Annual Report
31 December 2023
HIGHFIELD RESOURCES LIMITED
www.highfieldresources.com.au
ABN 51 153 918 257
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 1
Contents
Page
Corporate Directory ..........................................................................................................................3
Chairman’s Letter ...............................................................................................................................4
Chief Executive Officer’s Letter ........................................................................................6
Sustainability Report .......................................................................................................................8
CEO Message ........................................................................................................................................... 10
Our Enduring Commitment to Sustainability ...........................................................................12
Performance: Muga´s ESG Highlights ......................................................................................... 18
About this Report ...................................................................................................................................36
Directors’ Report ..............................................................................................................................38
Directors ....................................................................................................................................................... 40
Board Committees .................................................................................................................................44
Interests in the Securities of the Company ..............................................................................45
Results of Operations and Finance Review ...............................................................................45
Dividends ......................................................................................................................................................46
Risk Management ....................................................................................................................................46
Corporate Structure ...............................................................................................................................49
Nature of Operations and Principal Activities .........................................................................49
Review of Operations ........................................................................................................................... 50
Geoalcali Foundation ............................................................................................................................. 56
Corporate .................................................................................................................................................... 56
Annual Review of Ore Reserves and Mineral Resources....................................................57
Corporate Governance – Resource and Reserve Estimation and
Reporting .................................................................................................................................................... 60
Significant Changes in the State of Affairs .............................................................................. 60
Significant Events After the Reporting Date ........................................................................... 60
Likely Developments and Expected Results of Operations ........................................... 60
Environmental Regulations and Performance ....................................................................... 60
Share Options ............................................................................................................................................ 61
Indemnification and Insurance of Directors and Officers .................................................. 61
Directors’ Meetings ................................................................................................................................ 61
Proceedings on Behalf of the Company .....................................................................................62
Corporate Governance .........................................................................................................................62
Auditor Independence and Non-Audit Services ....................................................................62
Audited Remuneration Report .........................................................................................................63
End of Audited Remuneration Report .........................................................................................75
Financial Report ...............................................................................................................................76
Consolidated Statement of Profit or Loss and Other Comprehensive Income ....78
Consolidated Statement of Financial Position .........................................................................79
Consolidated Statement of Changes in Equity ....................................................................... 80
Consolidated Statement of Cash Flows ...................................................................................... 81
Notes to the Consolidated Financial Statements .................................................................82
Directors’ Declaration ..........................................................................................................................110
Auditor’s Independence Declaration ........................................................................................... 112
Independent Auditor’s Report ......................................................................................................... 113
ASX Additional Information ...............................................................................................118
2 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 3
Corporate Directory
Share Registry
Automic Pty Ltd
Level 5, 126 Phillip Street
SYDNEY, NSW 2000
Website
automicgroup.com.au
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
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. Luke Anderson
Non-Executive Director
Company Secretary
Ms. Katelyn Adams
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
4 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Chairman’s Letter
Dear Shareholders,
I am pleased to present the 2024 Chairman’s Letter for
Highfield Resources Limited. This year has been a significant
one for Highfield, with substantial progress made on our
flagship Muga Potash Mine project and changes to our
Board of Directors.
Project Updates
In addition to amazing effort of securing all the key Muga
Project permits in 2023, the Company updated the Muga
feasibility study, reconfirming the outstanding project
metrics over a 30-year Life of Mine. The Project economics
are robust, with an NPV8 of €1.82 billion and a 24% IRR
(post-tax). The EBITDA is projected to be €340 million
per annum in full production. The pre-production capital
requirement for Phase 1 is €449 million.
We are strategically located in the middle of the western
European market, with excellent access
to ports,
transport, and renewable grid power. Our mine access
is straightforward with shallow mineralization and low
technical risk with conventional mining and processing
methods.
Funding and Partnerships
We continue to work diligently to secure the remaining
financing required for phase 1 operations. We are in
negotiations with a range of parties encompassing strategic
partnerships, non-dilutive royalties, equity, and offtake
agreements.
We are delighted to have signed a binding offtake agreement
with Maxisalt, a global Spanish chemical and salt producer
and trader, to supply 75,000tpa of by-product salt.
Board Changes
We welcomed Mr. Luke Anderson to the Board this year. A
qualified chartered accountant, Mr. Anderson brings over 25
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 5
years of experience in executive management, corporate
development, corporate treasury, financial management,
and financial services roles in major international resource
and transport companies across Australia and the United
States.
We also mourn the loss of our esteemed Board member,
Mr. Brian Jamieson. His wisdom, passion, and intellect will
“We are very excited about
the start of construction and
look forward to keeping you
updated on our progress.”
be greatly missed.
Looking Ahead
With the recent signing of our key Construction contract
with EPOS-Tunelan construction start of the declines and
underground facilities is now planned to start in 2024. We
are very excited about the start of construction and look
forward to keeping you updated on our progress.
Thank you
I would like to also take the opportunity to thank my fellow
Board members, the management team led by Ignacio
Salazar, and our dedicated employees for all their efforts
over the year. 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 Highfields’s development, and I
look forward to Highfield continuing its positive trajectory
towards becoming a successful and sustainable long-life
producer of potash.
Best regards,
Paul Harris
Independent Non-Executive Chairman
27 March 2024
6 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Chief Executive
Officer’s Letter
Dear shareholders,
In 2023, we closed a long and significant chapter for
Highfield, achieving all key permits for Muga. The
construction licence in Navarra for the process plant,
granted at the end of March 2023, finally allows for the full-
scale construction of the Project to commence. This critical
milestone was the last step of a process which involved
more than 180 administrations, with more than 1,000
submissions analyzed, more than 13 public information
sessions were held and 31 permits and authorisations were
successfully granted during almost a decade. Many other
mining projects have failed at this stage. With Muga, we
have delivered, and this phase is now behind us.
The team has been actively working in advancing the
Project, re-tendering key construction activities and
updating the Muga feasibility study with a much higher
level of confidence in the Capex estimate. With this
update, following a significant inflationary environment,
we were able to successfully re-confirm a value for Muga
of €1.8 billion and a 24% IRR. The mine location provides
exposure to significantly lower potash delivery costs to the
European market, positioning Muga as a top quartile margin
performer in the industry. Our team has been working with
contractors to ensure alignment of costs with the updated
Feasibility Study published in November 2023. In March
2024, we announced the signing of the key contract for the
construction of the two declines and underground mining
infrastructure with EPOS - TUNELAN.
In parallel, the Company continued
its focus on the
financing strategy, successfully achieving a €320.6 million
senior secured project financing package with a syndicate
of six highly reputable entities in the sector. We also
obtained credit approval from the Macquarie Group for an
equipment operating lease facility of up to €25 million. We
were fortunate during the year to have a number of existing
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 7
“We feel the Company
is well prepared to start
construction of Muga and
to conclude the strategic
process.”
strategic shareholders who continue to demonstrate
strong support for the Company with interim funding to
allow the completion of the strategic investment process.
We feel the Company is well prepared to start construction
of Muga and to conclude the strategic financing process.
The difficult global geopolitical backdrop following the
wars in Ukraine and Gaza reinforces the importance of
Muga. In the first quarter of 2024 this has become more
apparent with farmers across western Europe bringing
Governments’ attention to the increasing cost burden they
face. More than ever, it is becoming more strategically
important to ensure a sustainable global potash supply.
I am confident that with our talented team, together with
the support of the local communities and administrations
where we operate and strategic partnerships, we will
deliver a leading potash Project in Spain.
Thank you for your continued support and trust in our
Company. We look forward to a long and sustainable future
filled with growth and success.
Ignacio Salazar
CEO and Managing Director
27 March 2024
8 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
8 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Sustainability
Report
CEO Message
Our Enduring Commitment to Sustainability
Performance: Muga’s ESG Highlights
About this Report
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 9
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 9
10 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
CEO Message
Muga is strategically
important in achieving
food security through
a new global and
sustainable supply of
European potash.
Dear Readers,
Access to strategically
important raw materials has
been a key driver for economic wealth and development
throughout history. The stakes are getting higher in the
current geopolitical environment, with Europe continuing
to depend on imported minerals for fertilizers to grow its
crops. Before the Ukraine war, Russia and Belarus together
supplied more than half of European potash demand. In
this context, the strategic relevance of Muga is now evident
and more important than ever. As the next Spanish potash
producer, Muga is crucial in securing Europe’s food supply.
This year’s Sustainability Report summarizes all of our ESG
oriented activities that contribute to the robustness of this
sustainable potash Project.
The Company has led by example with respect to its social
licence to operate within the region and local communities.
We are pleased that in 2023, the “Muga Community initiative”
was nominated by the United Nations Global Compact as
a “best practice” example in social management. “Muga
Community” is an initiative led by the local government
which coordinates, with the Company and our communities,
strategies for a successful implementation of this Project
in the region. The Company received the
last critical
construction licence from the Sangüesa Townhall early in
the year. This licence followed a strong support from local
stakeholders who expressed to the administrators the
urgent need to complete the permitting process. As a result,
the Company was successful in acquiring the remaining
land necessary for the Project following a legal process that
guaranteed landowners’ rights. The required land purchase
was successfully achieved with a high level of acceptance
by those impacted and amicable agreements reached. We
expect to start the main construction works in calendar year
2024, and as we move closer, the increased level of interest
during these last few months from hundreds of potential
local suppliers demonstrate the positive benefits that this
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 11
“Potash is an absolutely
essential input for fertilizers
that are used to grow strong
healthy crops against a
backdrop of a growing global
population and decreasing
arable land. We have a
unique opportunity here to
make a positive contribution
toward food security.”
Highfield Resources CEO, Mr Salazar
Project may bring to the economy of the region.
Muga will pioneer a high level of environmental standards.
The mine is designed to leave no visible disturbance
or footprint at surface, given
its conventional
low
emission underground operations. The mine will also be
progressively rehabilitated with all material extracted to
be sold or backfilled into the mine. European demand is
currently supplied by importing fertilizers produced with
a much higher carbon footprint1 than Muga – up to 60%
higher in some cases than European production. The
planned production from Muga therefore has the potential
to significantly reduce the carbon footprint associated with
European potash demand.
Several mining companies around the globe have
already identified the opportunity to expand into fertilizer
production, anticipating that the world’s
increasing
population and reduction in arable land will increase
pressure for food demand and ultimately fertilizers. Muga
is a shovel-ready Project in Europe ready to address
this challenge. Sustainability is at the centre of how we
will operate as a multi generational potash producer,
underpinned by renewable power, a low emission operation,
in a strategic location.
Ignacio Salazar
CEO and Managing Director Highfield Resources and
Geoalcali
27 March 2024
1 https://www.ft.com/content/638d6913-fec9-490f-90b0-5e6d3269d093
12 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Our Enduring
Commitment to
Sustainability
The Company is acutely aware that managing our ESG
sustainable performance throughout the evolution of the
obligations appropriately can contribute to
long-term
Project, ahead of regulations in Spain. The executive team
value creation for our organization and stakeholders. Since
the Company’s inception, stakeholder engagement has
been a critical component used to inform our strategies
as an ongoing tool to ensure the Company is aligned with
impacted communities and to identify and address material
topics the Project developes.
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 and cybersecurity.
The Board and committees oversee that the Company’s
ESG focus remains as a cornerstone of the Company’s
The Group’s committees review policies and ethical
performance.
compliance annually. During the 2023 review, no substantial
changes were required to our Code of Business Ethics and
Conduct.
Information about the Company’s corporate governance
can be found in the Company’s website:
The Group actively seeks the implementation and refine-
https://www.highfieldresources.com.au/
ment of existing protocols to manage risk and improve
corporate-governance/
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 13
ESG 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 Commitment, Excellence Respect and Attitude
(CREA), which form the basis of the eight principles of our
Sustainable Roadmap outlined below:
1.
2.
3.
4.
Integrate ethical
Adopt best practices
Focus on achieving
Encourage the
management that
in health and safety
the best
takes into account
with the aim of
environmental
participation and
communication of
risk analysis to
deliver the best
results for our
stakeholders.
providing protection
results, optimising
our communities
for our employees
and communities.
energy use and
the responsible
management of
resources.
to ensure that their
expectations and
needs are met.
