report there were 25,013,617 unissued ordinary shares under
options. The details of the options are as follows:
Exercise Price $
$0.81
$0.83
$0.81
$0.47
$0.83
$0.81
$0.47
$0.865
$0.81
$0.47
$0.865
$0.865
$1.07
$0.94
$0.94
$0.94
Expiry Date
30 June 2023
31 December 2023
31 December 2023
31 December 2023
31 December 2024
31 December 2024
31 December 2024
31 December 2024
31 December 2025
31 December 2025
31 December 2025
31 December 2026
30 June 2025
31 December 2025
31 December 2026
31 December 2027
No option holder has any right under the options to participate in any other share
issue of the Company or any other entity.
The following options were issued during the financial year:
• 1,000,000 options with an exercise price of $1.07, expiring on 30 June 2025.
• 1,551,774 options with an exercise price of $0.94, expiring on 31 December
2025.
• 1,551,771 options with an exercise price of $0.94, expiring on 31 December
2026.
• 1,551,762 options with an exercise price of $0.94, expiring on 31 December
2027.
The following options lapsed during the financial year:
• 1,000,000 options with an exercise price of $0.83, expiring on 30 June 2022.
• 3,221,170 options with an exercise price of $0.83, expiring on 31 December
2022.
Number
6,000,000
1,818,171
1,470,965
333,333
1,622,191
1,301,604
333,333
1,859,486
1,182,194
333,334
1,602,335
1,514,364
1,000,000
1,538,774
1,551,771
1,551,762
25,013,617
114
The following options were cancelled during the financial year:
• 75,890 options with an exercise price of $0.81, expiring on 31 December 2023.
• 67,153 options with an exercise price of $0.81, expiring on 31 December 2024.
• 88,905 options with an exercise price of $0.865, expiring on 31 December 2024.
• 60,992 options with an exercise price of $0.81, expiring on 31 December 2025.
• 76,610 options with an exercise price of $0.865, expiring on 31 December 2025.
• 13,000 options with an exercise price of $0.94, expiring on 31 December 2025.
The movement of the options during the year was as follows:
31 December 2022
31 December 2021
Average exercise price
per share option
Number of options
Average exercise price
per share option
$0.855
$0.963
$0.81
$0.84
$0.83
$0.886
24,962,030
5,655,307
(1,000,000)
(382,550)
(4,221,170)
25,013,617
$0.91
$0.865
-
-
$1.29
$0.855
Number of options
22,820,330
5,141,700
-
-
(3,000,000)
24,962,030
Opening balance
Granted
Exercised
Cancelled
Lapsed
Vested and exercisable at year end
$0.83
20,395,720
$0.81
20,192,201
21. Other
Expenses
Advertising and Promotion
Computer and Software Expenses
Subscriptions and Memberships
Investor Relations
Projects costs
Insurances
Rents
Other administration expenses
31 December 2022
$
31 December 2021
$
74,363
152,823
66,160
114,046
37,715
655,781
205,465
68,974
68,810
59,156
59,271
145,646
9,012
650,473
179,851
15,987
1,375,327
1,188,206
The cost of the unlisted options issued to investors that participated in the interim
raise carried out in December 2022 has been expensed as per AASB 132.
115
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders
22. Geographic
Segment
Analysis
a) Net interest (paid)/received
Australia
Spain
Australia
Spain
b) Non-current Assets
31 December 2022
$
31 December 2021
$
33,067
-
33,067
-
(42,932)
(42,932)
31 December 2022
$
31 December 2021
$
-
132,582,352
132,582,352
-
118,998,602
118,998,602
23. Significant
Events after
the Reporting
Period
As reported on 29 March 2023 (refer ASX release 29 March 2023, “Construction
Licence Granted for Muga Mine Process Plant”), the townhall of Sangüesa issued the
licence for the construction of the process plant. With this permit the Company has
the required permits to begin the full-scale construction of Muga comprising the civil
works, the process plant and the ramps in the second half of 2023.
There are no known contingent assets or liabilities as at 31 December 2022 (December
2021: Nil).
No dividend was paid or declared by the Company in the year ended 31 December
2022 or the period since the end of the twelve months financial period and up to the
date of this report. The Directors do not recommend that any amount be paid by way
of dividend for the year ended 31 December 2022.