5.
Uphold the
principles of
6.
7.
8.
Look for continuous
Always act with
Adopt an approach
improvement
integrity, honesty
that is consistent
diversity and ensure
through
and equanimity with
with our vision and
that equality is part
measurement
all our stakeholders.
corporate values
of our corporate
mechanisms with
culture.
the aim of achieving
excellence in all our
activities.
in our decision-
making processes
as the main driver to
generate value and a
sustainable outcome.
14 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Our Commitment to the
Sustainable Development
Agenda
No Poverty
Zero Hunger
Gender Equality
Muga Mine will generate
wealth for several
decades at a time of great
social transformation in labour
matters, especially in times when
economies have been hit by
pandemic or military events. Muga
will generate direct and indirect
jobs in a highly depopulated
region.
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 .
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.
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.
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
at each stage of the Project’s life
cycle.
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.
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.
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.
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.
Decent Work and
Economic Growth
Muga will be one of
the main economic 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.
Responsible
Consumption
and Production
Muga’s entire production process
is based on sustainable and
optimised criteria. In addition,
the Group promotes awareness
campaigns on responsible
consumption both externally
and internally. For the Company,
social awareness begins with the
Company itself.
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
Sustainable Development Goals
(SDG).
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 15
Muga´s ESG
Credentials
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.
Muga’s waste management
strategy has been
carefully designed to
fulfil the Circular
Economy
objectives.
Optimised Energy
Consumption
Measures implemented
have reduced our energy
consumption by ~ 15%.
Protecting Biodiversity
Protection programme
in partnership with
reputable NGO to
monitor and preserve
biodiversity in the area.
Optimised Water
Circuit
Reuse of salt water
for the process plant.
Environmental Surveillance
Plan
All environmental factors will be
closely monitored and
controls put in place
during the construction
and operation of the mine.
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.
16 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Listening to Our
Surroundings
The Company proactively and regularly engages with
key stakeholders to identify concerns and communicate
opportunities for long-term value creation associated with
the Project. The aim of this open dialogue is to incorporate
stakeholder opinions, whilst considering global trends that
may affect Muga. The purpose is to develop strategies
to control risk and maximise positive impacts. The Group
has in place several methods to communicate with its
stakeholders and will continue to do so throughout the life of
the Project. Similarly, the Company monitors and responds
to environmental and social trends in many jurisdictions.
This is a key consideration in our risk management process
and necessary to achieve our long-term vision. All this
information results in the definition of material topics which
are factored in the Company´s stakeholder engagement
plan outlined below.
Communication Channels
Stakeholder Type
How
Frequency Material Topics
Local Communities
Physical suggestion boxes located in the
communities involved in the project
Monthly
5
7
8
Local Communities
Online access through the “We want to listen
to you” tab for suggestions, consultations and
questions from citizens and residents of the area
Daily
2
4
8
Local Communities
Muga Community (local liaison group), events and
forums
Twice a year
2
3
4
5
6
7
8
11
Local Communities
Monitoring Press
Town Councils
Official application process
Town Councils
Regular meetings
Daily
Weekly
Monthly
Monthly
2
1
1
7
2
2
4
6
6
7
8
9
10
7
9
10
4
5
8
11
7
11
Physical suggestion boxes located in the
communities involved in the project
Directly related with relevant department
Daily
Official application process and regulatory affairs Weekly
Online access through the “We want to listen
to you” tab for suggestions, consultations and
questions from citizens and residents of the area
Daily
3
7
Informative events
2
3
5
7
8
Monitoring press
Investor Relations Department
HR Department
Daily
Daily
Daily
Daily
2
3
5
7
8
13
2
1
5
2
8
7
12
Trends and media
Business Associations, organisations, press
monitorin
Town Councils
Suppliers
Government
Organisations
Non-Governmental
Organisations and
Local Organisations
Non-Governmental
Organisations and
Local Organisations
Non-Governmental
Organisations and
Local Organisations
Investors
Employees
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 17
Material Topics
Business Development
Environmental Topics
Safety issues
Sustainable approach
2
4
5
8
3
Receipt of
necessary Permits
9
Water
Management
10
13
Waste
Management
Restoration of the
area
Supplier
Engagement*
Wealth Creation
Generation
of Quality
Employment
Project Feasibility
1
6
Ensure employee
Health and Safety
11
Community
Involvement
Prioritise Health
and Safety in the
Community
12
Climate Change
7
Sustainable
Development
*Supplier Engagement has replaced previous material topic Anti – Corruption as this has gained relevance during 2023, whilst Anti
Corruption is no longer a key issue of concern or relevant trend to the Project.
RELE
VA
N
C
E T
O O
U
R
S
T
A
K
E
H
O
L
D
E
R
S
Ensure employee Health and Safety
Receipt of necessary Permits
Project Feasibility
Supplier Engagement
Wealth Creation
Prioritise Health and Safety in the Community
Sustainable Development
Generation of Quality Employment
Water Management
Waste Management
Community Involvement
Climate Change
Restoration of the area
SIG
NIFICANT IMPACTS TO T H E B U S I N E S S
18 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Performance:
Muga´s ESG
Highlights
This report is structured in accordance to Material Topics
previously explained.
Business
Development
Receipt of Necessary
Permits
The Company announced on 29 March 2023 that
amendment was to exclude a small parcel of public land that
the Townhall of Sangüesa
issued the
licence for the
required a more extended licencing process. This does not
construction of the process plant. This milestone was one
impact the construction of the Muga process plant and has
of the Company’s highlight achievements of 2023 as this
was the last construction licence required to begin the full-
limited impact relative to the southern ponds.
scale construction of Muga, comprising the civil works, the
In parallel, and with a similar vision to accelerate the process
process plant and the ramps. To expedite the process, the
the Company received strong local support summarized in
Company requested an amendment to the licence; this
the following chart:
Name
Rol
Summary
Publication or link
Javier del Castillo
Former Mayor of
In an open letter published by
Sangüesa
Diario de Navarra, he asked the
authorities “to contribute to the
prosperity and development
of our city, to create wealth,
development, the future... in
short: grant the licence”.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 19
Name
Rol
Summary
Publication or link
Javier Solozábal
Current Mayor of
The former leader of the
Sangüesa since June
opposition and spokesman
2023
of Agrupación San Sebastián
political party wrote an article
in the local magazine Al Revés
calling for support for Muga
Mine.
José Antonio
Ex Mayor of
He published a letter to the
Martínez Cortés
Castiliscar and
editor in the Heraldo de Aragón,
Ex President of
urging the Sangüesa town
Aragón´s Rural
council to grant the license or
Development Agency
“hundreds of jobs will be put at
risk”.
Anonymous
Neighbour of
An anonymous Sangüesa
Sangüesa
resident wrote an opinion article
in the local magazine Al revés in
which he stated that “many of
us are committed to and believe
in the future of the area, which
is why we support and look
forward to the Muga project
becoming a reality”.
20 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Name
Rol
Summary
Publication or link
General Workers’
UGT Union Industry
The Union Federation (FICA) and
Union (UGT)
Federation
General Workers’ Union (UGT)
issued a press release calling
on the Sangüesa to “speed up
the process of granting the
necessary permits.”
Company’s workers Company’s workers
The local press picked up a
letter from Company’s workers
expressing their ‘great concern
at the delay and lack of response
to the Mina Muga licence
application’.
Ainhoa Unzu
PSN (Socialist Party
Ms. Unzu assured journalists
of Navarra) Economic
at the Parliament of Navarra
Development
Spokesperson
that Navarra is an attractive
region for the creation of new
companies, highlighting “major
projects” such as Muga in
Sangüesa.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 21
Name
Rol
Summary
Publication or link
Joakin Tellería
Chairman of the
In an-interview with Diario Vasco,
Pasaia Port Authority
the Chairman of the Pasaia Port
Authority in Gipuzkoa mentioned
the future opportunities that the
Muga project will bring to the
port.
Miguel Iriberri
President of
The press statement expressed
Industrial Foundation
that a final effort was required
of Navarra
to speed up the process to
resolve the pending reports and
formalities with urgency for such
a relevant Project as Muga is for
Navarra.
Another important milestone achieved in 2023 (June) was
Government of Navarra, met with those affected by the
the process to secure access to all the land necessary to
expropriation process to specify the areas affected and
build the Muga Mine. The Company had previously either
manage a valuation process between them. This process ran
purchased land or obtained commitments to buy it from
successfully, and the Company reached an agreement with
the landowners. The remaining areas, where no private
the majority of landowners (88.5%). For the small minority
agreement had been previously reached, were subject to the
of landowners where no price agreement was reached, an
normal legal expropriation process in Navarra for projects of
official process will be run by the Government to determine
public interest.
To ensure access to the remaining land required for the
construction of Muga (including the above ground facilities,
a fair market price. This process does not impact Highfield’s
right to access and use the areas immediately. To allow the
Company to access the land, the final requirement was
to make a deposit payment of €1.1 million as an advance
power lines and road access), the Company initiated an
payment of the final purchase price. The deposit amount is as
extensive expropriation process on 27 September 2021
per the requirement set out in the Government’s guidelines.
with the Government of Navarra. In December 2022,
Highfield made the deposit, and the Company has been
the Government of Navarra approved and declared the
officially notified that it has fulfilled all the requirements
urgent need to occupy these remaining areas by Highfield.
under the Navarran Compulsory Expropriation Law for
Following this declaration, the Company, together with the
immediate access and use of the lands.
22 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Supplier Engagement
Wealth Creation
Procurement typically represents the largest expendi-
Of the historical investment, more than 70% has been
ture in local communities - usually more than taxes,
allocated to the acquisition of products and services
wages, and community investment combined. Local
from local suppliers. In addition, the Project is expected
procurement opens new economic opportunities for
to have an annual supplier spend of more than €64
members of local communities, including jobs, training,
million over the mine life.
The Project will generate hundreds of quality jobs for
decades contributing to the local economy via taxes.
and business development linked to the mine. Local
suppliers have been strong supporters of the Project
and the involvement of this stakeholder group has
gained relevance particularly since the beginning of
the preliminary construction works. On 16 March 2023,
local suppliers organised an event to express their sup-
port with the aim of accelerating the construction of the
Project when it was pending of Sangüesa’s Construction
license. Local suppliers were concerned for the level of
investment that will be required to seize the economic
and social benefits that the mine will have in the region.
A local supplier event to support the Project had a high
level of attendance with more than 70 participants
The Company had previously organised several forums to
explain the potential benefits of the mine. These events
were organised in 2021 and 2022 in the local towns of
Ejea de los Caballeros, Sos del Rey Católico, Sangüesa
and Zaragoza. Despite Covid challenges, these events
had a high level of attendance with more than 250 local
companies involved. The Company has in place a Buy
Local Policy, and to date, more than 90% of the Project´s
local suppliers are Spanish.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 23
Generation of Quality
Employment
The Company is aware that generating quality employ-
ment is a key part of its journey in becoming an employer of
choice. The Company works closely with staff to develop
a meaningful career path, a supportive environment, and
a culture that values employee well-being.
2
Healthy Living
Program
The following activities highlight the Company’s effort
Company promotes healthy habits such as providing
towards achieving this goal:
fruit for staff and sport activities.
In their aim to guarantee staff well-being, the
1
Flexible Work
Schedules
During 2023, the Company implemented a new
holiday, leave and flexibility procedure with the aim
of strengthening the work-life balance measures
already in place.
Padel Teambuilding activity – December 2023
Geoalcali wins the BKT Tires’
Giveaway Contest
The Company entered the competition promoting
sustainable practices promoted by BKT Tires.
The Company was informed that BKT Tires had
chosen the Company’s project as the winner of
the BKT Tires BKT Bikes Giveaway competition,
and Geoalcali was awarded 10 bicycles that were
received during the month of November. A volunteer
day was organised to assemble and set up the
bicycles, which will be used to further promote sport
and sustainable mobility among the Company’s
workforce. As part of the Healthy Living Program,
two bicycles are now for common use by staff for
short journeys around the city of Pamplona.
24 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
3
Team building and
staff recognition
4
Employment
Forums
As part of Company’s Corporate Social Responsibility
We participated in the conference on “Employment
policy, on 16 and 17 January 2023 a group of
and Entrepreneurship” organised by the Public
volunteers from the Company staff refurbished an
University of Navarra (UPNA) in the Navarra Arena
exhibit room in Javier. This room was provided by
pavilion in Pamplona.
the Department of Tourism of the Government of
Navarra for educational purposes, which will host the
Company’s mineral exhibit, and which can be visited
by appointment by schoolchildren, neighbours and
any group that requests it.
The Director of Human Resources, Javier Olloqui,
took part in the round table organised by Navarra
Talent together with the heads of the same area
from companies such as 3P Biopharmaceuticals
and Veridas to explain the great professional
opportunities mining – and Muga, can provide to the
younger generations.
New space for the Mineral Exhibition
The Company launched a communication campaign
to boost employee engagement by highlighting every
member of staff who had the opportunity to express
their views and contribution the Muga Project.
Geoalcali’s Javier Olloqui at Pamplona’s Job Fair
Current employment figures
Workforce
Female
Male
2023
10
17
Training
10
thematics with a total
of
1,147
hours.
Turnover
4
people left the
Company (two females
and two males) and
3
people joined the
Company (one female
and two males).
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 25
Project Feasibility
The Company’s updated 2023 Feasibility Study confirms
the outstanding project metrics over 30-year Life of
Mine.
The parameters are based on advanced engineering and
firm contracts which provide a high level of confidence in
the Project assumptions with 93% of the capex based on
contracts plus firm offers and results in an NPV8 of €1.82
billion and an IRR of 23%.
26 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Environmental
Topics
We continued working on the
implementation of the
best environmental outcomes for Muga. In 2022, the
Environmental Surveillance Plan for Muga (PVA- Acronym
for Programa de Vigilancia Ambiental) was submitted to the
mining and environmental authorities of Navarra and Aragon.
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 2022, the PVA was implemented and the carrying out
of the controls corresponding to the construction phase
commenced. Quarterly reports with the results of all the
controls in place started in 2022 and in 2023 were shared
with the Administrations of Navarra and Aragón.
During 2023, the Muga Mine Project was in the Works phase
that included:
• Preliminary works on the mine opening. Polygon 6, plot
73 Espilengas, Undués de Lerda (Zaragoza); and
•
Initial earthworks for the temporary deposit of saline
waste. Polygon 8, plots 660 and 654, Sangüesa
(Navarra).
Water Management and
Waste Management
The activities carried out in 2023, likely to generate
Additionally, in August 2023, 6 new control piezometers
environmental
impact and
therefore subject
to
were included in the network, to increase the monitoring
monitoring and control, are:
• Earthworks from the collection of soil at the mine
site;
network (levels 2 and 3) of the PVA. Data from these new
piezometers has been recorded since their installation
and included in quarterly reports from Q3 2023. This is
being monitored from the moment of their execution
• Earthworks for the execution of the temporary
with a periodicity analogous to the point already
deposit of saline waste;
executed at the mine entrance.
• Extraction and storage of topsoil from the saline
deposit; and
• Revegetation of topsoil.
So far, the preliminary works carried out were small scale
activities and which could not cause damage to the water
environment. Nonetheless, taking into account that
the mining operation phase is expected to commence
in a few years, the Company considered it prudent to
maintain the frequency of the monitoring campaigns
in the pre-operational phase. This monitoring is based
on quarterly in-situ measurements and semi-annual
laboratory analyses to assess the current state of the
water reserves, prior to beginning the main construction
of the Muga mine.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 27
Restoration of the Area
The Company complies with strict regulations for the
restoration of all
land affected during the Company´s
activities. No substantial drilling activities occurred during
2023.
Muga´s PVA controls and monitors the
following:
No environmental
incidents occurred
during 2023.
Atmosphere and Air Quality
Waste Monitoring
• Control of dust and particle emissions
• Control of plant emissions
• Control of inmission
• Monitoring of waste management
•
•
Control of mining waste storage
Monitoring of chemical storage areas
Hydrology, Hydrogeology and Water
Quality
Socio-Economic, Archaeological and
Cultural Monitoring
• Surface water quality
Groundwater quality
•
•
•
•
Monitoring of discharges
Monitoring of drainage and channelling works
Monitoring of decanting and dewatering equipment
Monitoring of archaeological and cultural resources
• Monitoring of exclusion areas
•
•
•
Control of Noise
Control of Bardenas Chanel, Undués de Lerda and
Javier.
Geology, Soils and Orography
Subsidence and Seismicity Monitoring
• 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
• Monitoring of subsidence monitoring devices
Monitoring of seismicity monitoring devices
•
Monitoring of Mining Waste Facilities
• 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
Control of permeability
• Monitoring of animal communities
•
•
•
Monitoring of revegetated areas
Control of protection measurements
28 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Safety Issues
Ensure Employee Health
and Safety
Prioritise Health and
Safety in the Community
The Company and its Project Management coordinator
The Company is committed to safeguarding the safety of
(Bovis) closely monitored the execution of the Muga Mine
community members and therefore, has already in place a
pre-construction works, including the coordination of the
Social Management Plan that contributes to ensuring the
works from the preventive angle in compliance with the
community wellbeing. Within the Social Management Plan,
required legislation (RD1627/1997 and RD 171/2004). The
the Company monitors potential impacts such as traffic
objective was to ensure that the contractors executed
management, dust and noise controls, among others. In
the works according to the Project as designed by the
addition, the Company is working in collaboration with the
engineering company, complying with both national and the
governments to ensure that community services identified
Group’s own rules and regulations, thus creating the right
in the Muga Community Initiative (such as health systems)
conditions for a safe and accident-free workplace.
are of the requisite standard.
Training is key for a strong and shared safety culture.
During 2023, the Prevention of Risks at Work training was
completed by a 100% of active staff. An additional training
for two staff members for Construction Preventive Action
and an elevation platforms machinery training for one
operator was completed.
A total of 478 hours of training were completed.
The Company provides its workers with periodic health
monitoring, in accordance with the terms regulated in Law
31/1995 on Occupational Risk Prevention and in Royal
Decree 39/1997. During the year, refresher sessions were
also completed by all personnel.
No Safety incidents
or accidents occurred
during 2023.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 29
Muga Community
has been recognized
as best practice in
social management
according to the
UN’s Global Compact
initiative COMparte.
COMParte is a Spanish
Global Compact
Network’s platform
of good practices in
sustainability.
Sustainable
Approach
Community Involvement
From the beginning, the Company has maintained a
continuous dialogue with local community, however, it was
in 2022 when the local liason group was formalised under
the initiative: Comunidad Muga – Muga Community, holding
several coordination meetings in the same year.
In 2023, the first meeting of Muga Community was held at the
Commonwealth Services of Sangüesa Region in February.
The Director of Depopulation and Local Administration of the
Government of Navarra explained that the purpose of the
meeting was to focus on the development of the activities of
Muga Community until the end of the legislature (elections
held in May). The municipalities attending the meeting
expressed their interest in the training initiatives carried
out by the Construction Labour Foundation in collaboration
with Geoalcali and the Navarra Employment Service, the
study of local suppliers carried out by the Navarra Chamber
of Commerce and the forthcoming drafting of the Muga
Community Strategic Plan.
During the second and third quarters of the year, no meetings
were held, due to the reconfiguration of local and regional
governments following the May 2023 elections.
In the last quarter of the year, a meeting was held in Aragon
to promote training in the Aragonese part of the region. This
meeting was attended by the new town Mayors formed
after the May elections. In this case, representatives from
the municipalities of Undués de Lerda, Sos del Rey Católico
and Mancomunidad Altas Cinco Villas, Longás and Urriés
attended. A representative of the Construction Labour
Foundation was also present at this meeting to explain how
training courses related to the mine could be promoted in
the area.
The Company has received a high level of interest from
residents of the area who are currently employed. This
demonstrates that the residents consider Muga as an
employer of choice which will benefit the Company when it
comes time to consider drawing on local communities for its
workforce.
30 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Among the social engagement activities planned for 2023,
the Company highlights the following:
2
Open Doors to the
Company’s Exhibit:
Essential Minerals for
a Sustainable Future
In March 2023, the Company hosted several Open
Doors of the mineral exhibit, Essential Minerals for
a Sustainable Future, that the Company has in the
locality of Javier. Around 200 pilgrims during the
Javieradas pilgrimage visited the exhibit. Moreover,
in June, residents of Javier also had the opportunity
to visit the exhibit to learn more about geology in the
area, the importance of minerals in our daily lives.
The exhibit receives school visits and is included in
the official Navarra Government websites (mines
department and tourism).
1
200 New Trees Next
to the Castillo de
Javier
Neighbours and workers of the Company joined
forces in the planting of 200 new trees next to the
historic Castillo de Javier. Specifically, 75 gall oaks
(Quercus Faginea), 75 holm oaks (Quercus Ilex) and
50 rowan trees (Sorbus), all native species donated
by the Geoalcali Foundation, have been planted in an
area of 3,000 m2.
The new trees and their rooting will serve to
strengthen a slope located next to the cemetery in
the town of Navarra and will help to offset the CO2
emissions produced in the area. With this action,
the Company and the municipality strengthen their
alliance in tackling common objectives, while at the
same time strengthening their commitment to the
environment.
This is not the first initiative of this type that the
Company has carried out in the Sangüesa region.
These 200 new trees are in addition to the 150
trees that the Company has contributed to planting
in the area of influence of its Muga mining project,
in towns such as Sangüesa, Liédena and Rocaforte.
In total, thanks to the support of Geoalcali, and
through its Foundation, nearly 50,000 m2 of land
has been replanted.
For Geoalcali, this is not only an activity that is
committed to the reforestation of the area, but
also a further lever for the promotion of corporate
volunteering among its workforce. The initiative has
further positive effects: improving the landscape
near one of the most visited tourist spots in Navarra,
increasing biodiversity, helping to renew the air and
contributing to the European Green Deal´s objective
of reforestation.
Geoalcali staff and neighbors from Javier participated in
the tree planting
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 31
Climate Change
In order to implement mitigation measures to tackle climate
change risks, the Group will carry out a cost/benefit analysis
to help the senior management team identify which risk
mitigation measures be applied. External consultants will
be engaged if necessary when addressing climate change
risks. A formal tendering proposal is planned in due course.
3
The Geoalcali
Foundation
Since its creation in September 2014, the Geoalcali
Foundation has supported more
than 190
community projects in close collaboration with local
councils, social associations, foundations and other
local organisations. The commitment to education
and local development in the area continues to
be one of the pillars of the Foundation’s work.
Hence the collaboration with several schools in
the area for the acquisition of school materials
and to promote quality education, complementary
training with yoga classes for school children or
the maintenance of an essential service such
as transport for school children and residents in
Undués de Lerda. Another important factor in the
coexistence of any community is leisure. For this
reason, we collaborated in the organisation of the
first rural festival in the area, bringing magic, music
and theatre to the local residents in the Txokarrera
Fest in Liédena. This year we also celebrated with
the former potash miners of Navarra the Santa
Bárbara festivity, patron saint of miners.
32 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Sustainable Development
Sustainability partnerships consists of teaming up for
a supply of all vital commodities is gaining relevance. Muga
mutual benefits related to sustainability goals. The Company
encourages increased domestic production, lowers fertilizer
is continuously seeking alliances with the aim to drive the
costs for European farmers, and secures food supply in a
transformation of the mining industry into a more ESG
more sustainable manner. This is relevant for our society in
orientated business approachable to society, particularly in
Navarra, Aragón, Spain, and Europe.
the context where Europe´s strategic autonomy in securing
1
Meeting with Lithuanian
authorities
The CEO of Highfield-Geoalcali held a meeting with the
Lithuanian Embassy in Spain given the new geopolitical
context with the Ukranian war and the resultant global
potash supply challenges which are in turn placing the
focus on local European sources of supply such as Muga.