24. Contingent
Assets and
Liabilities
25. Dividends
116
26. Geoalcali
Foundation
As part of its Community Engagement Program, the Company established a not-
for-profit Spanish foundation called the Geoalcali Foundation (“Foundation”). The
Foundation is supported exclusively by Geoalcali and since its inauguration in
September 2014 has been involved in over 180 community projects.
27. Commitments
At 31 December 2022, the Group had entered into a number of contracts as part
of the development of the Muga Potash Project located in Spain. The expected
payments in relation to these contracts which were not required to be recognised as
liabilities at 31 December 2022 amounted to approximately $99.9m. Of this amount
approximately $85.8m will only become commitments once Notices to Proceed are
issued to equipment suppliers, which will only occur once permitting and financing
has advanced to the appropriate stage. In the meantime, the contracts are able to
be terminated by the Company at any point in time. The amount payable following
termination would be approximately $2.2m.
28. Parent Entity
Information
The following information relates to the parent entity, Highfield Resources Limited, at
31 December 2022 and for the year then ended. The information presented here has
been prepared using consistent accounting policies with those presented in note 2.
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total Equity
Loss of the parent entity
Other comprehensive income for the period
Total comprehensive loss of the parent entity
31 December 2022
$
31 December 2021
$
19,321,819
147,692,478
(167,927)
(167,927)
21,853,406
138,651,058
(223,371)
(223,371)
147,524,551
138,427,687
203,613,937
26,460,354
(82,549,740)
147,524,551
190,014,906
25,918,403
(77,505,622)
138,427,687
(5,044,119)
(7,868,386)
-
-
(5,044,119)
(7,868,386)
117
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Directors’ Declaration
In accordance with a resolution of the Directors of Highfield Resources Limited, I state that:
In the opinion of the Directors:
a) the financial statements and notes of Highfield Resources Limited for the year ended 31 December 2022 are in accordance
with the Corporations Act 2001, including:
ii) complying with Accounting Standards (including the Australian Accounting Interpretations), the Corporations
Regulations 2001 and other mandatory professional reporting requirements, and
iii) giving a true and fair view of the Group’s financial position as at 31 December 2022 and of its performance for the
financial year ended on that date, and
b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable, and
c) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2(b).
This declaration has been made after receiving the declaration by the Chief Executive Officer and the Chief Financial Officer required
to be made in accordance with sections of 295A of the Corporations Act 2001 for the year ended 31 December 2022.
On behalf of the Board
Paul Harris
Independent Non-Executive Chairman
Adelaide, Australia
30 March 2023
118
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders 31 December 2022 | Annual Report to Shareholders 119
Highfield Resources Limited
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Highfield Resources Limited for the year ended 31 December 2022, I
declare that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Highfield Resources Limited and the entities it controlled during the
period.
Julian McCarthy
Partner
PricewaterhouseCoopers
Adelaide
30 March 2023
PricewaterhouseCoopers, ABN 52 780 433 757
Level 11, 70 Franklin Street, ADELAIDE SA 5000, GPO Box 418, ADELAIDE SA 5001
T: +61 8 8218 7000, F: +61 8 8218 7999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
120
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Independent Auditor’s Report
Independent auditor’s report
To the members of Highfield Resources Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Highfield Resources Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 31 December 2022 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 31 December 2022
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
Level 11, 70 Franklin Street, ADELAIDE SA 5000, GPO Box 418, ADELAIDE SA 5001
T: +61 8 8218 7000, F: +61 8 8218 7999
Liability limited by a scheme approved under Professional Standards Legislation.
121
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Independent auditor’s report - Highfield Resources Limited (continued)
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
•
For the purpose of our audit we used overall
Group materiality of $1.5 million which represents
approximately 1% of the Group’s total assets.
• We applied this threshold, together with qualitative
considerations, to determine the scope of our audit
and the nature, timing and extent of our audit
procedures and to evaluate the effect of
misstatements on the financial report as a whole.
•
• We chose Group total assets because, in our view,
it is the benchmark against which the performance
of the Group is most commonly measured given it
is in the exploration and evaluation phase and has
no production or sales.