2
Exhibition at the
Museum of Natural
Sciences of the
University of Zaragoza
The University of Zaragoza invited us to participate
in the permanent exhibition on Minerals of Aragon
at the Museum of Natural Sciences. One of its
objectives
is to disseminate the richness and
diversity of the geological and mining heritage of
the region through this exhibition located in the
University Museum of Natural Sciences.
3
Minerals of the future,
Women of reference
Conference
The Company’s Director of Public Affairs, Susana
Bieberach, took part in the symposium organised
by Women In Mining on the importance of minerals
for sustainable development. The forum took
place in Seville to coincide with the celebration of
International Women’s Day. Atlantic Copper’s CEO,
Javier Targhetta and General Manager, Macarena
Gutiérrez, the Industry Minister of Seville, Jorge
Paradela and the Mines Director of Asturias, María
Belarmina Díaz Aguado participated in the event.
Display of potash samples extracted from the research
drillholes of Muga
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 33
6
Collaboration with
Alboan´s Mobiles for
the Earth” initiative
As part of its commitment to sustainability, the
Company joined the “Mobiles for the Earth” initiative
for the collection of old mobile phones.
The useful
life of mobile devices, such as
smartphones, is around two years on average.
As a result, hundreds of thousands of phones
are discarded every year that could be reused or
recycled appropriately to make more efficient use
of non-renewable resources. Materials such as gold,
tin, coltan and copper could be extracted from these
devices for reuse, promoting the circular economy
and reducing the impacts of mining these minerals
in other countries.
By collaborating with the “Mobiles for the Earth”
initiative,
the
the Company contributes
objective of the Alboan Foundation’s Conflict-Free
Technology Campaign, which is to raise public
awareness of the need to promote responsible
consumption of electronic devices and reduce the
social and environmental impacts of mining.
to
The funds raised through this initiative will go
towards financing humanitarian action projects
carried out with the Jesuit Refugee Service in
Colombia and eastern Democratic Republic of
Congo.
4
Geoalcali joined
Navarra Zirkular
The Company joined this public-private collaboration
initiative promoted by the Department of Economic
and Business Development, the Department of
Rural Development and the Environment, the
Department of Citizen Relations of the Government
of Navarra, the public companies Sodena and GAN-
NIK for the adoption of circular economy practices
in the Company’s strategies.
5
RSA Seal: Official
Government of
Aragón Corporate
Responsibility
initiative
This is our eighth consecutive year implementing
sustainable management in accordance with this
program. The renewal of this seal is recognition
of the efforts made by the Company in promoting
work life; 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.
34 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
In addition to this event, the Company has actively
participated in the workshops on the use of minerals
and potash for children in 4th Grade Primary School
at Liceo Monjardín, together with AEMINA and
AFARIME, both mining associations of Navarra,
under the coordination of the Navarra Government
Mines Department.
Employee Teresa Frauca explains the importance of
potash to the class
7
MINERÉTICA
Activities
MINERETICA is an official mining communication
program of the Government of Navarra in which
Geoalcali actively participates among other
members of the mining industry in Navarra.
In April, as part of the annual Vegetable Festival
held in Tudela, MINERËTICA organised a mineral
fertilizer thematic event. Geoalcali was responsible
for setting up a dedicated educational tent at the
Bardenas Reales headquarters, where visitors were
able to enjoy geology workshops and children’s
games about the minerals that surround us, learn
about nutrients and minerals with a Healthy Kit
provided by Geoalcali; and the exhibition “Essential
Minerals for a Sustainable Future”.
Prior to the conference a presentation on “The
role of mineral fertilizers in the vegetable garden”
was given by José María García-Mina, Professor
of Agricultural Chemistry and Soil Science at the
University of Navarra, followed by a discussion panel
between José María García-Mina, David Navarro,
member of the Farmers and Stockbreeders Union
of Navarra and Alberto Josa, Mining Engineer and
Director of Mining at Magnesitas Navarras S.A.
Minerética voulunteers in the educational tent
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 35
8
Memberships
The Company continues to be a member of the following organisations:
The business association of
Cinco Villas
The logistics cluster of
Aragón
The executive managers
association of Aragón
The Spanish mining
confederation
An association of mining
businessmen of Aragón
An association of mining
companies of Navarra
The business association of
Australia in Spain
International Fertilizer
Association
An association of Navarra
companies
A Spanish mining association
A Navarra mining association
A non-profit organisation created
by the Official College of Industrial
Engineers of Navarra and the
Association of Industrial Engineers
of Navarra.
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.
36 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
36 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
About this Report
This report highlights all ESG activities carried out during 2023 by
Highfield Resources Limited (the “Company” or “Highfield”) and its
Spanish subsidiary Geoalcali SLU (“Geoalcali”), together “the Group”.
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.
For further information visit:
https://www.highfieldresources.com.au/ sustainability-reports/
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 37
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 37
38 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
38 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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 2023.
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
38
Highfield Resources Limited
31 December 2022 | Annual Report to Shareholders
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 39
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 39
40 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Directors
The names, qualifications, and experience of the Company’s Directors in office during the year and up to the date of this report
are as follows. Directors were in office for the entire period unless otherwise stated.
Mr. Paul Harris
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 was a non-executive Director of Aurelia
Metals Limited (ASX: AMI) until 31 January 2024. 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 Masters of Engineering (Mining) 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. 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. Ignacio 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’s degrees in Economics and
Business and in Law, Ignacio has extensive experience
in
the exploration, development, construction and
operation of open pit and underground mines, as well as
in local relations with communities and governments, in
international relations within the industry and the capital
markets of Europe, North America and Australia, through
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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 41
Ms. Pauline Carr
Mr. Roger Davey
Independent Non-Executive Director, BEcon, MBA, FAICD,
FGIA, FCG (CS CGP)
Independent Non-Executive Director, ACSM, MSc., C.Eng.,
Eur.Ing., MIMMM
Originally an accountant, Pauline Carr is a professional
non-executive director and has over 35 years’ commercial
and executive experience with Australian and international
listed companies spanning management, corporate
governance and compliance, risk, investor and stakeholder
relations and business improvement. Her professional and
directorial career has encompassed a range of sectors
including resources and energy, property and construction,
financial services, pharmaceutical, community healthcare,
retail and higher education.
In addition to her oil and gas experience Pauline’s
resources sector experience has been gained over 35
years and covers a range of mineral commodities – gold,
base metals, industrial minerals, iron ore, tungsten, potash
and more recently rare earths. She has held in a variety of
roles over the years starting in the accounting, financial
analysis, auditing areas before moving into government
and community relations, business improvement, HR,
compliance, risk management and corporate governance
and then into executive roles which included being an
integral part of growth and
international expansions
through mergers and acquisitions.
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.
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, and a Master of Science degree in Water
Resource Management from Bournemouth 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). In the three years immediately
before the end of the financial year, Mr. Davey held no
other directorships of any Australian listed companies.
42 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Mr. Luke Anderson
Mr. Brian Jamieson
(commenced 13 September 2023)
(ceased 7 August 2023)
Non-Executive Director, BA (Accy), MAICD
Non-Executive Director, FCA, FAICD
Mr. Anderson is a qualified chartered accountant with
The Board of Highfield Resources Limited was deeply
over 25 years of experience in executive management,
saddened by the passing of Mr. Brian Jamieson on 7
corporate development, corporate treasury, financial
August 2023. Upon his passing, Chairman of the Board, Mr.
management and financial services roles
in major
Paul Harris, extended the Company’s deepest sympathy
international resource and transport companies across
to Mr. Jamieson’s family and conveyed the great privilege
Australia and the United States. He also has extensive
of working with Mr. Jamieson and acknowledged his
experience in business development in the resources
exceptional talents, wisdom, passion and intellect.
sector.
Over his working career Mr. Jamieson procured over
Most recently Mr. Anderson was the CEO of One Rail
40 years’ experience in the advisory, manufacturing,
Australia (previously Genesee & Wyoming Australia), the
resources and technology industries in Australia and
third largest rail freight operator in Australia which owned
offshore.
and operated more than 3,200 km of rail track across
Australia.
Mr. Jamieson was a chartered accountant and at the time
of his passing chaired the Audit and Risk Committee of
Mr. Anderson was also President and CEO of Unimin
IODM Limited and was the Non-Executive Chairman of
Corporation, the
largest
industrial minerals mining
Energy Technologies Limited (ASX:EGY appointed 24
company in North America, generating revenues in excess
December 2020).
of US$1.3 billion from its 42 operations in the US, Canada
and Mexico.
At the time of his passing, he did not hold any other listed
directorships in addition to those set out above in the past
Mr. Anderson has a range of project development
three years.
experiences which include being the CFO of Oz Minerals
while it was developing its Carrapateena Project in South
Australia.
In the three years immediately before the end of the
financial year, Mr. Anderson did not hold any other listed
company directorships.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 43
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, PNX Metals
Limited, Mighty Kingdom, Duxton Water Limited and
Duxton Farms Limited.
44 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Board Committees
Remuneration and
Nomination Committee
Audit, Business Risk and
Compliance Committee
The principal purpose of the Committee is to assist the
The principal purpose of the Committee is to assist the
Board fulfil its governance and oversight responsibilities in
Board fulfil its governance and oversight responsibilities
relation to the Group’s remuneration practices so that they:
relating to:
• Link rewards to the creation of value for shareholders;
• The integrity of financial accounting practices and
• Facilitate operational excellence by attracting and
retaining talent;
• Fairly and responsibly reward
individuals having
regard to individual and the Group’s targets and
performance as well as
industry remuneration
conditions; 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
• Comply with applicable regulatory obligations.
Principles.
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 appointed by the Board and are currently
Ms. Pauline Carr (Chairman), Mr. Paul Harris, Mr. Roger
Davey and Mr. Luke Anderson. Mr. Luke Anderson joined
Each member of the Committee must be appropriately
financially literate and accordingly have working familiarity
with basic finance and accounting practices and have an
understanding of risk management strategies.
The members of the Audit, Business Risk and Compliance
Committee are appointed by the Board and are currently
Ms. Pauline Carr (Chairman), Mr. Roger Davey and Mr.
Luke Anderson. Mr. Luke Anderson joined the Committee
effective 13 September 2023 upon his appointment as
the Committee effective 13 September 2023 upon his
Director.
appointment as Director.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 45
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
Roger Davey
Luke Anderson
Ordinary Shares
Options over ordinary shares
-
126,700
62,101
9,251
495,837
1,000,000
5,604,138
-
-
40,322
The table below provides a further breakdown of the options held by Directors:
Director
Paul Harris
Ignacio Salazar
Luke Anderson
Options by price and expiry
$1.07
$0.47
$0.79
$0.865
$0.94
16 June 2024
31 December 2024
30 June 2025
31 December 2025
31 December 2026
31 December 2027
31 December 2028
-
-
1,000,000
-
-
-
-
-
333,333
-
333,334
-
-
-
879,766
879,765
879,765
-
591,803
-
509,961
459,971
-
-
-
-
-
736,440
-
-
-
$0.93
40,322
-
-
-
-
-
-
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 2023 was $12,115,323 (year ended 31 December 2022: $5,789,353).
As the Group is still classified as an exploration company under Australian Accounting Standards, revenue obtained related to
interests earned from the cash positions held by the Group both in Spanish and Australian institutions.
Total consolidated cash on hand at the end of the financial year was $14,083,844 (31 December 2022: $19,446,084).
Net cash outflow from operating activities utilised $9,909,116 (31 December 2022: $4,000,869) primarily to fund General
and Administrative costs.
Net cash outflow from investing activities of $9,562,059 (31 December 2022: $12,145,643) was mainly to advance the Muga-
Vipasca Project in relation to:
46 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
• Preliminary works at the mine site;
management principles all of which are aligned with ISO
• Mining and processing plant equipment engineering
fees;
• Payment of deposits to secure access to the lands
following the culmination of the expropriation
process; and
31000-2018 Risk Management.
• Empowering managers and risk owners;
• Developing risk management as a cultural discipline;
and
• Supporting managers with the assistance they need
• Consultant fees and other charges related to the
to manage risks.
Project’s funding.
Net cash inflow from financing activities of $14,349,544
during the year ended 31 December 2023 was attributable
to net proceeds from the issue of convertible notes partially
offset by the payment of financing fees to the Project
Finance banks partners (31 December 2022: $13,473,000).
The management of risk within the Group is guided by
a pyramid structure with policies at the apex which set
high level strategic objectives. These policies are further
developed by standards which set specific requirements
and outline the Group’s policies. The base of the pyramid
encompasses procedures, manuals, and handbooks to
define the necessary steps to carry out certain required
The attached financial report for the year ended 31
tasks. This structure and its robust application establish
December 2023 contains an independent auditor’s report
a sound framework of risk oversight, risk management
which highlights the existence of a material uncertainty
and
internal controls which underpin the Company’s
that may cast significant doubt about the Group’s ability to
commitment towards a good corporate governance.
continue as a going concern. For further information, refer
to Note 2 in the financial report, together with the auditor’s
report.
Dividends
No dividend was paid or declared by the Company during
the financial year ended 31 December 2023 or up to the
date of this report. No recommendation for payment of
dividends have been made.
Risk Management
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 risk context in which Highfield operates is characterized
by its position as an exploration company on the cusp of
moving into the development phase as well as the strict and
substantial regulatory regime within which it operates, and
the intent to deliver shareholder returns in an increasingly
competitive environment.
The Group does not generally have an appetite for high
exposure risks but recognises that delivering upon its
project delivery vision will involve a degree of risk-taking
and uncertainty. A Risk Appetite Statement provides
guidance to management on the amount and type of risk
The Group has developed a Risk Management Framework
the Company seeks to take in pursuing its objectives has
(“RMF”) that serves as a roadmap of the operating
been set up and different levels of risk have been defined
strategies guiding the Group from the risk management
for each operating area at the strategic, tactical, and
perspective and it is fully aligned with the Group’s vision and
operational levels. The Risk Appetite Statement has been
Commitment, Respect, Excellence and Attitude (“CREA”)
considered by the Audit, Business Risk and Compliance
corporate values. This framework defines how risks are
Committee and formally adopted by the Highfield Board of
to be managed at the Group level and it also addresses
Directors.
the interconnectivity of the different tools to achieve the
Group’s objectives in this respect.
The Directors have assessed the Group’s current and future
situation and have concluded that business risks are at this
Highfield’s RMF embeds robust practices into the Group’s
stage well managed and are being regularly monitored.
risk culture and is a key foundation of the Group’s financial
Management has classified the key risks facing the Group
future. The Group’s RMF is based on three overriding risk
into the following categories, namely:
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 47
Risk Category
Risk Description
Mitigation Strategy
Financial Risks –
Cash availability
In the event that the equity financing for the
Project is delayed the Group’s cash could
potentially deteriorate.
Cash requirements for the Muga project
are obviously a lot higher than those at
pre-construction however, until final Muga
funding is in place, the Company needs to
keep a minimum cash balance.
As at 31 December 2023 the Group’s cash position is A$14.1m
(€8.7m).
Management has liquidity as its main focus and measures
to preserve cash while moving the Project ahead have been
implemented. In this respect non-essential cash outflows are
very much limited to avoid cash depletion.
Robust financial management is applied to ensure the Group
continues operating as a going concern.
Monthly current cash burn excluding financing costs is less
than A$1m. In addition, banks are charging A$0.8m per month
for their commitment towards the Project Finance loan. In any
case, tougher measures to cut expenditure could potentially
be applied to limit cash outflow further.
The recent issue of convertible notes to key shareholders
indicates their support to the Company.
Financial Risks –
Project Funding
Inability to secure the last piece of funding
on relative acceptable terms over the
coming months might potentially lead to
seek more onerous funding alternatives,
this resulting in weaker cash flow generation
over the life of the Project this leading to
a fall in the Company’s share price and
a reduction in the Company’s market
capitalization.
While the senior debt portion of the capital stack is secured
with a €320.6 million senior Project Financing facility and an
additional €25 million equipment operating lease, an active
funding plan is being developed to fully fund the Project and
enable the full-scale construction. Options under review
include strategic investors, royalty providers, offtakers,
and other alternatives. The Group is managing a number
of potential parties in each of these areas with the help of
its financing advisors, Macquarie Capital, Clarksons and
Endeavour Financial.
Financial Risks –
Project Costs
During construction a number of adverse
events could occur that would require
additional funding to ensure continuing
compliance with bank covenants and avoid
cost overruns.
Operational Risks
– Health & Safety
(H&S)
Hazards and incidents require early
identification, root cause analysis and a
response strategy.
The recently published Feasibility Study (November 2023)
confirmed Muga’s capex and opex estimates and provided
a stronger level of confidence as contracts and firm offers
representing 93% of the updated capex have been recently
obtained. Most of these contracts and offers were obtained
in Q4 2023 and factor in inflationary pressure and are still
regarded as current.
Contingencies have been reassessed to reach 10% of the
direct and indirect construction costs (€40.0 million), in line
with similar projects and market practices.
Additionally, 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.
The Project is assuming (and financing) a combined buffer of
circa €100 million to face potential cost increases.
Safety KPIs have been defined and are assessed on a monthly
basis as part of the H&S strategy. These performance
variables have been embedded in the Group’s remuneration
practices and hence, employees’ variable at risk remuneration
is party determined by the Group’s H&S performance.
A bespoke Crisis Management Manual has been enacted and
is reviewed yearly to ensure it remains up to date and fits the
purpose. This manual aims to manage a crisis (whatever its
nature) within the business and strives to minimize harm and
restore operations as soon as practicably possible. The manual
is led by five unwavering priorities:
• Safety and welfare of all staff and public;
• Protect the environment;
• Protect the reputation of the Company;
• Protect the Company’s assets and facilities; and
• Achieve operational continuity.
Crisis simulations exercises are periodically conducted to test
the procedures included in the manual and a lesson learnt
document is duly drafted.
48 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Risk Category
Risk Description
Mitigation Strategy
Operational Risks
– Key personnel
and talented staff
availability
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.
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.
Shortage of talented employees in the
Project location might also be a risk.
Construction Risks
– Construction
execution
Construction costs could exceed those
contemplated in the latest Feasibility Study.
Technical Risks
Although the Muga plant will be based on
established technology, its performance will
depend on a number of factors, namely:
•
•
•
•
a successful detailed engineering;
quality construction that meets
deadlines and avoids cost overruns;
swift plant commissioning;
processing of ore that delivers the
expected grade.
Marketing &
Logistics Risks –
Offtake agreements
(potash and salt)
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.
Aggressive pricing policies applied by
existing producers might have an impact on
the level of prices.
Moreover, final customers’ expectations
around discounts might also contribute to a
lower potash price achieved.
In addition, there is regular monitoring of the status of the
labour market and reviews of the project’s future staffing
needs. Programs are in place with the Regional Employment
Offices of Navarra and Aragón to build a pool of potential
candidates to allow the Group to recruit experienced and
skillful personnel for the construction and operational phases.
The Group is working with the Regional Employment Offices
of Navarra and Aragón to build a talent pool of potential local
candidates. In addition, talent and development management
initiatives have been implemented in the Group to ensure
development and training of staff.
External consultants are engaged to provide specialist
expertise to supplement the in-house team when required.
The detailed engineering has been undertaken by an
experienced and reputable consultant.
The Plant construction will be carried out by a reputable
and experienced contractor which also has the appropriate
expertise.
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.
Operations and maintenance teams carefully designed to
tackle commissioning issues.
MOUs have been signed with fertiliser traders with deep
potash market experience and contacts to help mitigate these
risks.
Muga´s favourable location close to major potash consumers
is expected to allow it to achieve local premiums including
logistics benefits in the current market where European
suppliers are being supplied from Canada.
A binding take-or-pay offtake with Padira Premium S.L.U./
Maxisalt was signed in November 2023 for up to 75kt per
annum, of high-grade vacuum salt per annum.
Marketing &
Logistics Risks –
Port facilities
Delays in finalising the sale mix and shipping
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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 49
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 hold the Group’s
three exploration projects.
Nature of
Operations and
Principal Activities
The principal activity of the Group during the financial
year was advancing its flagship Muga-Vipasca Project in
the north of Spain. There was no significant change in the
nature of the Group’s activities during the financial year
ended 31 December 2023.
50 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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.
Muga-Vipasca Project
Highfield’s flagship Muga Project (“Muga” or “the Project”)
The Vipasca permit extends over 14km2 adjacent to the
is targeting the relatively shallow sylvinite beds in the
Muga Project. Its geological characteristics make Vipasca’s
Muga Project area that covers about 40km2 located in the
potash unit a natural continuation of the Muga deposit.
Provinces of Navarra and Aragón. Mining is planned to
However, the geological data obtained in recent years show
commence at a depth of approximately 350 metres from
that only the section located at the east of the permit is
surface and is, therefore, ideal for a relatively low-cost
economically viable at the present time, while the potash
conventional mine accessed via a dual decline.
in the central and western sectors is too deep, situated at
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 51
more than 1,100 metres depth. Accordingly, the Company
the declines and underground mining infrastructure to be
relinquished these areas in 2021 and focused its efforts on
undertaken by a Mining Specialist Contractor and the Civil
the eastern sector, that has upgraded its categorisation
Works and Urbanisation by a General Contractor.
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 financial year, HFR continued to progress its
Muga-Vipasca Project. The focus has been on completing
the cost and design review, with the announcement of
the updated feasibility study on November 2023, and
progressing funding and offtake negotiations on the back
of the privileged situation of the Project which is fully
permitted and shovel ready.
Permitting and
Construction Update
The Project has been significantly de-risked from
the permitting angle with all the relevant
licenses,
authorizations, and permits having been obtained. Also,
access to the lands was finally gained after the completion
of the expropriation process for the areas where no private
agreement was signed. Agreement was reached with the
majority of landowners and a deposit of €1.1 million was
paid in accordance with the Government’s guidelines. For
the remaining small number of landowners where no price
agreement was reached, an official process will be run by
the Government to determine a fair market price (refer
ASX release 27 June 2023, “Highfield Resources secures
all land for the Muga Project”).
Following the successful expropriation process in Navarra,
and with land access secured for the Project, some
preliminary works, which need to be carried out prior
to the main construction have been progressed during
During the last quarter of the year, the Company progressed
negotiations with the two relevant contractors responsible
for each of the two packages set out above.
Technical Update
As announced in the first quarter of 2022, all key process
plant equipment purchase contracts had been signed
with its suppliers (refer ASX release 15 February 2022,
“Remaining Purchase Contract Signed”). Following the
signing of these contracts Highfield received equipment
engineering drawings that allowed for the further
finetuning and optimization of the detailed engineering
of the processing plant. The Company is now ready to
begin construction once the financing process comes to
completion.
Apart from some minor updates that the 2023 Updated
Feasibility Study
incorporated
following comments
received during the due diligence process with the
financing banks (refer ASX release 7 November 2023,
“Updated Muga Feasibility Study”), the processing plant
design and the mine plan are the same as presented in the
December 2021 Muga Feasibility Study Update.
Sales, Marketing and
Logistic Update
Trade sanctions affecting Russia and Belarus since 2022
have worsened the supply constraints the potash market
had been experiencing since 2021. In 2022, prices hit
all-time record-highs and demand dramatically fell as
affordability eroded. Market constraints eased and global
demand begun to recover in 2023, however a shift in
market dynamics has settled a new global trade map with
former soviet producers being unable to access most
the year. Some of these works relate to earthmoving in
western economies.
preparation for the areas for the saline water deposit and
the environmental protection barriers around the footprint
of the Project. In addition, minor preliminary works in the
power line were also undertaken.
The contracting strategy for the Muga-Vipasca Potash
Project has been streamlined to an owner-managed
The ongoing conflicts involving Russia and Ukraine in
eastern Europe as well as and in Israel and Palestine in
the Middle East, continue to encourage buyers to find
alternative sources of potash from more stable regions.
This has stimulated discussions with traders and other
potential offtake and logistics partners interested in a
project delivery model that envisages the construction of
strategic participation in the Project.