• We utilised a 1% threshold based on our
professional judgement, noting it is within the
range of commonly acceptable thresholds.
• Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
The Group audit is planned and led by our Group
audit team in Australia. Given the Group’s principal
operating entity Geoalcali SLU and its
management and financial reporting function are
based in Pamplona in Spain, we engaged
component auditors in Spain to perform audit
procedures over the financial information of that
entity. Audit procedures were performed by the
Group audit team over the consolidation process
and balances recorded at a Group level. The audit
work carried out in Spain, together with the
additional procedures performed at Group level, in
our view provided sufficient evidence to express
an opinion on the Group financial report as a
whole.
• We ensured the audit teams, both in Australia and
Spain, had the appropriate skills and
competencies.
2
122
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Independent auditor’s report - Highfield Resources Limited (continued)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit, Business Risk and Compliance Committee.
Key audit matter
How our audit addressed the key audit matter
Carrying value of exploration and evaluation assets
(Refer to Note 10) $126,645,022
We performed the following procedures amongst
others:
The Group accounts for exploration and evaluation
activities in accordance with the policy in Note 2(f) of
the financial report.
Judgement is required by the Group to determine
whether there were indicators of impairment of the
exploration and evaluation assets, due to the need to
make estimates about future events and
circumstances, such as whether the resources may be
economically viable to develop in the future.
The carrying value of exploration and evaluation assets
was considered a key audit matter given the financial
significance of the balance and the significant
judgements required by the Group in determining the
carrying amount as outlined above.
•
•
•
•
•
Evaluated the Group’s assessment that there
had been no indicators of impairment on
areas capitalised at 31 December 2022 during
the period with reference to the requirements
of Australian Accounting Standards.
Considered the latest available information
regarding the projects through inquiries of
management and the directors, and inspection
of press releases.
Inquired of management and the directors as
to whether there had been any changes to,
and obtained evidence to support, the Group’s
right of tenure to the projects. This included
considering the status of licences, to assess
whether the Group retained right of tenure.
Where a licence was pending, we assessed
the Group’s expectation of renewal of the
licence.
Tested a sample of current year capitalised
expenditure to source documents and
considered whether they had been accounted
for in accordance with the Group’s accounting
policy and Australian Accounting Standards.
Evaluated the reasonableness of the
disclosures against the requirements of
Australian Accounting Standards.
3
123
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Independent auditor’s report - Highfield Resources Limited (continued)
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2022, but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
4
124
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Independent auditor’s report - Highfield Resources Limited (continued)
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 23 to 34 of the directors’ report for the
year ended 31 December 2022.
In our opinion, the remuneration report of Highfield Resources Limited for the year ended 31
December 2022 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Julian McCarthy
Partner
Adelaide
30 March 2023
5
125
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders 126 Highfield Resources Limited
126
31 December 2022 | Annual Report to Shareholders
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders ASX Additional
Information
Additional information required by the Australian Securities Exchange Limited
and not shown elsewhere in this report is as follows. The information is current
at 7 March 2023.
31 December 2022 | Annual Report to Shareholders 127
127
Highfield Resources Limited
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Distribution of
Share Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001- and over
TOTAL
Ordinary Shares
Number of Holders
Number of Shares
323
734
543
1,121
323
3,044
154,239
2,177,894
4,420,868
40,223,440
340,066,350
387,042,791
There were no holders of ordinary shares holding less than a marketable parcel.