52 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
During 2023, Highfield continued to develop its transport
In May 2023, the Company received credit approval from
and logistics strategy in line with the newest developments
Macquarie for an equipment operating lease facility with
introduced in the marketing plan. With the deferral of the
a total value of €27 million, with a peak exposure not
compacting and glazing unit construction, the mine will
expected to exceed €25 million (refer ASX release 12 May
now produce standard grade muriate of potash (“SMOP”)
2023, “Highfield secures credit approval for up to €25m
in phase 1 and add granular grade muriate of potash
equipment operating lease financing”). This key milestone
(“GMOP”) to the product portfolio in phase 2. Given that
was the culmination of the non-binding indicative term
there is a marked preference for each product in different
sheet signed with Macquarie a year before.
geographical markets, the sales strategy has been re-
defined based on the specific product demand in each
area. In Europe the market demand is 60% GMOP and
40% SMOP. The Company’s sales plan assumes that the
majority of SMOP is to be sold in Europe in both phases,
while 50% of the total phase 2 GMOP production is to be
sold into local and regional markets with a further 25%
sold into north European markets and the remaining 25%
to other export markets.
The salt sales and marketing plan has also progressed
significantly in 2023 with an offtake agreement signed
with Maxisalt for the sale of a minimum 50,000 tonnes
per annum with the option to sell up to 75,000 tonnes per
annum of vacuum salt for the first 5 years of production
(refer ASX release 1 November 2023, “Highfield signs
75ktpa vacuum salt offtake agreement with Maxisalt”).
This amount represents 20-30% of the expected high-
grade salt production in phase 1 of the Project.
Highfield continues to engage with the three nearby ports
it has previously signed MOUs with – Pasajes and Bilbao
(North of Spain) and Bayonne (South of France) – with
a view to effectively build the Company’s transport and
The Company secured a key strategic investment of
approximately A$25 million from EMR Capital and
Tectonic and related parties under a convertible note
deed, between the Company and the Lenders (refer ASX
release 23 May 2023, “Highfield secures a key strategic
investment of A$25m from EMR Capital and Tectonic
Investment Management”). The convertible notes which
have a maturity of a 24 months will mandatorily convert
into shares of HFR before the first draw down under the
senior debt facility for the Project.
Further to the investment set out above, Highfield secured
an additional US$6 million investment from existing key
shareholders in the form of convertible notes issued on
similar contractual terms to the issuance of convertible
notes announced by the Company in May 2023 (refer ASX
release 22 December 2023, “Highfield secures US$6 million
to advance Muga potash mine toward construction”).
The Company continues working with
its external
consultants, Macquarie bank, Clarksons Securities and
Endeavour Financial to fully fund the Project and a wide
range of alternatives encompassing strategic partnerships,
non-dilutive royalties, equity, and offtake agreements are
logistics strategy, as it is a key input in the development
being analysed.
and implementation of the Company’s sales and marketing
plan.
Financing Update
After the signature of the principal facility with four
European major banks acting as Mandated Lead Arrangers
(“MLA”), (BNP Paribas S.A., ING Bank N.V., Natixis CIB and
Societe Generale (London Branch) for €320.6 million
Senior Secured Project Financing for Muga, the Company
Updated Feasibility Study
The Company completed the update of its Feasibility Study
for the Project and released the results to the ASX on 7
November 2023 (refer ASX release, “Muga potash mine
updated 2023 Feasibility Study”).
The current Project contains several differences compared
with the 2022 Feasibility Study and reflects a more refined
announced in April 2023 that HSBC Continental Europe
approach to certain mining and processing technical
and Caja Rural de Navarra had joined the Senior Facilities
aspects as a result of the thorough review carried out
as Lenders (refer ASX release 17 April 2023, “Highfield
by the independent technical engineers appointed by
welcomes additional lenders to its Senior Secured Project
the senior debt lenders. One of the main changes is that
Financing for Muga Project development”). This milestone
the Project will produce SMOP only during phase 1 given
is seen as a significant endorsement to the Muga financing
that the commissioning of GMOP takes extra time would
stack.
require additional investment (a compaction and glazing
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 53
unit) to upgrade the product. These facilities have been
and firm offers represent 93% of the updated capex
deferred to phase 2.
In terms of duration, the total construction works including
the plant commissioning for phase 1 will extend for 30
months. The envisaged ramp-up period to achieve the plant
nameplate capacity is 8 months. Phase 2 will be developed
in 24 months reflecting the learning curve provided by
phase 1 and the fact that some of the big infrastructures will
estimate. Average C1 costs are slightly higher at €108 per
tonne, including the salt by-product credit because of the
change in global prices. However, the potash price deck
provided by independent consultant, CRU, that supports
the study shows higher potash prices in the first years of
production, which positively impacts the overall economics
of the Project, in terms of IRR and NPV.
be in place. Phase 2 will be a replication of phase 1 without
The updated Project economics resulted in an NPV8 of
the same requirement for access roads, site preparation,
€1.82 billion and an IRR of 23% over a 30-year mine life.
power lines, ponds, etc. which only occur in phase 1.
The updated capex for phase 1 is €449 million, and €286
From the economic standpoint the new model capex
accounts for the global cost inflation on raw materials and
is supported by a stronger level of confidence as contracts
million for phase 2. At full production, the EBITDA will be
approximately €340 million per annum.
54 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Pintanos Project
Adjacent to the Muga Project, the Pintanos tenement area
process for the drilling permits at Molineras 2 and Puntarrón
comprises the three permits of Molineras 1, Molineras 2 and
in 2019 and continues to await the award of the permit from
Puntarrón and covers an area of 65km2. The drilling permit
the authorities.
at Molineras 1 was extended for three years in 2020 and
an additional one-year extension was requested in 2023 to
complete the works in the area. The extension was granted
in early 2024. The Company re-initiated the application
The current priority for the Company remains the
development of the Muga Mine.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 55
Sierra del Perdón Project
Located southeast of Pamplona, the Sierra del Perdón
mining department of the Government of Navarra. Highfield
tenement area
(“SdP”) covers approximately 120km2
appealed this decision in 2019 and to date has not obtained
and comprises the three permits of Quiñones, Adiós and
a resolution. In the fourth quarter of 2020, the second three-
Ampliación de Adiós. SdP is a brownfield target which
year extension application for the Ampliación de Adiós
previously hosted two potash mines operating from the
permit had been rejected by the mining department of the
1960s until the late 1990s and which produced nearly
Government of Navarra, a decision that was appealed by the
500,000 tonnes of potash per annum. The Company
Company in the same quarter. Based on local Spanish legal
believes that there is potential for potash in new, unmined
advice, the continued lack of a resolution to these appeals
areas in the SdP area.
does not represent a significant change with an adverse
The Company was advised in the fourth quarter of 2018
effect on the entity.
that the second three-year extension application for the
No drilling took place at SdP during 2023.
Adiós and Quiñones permits had been rejected by the
56 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Geoalcali
Foundation
Corporate
Directors
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.
Projects
Since its establishment in September 2014 the Geoalcali
foundation has provided support to over 190 community
projects in close collaboration with town halls, social
associations, foundations, and other local organisations.
The commitment to education and local development in the
area continues to be one of the pillars of the Foundation’s
work. Hence, the collaboration with several schools in the
area for the acquisition of school supplies and promoting
quality education, yoga classes for schoolchildren, and the
funding of an essential service such as transportation for
Mr. Brian Jamieson was a Non-Executive Director of the
Company until his passing in early August 2023. The
Company would like to acknowledge Mr. Brian Jamieson’s
contribution during his tenure as a member of the Board
and once again express its condolences to his family and
friends.
Mr. Luke Anderson was appointed to the Board on
13 September 2023 as a Non-Executive Director. Mr.
Anderson has over 25 years of experience in executive
management, corporate development, corporate treasury,
financial management and business development in the
resources sector and has been nominated by EMR to
replace Mr. Jamieson following his passing.
Executives
schoolchildren and residents in Undués de Lerda.
On 10 May 2023, the Company announced that Mr. Carles
Alemán had been appointed as Head of Plant Construction
& Health, Safety and Environment (HSE). Mr. Aleman has
over 30 years’ experience, with extensive experience
in potash mining in Spain. Prior to joining Highfield Mr.
Alemán was President of ICL Iberia and Managing Director
of Iberpotash. Mr. Alemán’s appointment strengthens the
construction team and will ensure the integration of the
Company’s health, safety, and environmental activities
before moving into the construction phase.
Another
important factor
in the coexistence with
community is leisure. For this reason, the Foundation
collaborated in the organization of the first rural festival
in the area, bringing magic, music, and theatre to its
neighbours. The Foundation also remembers former
miners in Navarra and celebrated with them Saint Barbara’s
Day, patron saint of miners, with them.
During 2023, the Foundation worked with the Company’s
Public Affairs team and with the Muga Community to
maximise the socioeconomic benefits of the Muga mine in
the local area. In this respect students embarked in different
training programmes organised jointly by Geoalcali, the
Navarran Employment Office and the Labour Construction
Foundation of Aragón visited the mining museum that
Geoalcali set up in Javier.
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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 57
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 2023. Rounding differences may occur.
Muga-Vipasca Project
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 2023.
Table 1: Muga-Vipasca Ore Reserves Summary
Proved
Probable
Total Proved & Probable
31 December 2023
31 December 2022
31 December 2021
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)
45.3
59.0
104.3
Grade
K2O (%)
10.5%
10.0%
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.
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%.
58 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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 2023.
Table 2: Muga-Vipasca Mineral Resources Summary
31 December 2023
31 December 2022
31 December 2021
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.
Sierra del Perdón Project
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 2023.
Table 3: Sierra del Perdón Mineral Resources Summary
31 December 2023
31 December 2022
31 December 2021
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
-
41.8
41.8
40.3
82.1
-
10.7%
10.7%
10.5%
10.6%
-
41.8
41.8
40.3
82.1
-
10.7%
10.7%
10.5%
10.6%
-
41.8
41.8
40.3
82.1
-
10.7%
10.7%
10.5%
10.6%
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 59
Pintanos Project
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 2023.
Table 4: Pintanos Mineral Resources Summary
31 December 2023
31 December 2022
31 December 2021
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%
Summary
A summary of Highfield’s total Ore Reserves and Mineral Resources is shown below.
Table 5: Highfield Total Ore Reserves Summary (all projects)
31 December 2023
31 December 2022
31 December 2021
Tonnes In Place
(Mt)
Grade
K2O (%)
Tonnes In Place
(Mt)
Grade
K2O (%)
Tonnes In Place
(Mt)
Grade
K2O (%)
Proved
Probable
Total Proved & Probable
45.3
59.0
104.3
10.5%
10.0%
10.2%
45.3
59.0
104.3
10.5%
10.0%
10.2%
45.3
59.0
104.3
10.5%
10.0%
10.2%
Table 6: Highfield Total Mineral Resources Summary (all projects)
The MRE includes all Ore Reserves shown above in Table 5.
31 December 2023
31 December 2022
31 December 2021
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%
60 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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
The Extraordinary General Meeting held on 9 February
2024 approved the issue of convertible notes to EMR.
As reported on 11 March 2024 (refer ASX release 11 March
2024, “Highfield signs contract for the construction of the
declines at Muga potash project”), the Company signed
the agreement to construct the declines and underground
mining infrastructure with the Portuguese/Spanish joint
venture, EPOS-TUNELAN for a total cost of €48 million, in
line with the recent feasibility study. Works will commence
in H1, 2024 upon completion of funding and Final
Investment Decision.
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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 61
Share Options
Refer to note 20 to the consolidated financial statements
below for details.
Indemnification
and Insurance
of Directors and
Officers
The Company has agreed to indemnify all the current
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 2023 and the
number of meetings attended by each Director were as
follows:
Director
Board Meetings
Remuneration and Nomination
Committee
Audit, Business Risk and Compliance
Committee
Paul Harris
Ignacio Salazar
Pauline Carr
Roger Davey
Brian Jamieson1
Luke Anderson2
Held
Attended
Held
Attended
Held
Attended
22
22
22
22
5
16
22
22
22
20
5
15
4
4
4
4
2
1
4
4#
4
4
2#
1
5
5
5
5
3
1
5#
5#
5
5
3
1
1 Mr. Jamieson ceased directorship on 7 August 2023.
2 Mr. Anderson was appointed as a Non-executive Director on 13 September 2023.
# Attendance at meeting by invitation.
62 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Proceedings on
Behalf of the
Company
No person has applied to the Court under section 237 of
the Corporations Act for leave 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 part of
those proceedings.
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
The Company was not a party to any such proceedings
at page 112 of the annual report.
No non-audit services were provided by the Company’s
auditor.
during the financial year.
Corporate
Governance
The Board of Directors is responsible for the operational
and financial performance of the Consolidated Entity,
including its corporate governance. The Company believes
that the adoption of good corporate governance adds
value for stakeholders and enhances investor confidence.
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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 63
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 2023.
For the purposes of this report the KMP are defined as
those persons having 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.
Details of Directors and
Other Key Management
Personnel
Remuneration Policy
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 which is embedded in the Group’s Code of Business
Conduct and Ethics, 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 an
independent Remuneration and Nomination
Committee Charter to oversee the Group’s remuneration
The following individuals have held their positions and were
and nomination responsibilities and related governance as
KMP for the whole year, unless stated otherwise:
well as formulate the Group’s Remuneration Framework
and Remuneration Policy.
Non-executive Directors
Paul Harris
Independent Non-Executive Director
Pauline Carr
Independent Non-Executive Director
Roger Davey
Independent Non-Executive Director
Brian Jamieson
Non-Executive Director
(ceased 7 August 2023)1
Luke Anderson
Non-Executive Director
(appointed 13 September 2023)
Executives
Ignacio Salazar CEO and Managing Director
Javier Aguado
Chief Financial Officer
1 Mr. Jamieson was a Non-Executive Director of the Company until
his passing in early August 2023.
Remuneration Philosophy
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 Groups’ remuneration offerings remain in line with its
industry peer group.
64 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Use of Remuneration
Consultants
Review of KMP
Remuneration
The Board and the Remuneration and Nomination
A review of the KMP remuneration is undertaken by the
Committee at times receives advice from independent
Board each year with the assistance of the Remuneration
remuneration consultants to ensure that KMP and senior
and Nomination Committee and as required, external
executives’ fees and payments are appropriate and in line
remuneration consultants to ensure that:
with the market.
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.
•
•
•
reward levels are fair and responsible in accordance
with the market;
the Group’s rewards are competitive, performance-
based that properly attract, retain, and motivate; and
incentives provide fair reward
in
line with the
Company and individual performance to deliver on
the long-term strategic objectives.
The advice and recommendations of consultants are used
When performing the remuneration review, the Board
by the Board and Committee as a guide in formulating
considers:
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 engaged remuneration
consultant Juno Partners for a fee of $14,350 to obtain
comparable market data on remuneration policies and
practices.
•
•
•
•
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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 65
Remuneration of Non-Executive Directors (“NED”)
Fees are paid to all NEDs. 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.
Details of NED remuneration is shown below.
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.
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.
NED remuneration is reviewed periodically by the Remuneration and Nomination Committee so as to gauge its fairness and
competitiveness.
The aggregate remuneration for NEDs was set at an amount not to exceed $1,000,000 per annum after the Shareholders’
approval at the annual general meeting held on 24 May 2018. This amount may only be increased with the approval of
Shareholders at a general meeting.
66 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Remuneration of other KMP and Senior Executives
The Company’s Remuneration Framework relating to other KMP and Senior Executives is set out in the table below.
Fixed Remuneration
At-risk Remuneration
Short Term Incentive (“STI”)
Long Term Incentive (“LTI”)
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.
Variable, performance based, annual
cash incentive plan designed to
reward high performance against
challenging, clearly defined, realistic
and measurable objectives that
are based on Group KPI targets
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 STI opportunity is up to 75% of
fixed remuneration for the CEO and
up to 50% for other KMP and senior
executives.
The equity component of the at-risk
reward opportunity, linked to the
creation of shareholder value and
foster employee retention.
The LTI opportunity for executives is
up to 85% of fixed remuneration for
the CEO and up to 50% for other KMP
and senior executives.
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.
Key Performance Indicators (“KPI”) for Short Term
Incentives
KPIs are quantifiable measures that gauge the Group’s performance against a set of corporate targets and strategic objectives.
The Group’s KPIs are reviewed by the Remuneration and Nomination Committee, and approved by the Board. They typically
cover targets in respect of safety and wellbeing, key project milestones for Muga including (but not limited to) permitting,
funding, engineering, construction, and project delivery.
The aggregate score against the Group’s KPIs determines the total size of the STI bonus pool to be awarded to participants. A
personalized 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 Board exercises its discretion to award STI payments to executive KMP.
As in the previous years, the level of achievement of KPIs is only assessed as Target.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 67
Summary Group KPI Performance
The STI corporate and strategic KPI performance outcomes for KMPs for the year ended 31 December 2023 were as follows.
As at the date of this report the KPI assessment had not been finalised.
KPI Category
Corporate Objective for the year
Weighting for 2023
%
2023 Outcome
%
Safety, Health,
Environmental
and Community
No injuries or environmental incidents and
appropriate responses to social grievances.
Permits
Construction licences from Sangüesa, and
Confederación Hidrográfica del Ebro (“CHE”) permits
granted.
Financing
Successful debt and equity financing in place to allow
construction commencement.
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 and team,
capital, and project ready for next phase.
10
20
20
15
15
20
10
20
TBD
TBD
TBD
TBD
Total
100
TBD1
1 Assessment % not yet finalised and is scheduled to be completed by the end of Q2, 2024.
Short Term Incentive
Award
The remuneration of the CEO and CFO for the financial
year included cash performance pay in respect of the
attainment of Group and individual STI KPIs set by the
Board.
As at the date of this report the 2023 STI is in the process of
being finalised. The Board is of the view that any payment
of the 2023 STI be deferred until after the full capital
funding of Muga is completed. An accrual equivalent to a
70% payout for the cost of the achievements of the STI
KPIs for the year ended 31 December 2023 has been
included in the financial statements for the year ended 31
December 2023.
68 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Long Term Incentive Award
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. The options are assessed for vesting in equal instalments over three years. Employee
retention has been identified as one of the key success factors for the Project and hence its use as a vesting condition.
Feature
Description
Structure
The total value of options granted is based on a percentage of fixed remuneration. This
percentage is up to 85% for the CEO, up to 50% for other KMP and senior executives and up
to 20% for other employees.
The number of options granted is obtained 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). The final allocation for recipents other than the CEO is then assessed by the CEO
and put forward to the Remuneration Committee for their review and then Board approval.
The allocation to the CEO is determined by the Remuneration Committee and the Baord.
Option type
American options that can be exercised anytime between vesting and expiry.
Vesting conditions
Vesting conditions are primarily linked to the recipient’s continuity as an employee of the
Company at the time each tranche is assessed for vesting.
Performance hurdle
The performance hurdle is represented by the premium that must be achieved before options
are in the money.
Exercise price
In order to provide an incentive linked to the longer term performance of the Company
relative to the market, 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.
In line with previous years, the premium for options granted during the year was 25%.
However, due to changes in the share price between this VWAP and that at the grant date, the
actual premium may be greater or less than 25%.
Forfeiture and
Termination
Options lapse if not exercised during its option’s life.
Options are forfeited if a vesting condition is not met.
Options are cancelled if the employee forgoes the option.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 69
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 2023 are as below:
Short term
Post-
employment
Base
Salary $
Fees
$
STI
Awards1
$
Other
Benefits2
$
Super
annuation
$
Total
$
Long term
Share-
Based
Payments3
$
Perfor-
mance
related
%
Year ended 31 December 2023
Non-executive Directors
Paul Harris
Pauline Carr
Roger Davey
Brian Jamieson (ceased 7 August 2023)
Luke Anderson (appointed 13 September 2023)
-
-
-
-
-
116,000
92,800
75,400
38,973
23,400
-
-
-
-
-
-
-
-
-
-
-
-
-
116,000
92,800
75,400
4,122
43,095
-
23,400
-
-
-
-
-
Executives
Ignacio Salazar (CEO and MD)
Javier Aguado (CFO)
740,305
130,869
-
-
403,4691
38,0241
4,683
5,853
-
-
1,148,457
63,0754
174,746
18,813
871,174 346,573 441,493
10,536
4,122 1,673,898
81,888
-
-
-
-
-
41%
33%
40%
1 The employees’ STI relates to the accrued performance pay for services provided during 2023 which are normally paid at the beginning of
2024. However, Management has proposed that the 2023 STI award will be paid only after the funds to fully fund the construction of Muga
are obtained.
2 Benefits relate to health insurance allowances.
3 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.
4 In addition to that disclosed above, on 13 December 2023, Mr. Salazar renounced on a voluntary basis 1,472,878 options corresponding
to tranche 2 and 3 of the LTI 2022 plan. These are treated as a cancellation of options and require an acceleration of remaining expense
through the income statement and included as part of total remuneration. At the time of cancellation, the options had a remaining expense
of $202,253.
Note: Management and staff of the company assumed a partial furlough scheme for two months in 2023 prior to obtaining the last significant
construction permit for Muga. The Directors’ fees were also reduced during this time to align with the temporary reductions to management’s
salaries.
70 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Details of remuneration for the year ended 31 December 2022 are shown below:
Short term
Post-
employment
Base
Salary $
Fees
$
STI
Awards1
$
Other
Benefits2
$
Super
annuation
$
Total
$
Long term
Share-
Based
Payments4
$
Perfor-
mance
related
%
Year ended 31 December 2022
Non-executive Directors
Richard Crookes (resigned 24 March 2022)
- 30,000
Paul Harris (appointed 25 March 2022)
Pauline Carr
Roger Davey
Brian Jamieson
Executives
-
92,258
- 96,000
-
78,000
- 67,500
-
-
-
-
-
-
-
-
-
-
30,000
-
-
92,258
120,900
57%
-
-
-
-
96,000
78,000
6,927
74,427
-
-
-
Ignacio Salazar (CEO and MD)
677,532
- 338,805
4,143
- 1,020,480
168,987
Javier Aguado (CFO)3
102,291
-
46,061
4,731
-
153,083
11,214
779,823 363,758 384,866
8,874
6,927 1,544,248
301,101
-
-
-
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. However, management proposed that the 2022 STI award be paid after interim funding in June 2023. Mr. Salazar
personally also offered the Company to postpone payment of his 2021 STI award as well until June 2023.
2 Benefits relate to health insurance allowances.
3 Starting 1 January 2022 Mr. Aguado was 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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 71
Shareholdings of Directors and Other Key
Management Personnel
No shares were granted as remuneration during the year ended 31 December 2023.
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.
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
Year ended 31 December 2023
Non-executive Directors
Paul Harris (appointed 25 March 2022)
Pauline Carr
Roger Davey
Brian Jamieson (ceased 7 August 2023)
-
62,101
9,251
66,943
Luke Anderson (appointed 13 September 2023)
495,837
Executives
Ignacio Salazar (CEO and MD)
Javier Aguado (CFO)
126,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(66,943)
-
-
-
-
62,101
9,251
-
495,837
126,700
-
1 The other change during the period represents an adjustment to exclude shares held by Mr. Jamieson 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.
72 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Option holdings of Directors and Other Key
Management Personnel
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
period
Other
changes
during the
period2
Balance at
the end of
the period Exercisable
Not
exercisable
Year ended 31 December 2023
Non-executive Directors
Paul Harris
Pauline Carr
Roger Davey
Brian Jamieson
1,000,000
1,000,000
1,000,000
1,000,000
Luke Anderson
(appointed 13 September 2023)
-
Executives
Ignacio Salazar (CEO and MD)
4,771,053
2,639,296
(333,333)
Javier Aguado (CFO)
300,174
270,000
(39,030)
1 Options expired during the year were granted in:
May 2020 with an exercise price of $0.81;
June 2019 with an exercise price of $0.83;
June 2020 with an exercise price of $0.81; and
September 2020 with an exercise price of $0.47.