Top Twenty
Share Holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
EMR CAPITAL INVESTMENTS PTE LTD
WWB INVESTMENTS PTY LTD
BCI MINERALS LIMITED
BNP PARIBAS NOMS PTY LTD
MR. WARREN WILLIAM BROWN
DEREK CARTER & CARLSA CARTER
HSBC CUSTODY NOMINEES
CITICORP NOMINEES PTY LTD
L1 CAPITAL PTY LTD
MR. CRAIG PETER BALL
MR. DANIEL EDDINGTON
PETER DAVID FERGUSON PTY LTD
CELTIC CAPITAL PTE LTD
BRING ON RETIREMENT LTD
JONERIC PTY LTD
ELEMENT AU SMSF PTY LTD
MR. MICHAEL ANDREW WHITTING
MR. BENJAMIN JOHN HAAN
MR. ANDREW BYRNES DOBLE
CARINYA INVESTMENTS
128
Number of shares
104,038,875
35,040,000
26,349,498
16,692,720
14,559,260
9,261,827
5,147,105
4,997,470
4,838,710
3,896,134
3,792,000
3,032,023
3,000,000
2,995,500
2,701,076
2,685,613
2,645,425
2,490,000
2,445,000
2,227,692
%
26.9
9.1
6.8
4.3
3.8
2.4
1.3
1.3
1.3
1.0
1.0
0.8
0.8
0.8
0.7
0.7
0.7
0.6
0.6
0.6
252,835,928
61.4
Substantial
Shareholders
The following table shows holdings of five per cent or more of voting rights in
Highfield Resources Limited’s shares as notified to the Company under the Australian
Corporations Act 2001, Section 671B as at 7 March 2023.
Title of class
Registered holder of securities
Identity of person or Group
Date of last notice
Number owned
Percentage of
total voting
rights2
Ordinary Shares
EMR Capital Investment Pte Ltd
EMR Capital Investment Pte Ltd1
15/05/2015
104,038,875
26.88%
Ordinary Shares
Various holders
WWB Investments Pty Ltd1
Ordinary Shares
BCI Minerals Ltd
Seven Group Holdings (SGH) Ltd1
08/11/2017
18/11/2021
35,040,000
26,349,498
9.05%
6.81%
1 Being the Group listed and its associated entities.
2 The percentages quoted are based on the total voting rights conferred by ordinary shares in the Company as at 7 March 2023 of
387,042,791.
Substantial
Unlisted Options
Class
Number
Holders with more than 20%
Options over ordinary shares exercisable at $0.47 on or before 31 December 2023
Options over ordinary shares exercisable at $0.47 on or before 31 December 2024
Options over ordinary shares exercisable at $0.47 on or before 31 December 2025
333,333
333,333
333,334
Ignacio Salazar 333,333 options;
Ignacio Salazar 333,333 options;
Ignacio Salazar 333,334 options;
Options over ordinary shares exercisable at $0.865 on or before 31 December 2024
1,948,391
Ignacio Salazar 591,803 options;
Options over ordinary shares exercisable at $0.865 on or before 31 December 2025
1,678,945
Ignacio Salazar 509,961 options;
Options over ordinary shares exercisable at $0.865 on or before 31 December 2026
1,514,364
Ignacio Salazar 459,971 options;
Options over ordinary shares exercisable at $1.07 on or before 30 June 2025
1,000,000
Paul Harris 1,000,000 options;
Options over ordinary shares exercisable at $0.94 on or before 31 December 2025
1,551,774
Ignacio Salazar 736,440 options;
Options over ordinary shares exercisable at $0.94 on or before 31 December 2026
1,551,774
Ignacio Salazar 736,439 options;
Options over ordinary shares exercisable at $0.94 on or before 31 December 2027
1,551,762
Ignacio Salazar 736,439 options;
On-Market Buy
Back
There is no current on-market buy back.
129
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Voting Rights
All ordinary shares carry one vote per share without restriction. Options have no voting
rights.
Use of Proceeds
In accordance with listing rule 4.10.19, the Company confirms that it has used cash
and assets in a form readily convertible to cash in a way consistent with its business
objectives during the year ended 31 December 2022.
Schedule of
Tenements
Highfield’s Spanish potash projects are located in the Ebro potash producing basin in
Northern Spain. Details are shown in the table below.
Project
Region
Permit Name
Permit Type
Applied
Granted
Ref#
Investigation
Sierra del Perdón
Navarra
Quiñones
Investigation
19/07/2011
Sierra del Perdón
Navarra
Adiós
Investigation
19/07/2011
Sierra del Perdón
Navarra
Ampliación de Adiós
Investigation
26/10/2012
Application in
process
35760
Application in
process
35770
Application in
process
35880
Area
Km2 Holder
Structure
22.88 Geoalcali SLU
100%
59.40 Geoalcali SLU
100%
40.90 Geoalcali SLU
100%
123.18
Muga-Vipasca
Navarra
Muga Sur
Investigation
25/09/2014
30/06/2020
3524
7.28 Geoalcali, S.L.U. 100%
Muga-Vipasca
Navarra
Vipasca (area under
concession progress)
Investigation
06/11/2013
11/12/2014
35900
14.10 Geoalcali SLU
100%
21.38
Pintanos
Aragón
Molineras 1
Investigation
20/11/2012
06/03/2014
3495/10
18.20 Geoalcali SLU
100%
Pintanos
Aragón
Molineras 2
Investigation
19/02/2013
Pintanos
Aragón
Puntarrón
Investigation
08/05/2014
Application in
process
3495/20
16.80 Geoalcali SLU
100%
Application in
process
3510
30.24 Geoalcali SLU
100%
Total
65.24
209.80
Navarra
Goyo
Concession
19/07/2011
01/07/2021
35780
15.30 Geoalcali SLU
100%
Aragón
Fronterizo
Concession
21/06/2012
01/07/2021
Z-3502/N-3585
9.00 Geoalcali SLU
100%
Aragón
Muga
Concession
29/05/2013
01/07/2021
3510
14.40 Geoalcali SLU
100%
Total
38.70
38.70
Concession
Muga
Muga
Muga
130
Project locations are shown in the following map*.
*The potential quantity and grade of the Exploration Target is conceptual in nature and there has been insufficient exploration to estimate a Mineral
Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource.
131
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders Important Information and
Disclaimers
This report 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 judgement as
of the date hereof based on information currently available. The Company does not
assume any obligation to update any forward looking statement.
The Review of Operations contained within this annual report was prepared by Mr.
Ignacio Salazar, CEO and Managing Director of Highfield Resources. The information
in this report that relates to Ore Reserves, and reported with an effective date 31
October 2021, is based on information prepared by Dr. Mike Armitage. Dr. Mike
Armitage is the Competent Person who assumes overall professional responsibility
for the Compliance Opinion. Mr. Chris Bray BEng, Principal Mining Consultant
at SRK Consulting (UK), has taken responsibility for the review of the Life of Mine
(“LOM”) plan, as reported by the Company. The information in this report that relates
to Mineral Resources, Exploration Results and Exploration Targets is based on
information prepared by Anna Fardell, Principal Resource Geologist at SRK Consulting
(Kazakhstan) Limited.
As of the effective date, 31 October 2021, Dr. Mike Armitage was employed by SRK
Consulting (UK) Limited. Dr. Mike Armitage is a Member the Institute of Materials,
Minerals and Mining (“IOM3”) 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.
Mr. Chris Bray is a member of and a Chartered Professional in the Australasian
Institute of Mining and Metallurgy. He is a Mining Engineer with 25 years’ experience
in the mining and metals industry, including operational experience in underground
mines as well as mine planning and review experience on underground potash, salt,
lithium and borate projects, and as such qualifies as a Competent Person as defined in
the JORC Code. He has also been involved in the reporting of Ore Reserves on various
properties internationally for over 10 years. Mr. Chris Bray consents to the inclusion in
this report of the matters based on this information in the form and context in which
it appears.
Forward Looking
Statements
Competent
Person
Statement for
Muga-Vipasca
Potash Project
132
Competent
Person
Statement
for Mineral
Resources and
Exploration
Targets other
than the Muga-
Vipasca Potash
Project
Ms. Anna Fardell is a Principal Resource Geologist employed by SRK Consulting
(Kazakhstan) Limited. Anna Fardell is a member of the Australian Institute for
Geoscientists and has 15 years’ experience in the mining and metals industry and
has sufficient experience which is relevant to the style of mineralisation and type of
deposit under consideration to qualify as a Competent Person as defined in the JORC
Code. Anna Fardell consents to the inclusion in this report of the matters based on her
information in the form and context in which it appears.
The Review of Operations contained within this annual report was prepared by Mr.
Ignacio Salazar, CEO and Managing Director of Highfield Resources. The information
in this report that relates to 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 Osinaga and Mr. Manuel Jesús González Roldán consent to
the inclusion in this report of the matters based on their information in the form and
context in which it appears.
133
Highfield Resources Limited 31 December 2022 | Annual Report to Shareholders highfieldresources.com.au