-
-
-
-
-
-
(1,000,000)
(1,000,000)
(1,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
1,000,000
-
-
-
-
-
-
40,322
40,322
40,322
-
-
-
-
-
(1,472,878) 5,604,138
3,844,608
1,759,530
-
531,144
298,782
232,362
2 Other changes during the period represent an adjustment to exclude options held by Mr. Salazar pursuant to his voluntary renouncement of
the options and the inclusion of Mr. Anderson’s options upon his appointment as Director.
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
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
2023 other than those disclosed above.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 73
Options Affecting Remuneration
The terms and conditions of options granted during the year ended 31 December 2023 affecting remuneration in the current
or future reporting periods are as follows:
Grant date
Number
granted
Expiry
date/last
exercise
date
Fair value
per option
at grant
date
Exercise
price per
option
Value of
options
at grant
date1
Number
of options
vested
Value
vested
Max value
yet to vest
Executives
Ignacio Salazar (CEO and MD)
30/06/23
879,766
31/12/26
$0.0210
$0.79
$18,475 879,766
$18,475
-
Javier Aguado (CFO)
30/06/23
90,000
31/12/26
$0.0210
$0.79
$1,890
90,000
$1,890
-
30/06/23
879,765
31/12/27
$0.0770
$0.79
$67,742
30/06/23
879,765
31/12/28
$0.1240
$0.79 $109,091
-
-
$22,663
$45,079
$21,937
$87,154
30/06/23
90,000
31/12/27
$0.0770
$0.79
$6,930
30/06/23
90,000
31/12/28
$0.1240
$0.79
$11,160
-
-
$2,318
$4,612
$2,244
$8,916
2,909,296
$215,288 969,766 $69,527
$145,761
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:
Ignacio Salazar (CEO and MD)
Javier Aguado (CFO)
Options issued
Accounting Fair Value
of Options
2,639,296
270,000
2,909,296
195,308
19,980
215,288
Cash received by
Company if fully
exercised
2,085,043
213,300
2,298,343
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 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.
74 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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 2023 Mr. Salazar’s total fixed remuneration was €453,732 (A$740,305).
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 2023 Mr. Aguado’s total fixed remuneration was €80,161 (A$130,869).
Loans to Directors and Other Key Management
Personnel
There were no loans to Directors or other key management personnel during the year ended 31 December 2023 (year ended
31 December 2022: nil).
Voting and Comments Made at the Company’s Last
Annual General Meeting
The Company received 96.96% of votes in favour of its Remuneration Report for the financial year ended 31 December 2022
and received no specific feedback on its remuneration practices at the Annual General Meeting or throughout the period.
The Company’s Annual General Meeting was held on 30 May 2023.
Performance Measured by Loss per Share and Share
Price
The table below shows the performance of the Company measured by loss per share:
Year ended
31 December
2023
Year ended
31 December
2022
Year ended
31 December
2021
Year ended
31 December
2020
Year ended
31 December
2019
Loss per share (cents)
Share price (at period end)
Share price High for the reporting period
Share price Low for the reporting period
(3.11)
$0.33
$0.69
$0.29
(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
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 75
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
27 March 2024
76 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
76 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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
76
Highfield Resources Limited
31 December 2022 | Annual Report to Shareholders
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 77
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 77
78 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
for the year ended 31 December 2023
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
Fair value on convertible note
Interest expense on convertible note
Interest (paid)/received
Loss before income tax
Note
31 December 2023
$
31 December 2022
$
(34,600)
(135,727)
(1,928,608)
(3,274,134)
(319,469)
(130,452)
(81,862)
(26,274)
(1,462,633)
(1,210,184)
(3,682,237)
170,857
3
20
9
21
22
(136,452)
(153,953)
(947,856)
(2,391,652)
(605,551)
(171,743)
(21,379)
(18,507)
(1,375,327)
-
-
33,067
(12,115,323)
(5,789,353)
Income tax expense
5
-
-
Net loss for the period
(12,115,323)
(5,789,353)
Other comprehensive income
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations
4,241,079
Other comprehensive income/(loss) for the period net of tax
4,241,079
830,372
830,372
Total comprehensive loss for the period
(7,874,244)
(4,958,981)
Loss per share
Basic and diluted loss per share (cents)
6
(3.11)
(1.58)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 79
Consolidated Statement of Financial
Position
as at 31 December 2023
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
Loans and borrowings
Derivative financial liability
Other non-current liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Note
31 December 2023
$
31 December 2022
$
7
8
8
9
10
11
12
13
14
15
16
14,083,844
28,181,863
42,265,707
1,208,422
13,127,954
147,313,513
161,649,889
203,915,596
16,896,675
9,889,127
26,785,802
22,790,641
8,017,843
3,026,635
33,835,119
60,620,921
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
143,294,675
147,722,732
206,740,655
34,319,442
(97,765,422)
143,294,675
203,613,937
29,758,894
(85,650,099)
147,722,732
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
80 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Consolidated Statement of Changes in
Equity
for the year ended 31 December 2023
Year ended 31 December 2022
Issued capital
$
Accumulated
losses
$
Share-based
payments
reserve
$
Foreign
exchange
translation
reserve
$
Other
reserves
$
Total
$
Balance at 1 January 2022
190,014,905
(79,860,746) 25,917,403
2,468,168
1,000
138,540,730
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
-
-
-
(5,789,353)
-
(5,789,353)
Conversion of options
Issue of securities
810,000
13,400,000
Exercised shares from share-based payment reserve
63,600
Cost of issue
Share-based payment
(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
Year ended 31 December 2023
Issued capital
$
Accumulated
losses
$
Share-based
payments
reserve
$
Foreign
exchange
translation
reserve
$
Other
reserves
$
Total
$
Balance at 1 January 2023
203,613,937
(85,650,099) 26,459,354
3,298,540
1,000
147,722,732
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
3,140,629
Exercised shares from share-based payment reserve
-
Cost of issue
Share-based payment
(13,911)
-
-
-
-
-
(12,115,323)
-
(12,115,323)
-
-
-
-
-
-
-
-
-
-
-
-
319,469
-
4,241,079
4,241,079
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,115,323)
4,241,079
(7,874,244)
-
3,140,629
-
(13,911)
319,469
Balance at 31 December 2023
206,740,655
(97,765,422) 26,778,823
7,539,619
1,000
143,294,675
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 81
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
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
Payments of project finance fees
Proceeds from convertible note
Payments for convertible note
Net cash provided by financing activities
Note
31 December 2023
$
31 December 2022
$
(10,872,634)
(5,930,779)
152,816
810,702
25,689
1,904,221
7
(9,909,116)
(4,000,869)
(951,307)
(8,610,752)
(9,562,059)
-
-
-
(11,566,518)
26,070,098
(154,036)
14,349,544
(5,121,631)
19,446,084
(240,609)
14,083,844
(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
Net (decrease)/ 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
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
82 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Notes to the Consolidated
Financial Statements
for the year ended 31 December 2023
1. Corporate Information
The financial report also complies with International
Financial Reporting Standards (“IFRS”) adopted by the
International Accounting Standards Board (“IASB”).
The financial report of Highfield Resources Limited
(“Highfield Resources”, “Highfield” or “the Company”) for
the year ended 31 December 2023 was authorised for
b) Going Concern
issue in accordance with a resolution of the Directors on
The consolidated financial statements have been prepared
26 March 2024.
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
on a going concern basis which contemplates continuity
of normal business activities including the realisation of
assets and settlement of liabilities in the ordinary course
of business.
operations and the principal activities of the Company are
As at 31 December 2023, the Group had net assets of $143.3
described in the Directors’ Report.
2. Summary of Material
Accounting Policies
million and cash and cash equivalents of $14.1 million, with
a further cash injection of $7.6 million received in early
2024 from the proceeds of the convertible note issued in
December 2023. The Group has no cash generating assets
in operation.
Funds are nevertheless required to progress the Muga
Project (“Muga”) in Spain to ensure the continuing viability of
a) Basis of Preparation and Compliance
the Group. While the funding of Muga was partially secured
Statement
The principal accounting policies adopted in the preparation
of the financial statements are set out in the notes to the
accounts. These policies have been consistently applied to
all the financial years presented unless otherwise stated.
Accounting policies that are determined to be immaterial
are not included in the financial statements.
with the Project Finance facility (€320.6 million) and the
equipment lease financing (€25 million), management is
working with a number of strategic partners to secure the
remaining funding for Muga.
At the date of signing the financial report, the remaining
funding for Muga has not been confirmed although
there are negotiations in progress at different stages of
development. The Directors are of the view that these
These general-purpose financial statements have been
negotiations will keep progressing while at the same time
prepared
in accordance with Australian Accounting
other sources of funding might be obtained, such as further
Standards and Interpretations issued by the Australian
extensions of the convertible notes or raising additional
Accounting Standards Board (“AASB”) and the Corporations
funding through a Share Purchase Plan, to cover the cash
Act 2001. Highfield Resources Limited is a for-profit entity
flow requirements for the 12-month period from the date
for the purpose of preparing the financial statements.
of approval of the financial statements.
The financial statements have been prepared on a historical
These conditions
indicate that there
is a material
cost basis except for, where applicable, the revaluation of
uncertainty related to events or conditions that may cast
financial liabilities at fair value through profit and loss and
significant doubt on the Group’s ability to continue as a
derivative financial instruments.
going concern and, therefore, that it may be unable to
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 83
realise its assets and discharge its liabilities in the normal
d) Foreign Currency Translation
course of business.
The consolidated financial statements do not include any
adjustments relating to the recoverability and classification
of recorded asset amounts or liabilities that might be
necessary should the Group not continue as a going
concern.
c) Basis of Consolidation
The consolidated financial statements comprise the
financial statements of the Company and its subsidiaries
(“the Group”) at 31 December 2023 and at 31 December
2022 in the comparative period.
Subsidiaries are 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
intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions,
are eliminated. Unrealised losses are eliminated in the
same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
i) Functional and presentational currency
These Group’s consolidated financial statements are
presented in Australian dollars. 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.
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.
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.
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 year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies
are generally recognized in Consolidated Statement of
Profit or Loss and Other Comprehensive Income.
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:
84 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
i) the rights to tenure of the area of interest are current;
g) Property, Plant & Equipment
and
ii) at least one of the following conditions is also met:
a) 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
b) 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.
Plant and equipment,
including mechanical, electrical
and computer equipment as well as furniture, fixtures,
and fittings, is stated at historical cost less accumulated
depreciation and accumulated impairment loss. 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 over the depreciable amount,
which is the cost of the asset, 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.
Depreciation and amortisation methods, useful lives and
residual values are reviewed at each reporting date and
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
adjusted if appropriate.
h) Income Tax
of assets used in exploration and evaluation activities.
The income tax expense or revenue for the period is the
General and administrative costs are only included in the
tax payable or receivable on the current period’s taxable
measurement of exploration and evaluation costs where
income or loss based on the applicable income tax rate
they are related directly to operational activities in a
for each jurisdiction adjusted by changes in deferred tax
particular area of interest.
Exploration and evaluation assets are assessed for
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
impairment when facts and circumstances suggest that
unused tax losses.
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).
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 in the tax jurisdictions where the
Group’s subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in
tax returns with respect to situations in which applicable
Where an impairment loss subsequently reverses, the
tax regulation is subject to interpretation. It establishes
carrying amount of the asset is increased to the revised
provisions where appropriate on the basis of amounts
estimate of its recoverable amount, but only to the extent
expected to be paid to the tax authorities.
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
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
for impairment and the balance is then reclassified to
differences arising between the tax base of assets and
development.
liabilities and their carrying amounts at the balance.
Where an area of interest is abandoned, any expenditure
Deferred income tax liabilities are recognised for all taxable
carried forward in respect of that area is written off.
temporary differences except when:
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 85
•
•
the deferred income tax liability arises from the initial
other comprehensive income or directly in equity. In this
recognition of goodwill or of an asset or liability in a
case, the tax is also recognized in other comprehensive
transaction that is not a business combination and
income or directly in equity, respectively.
that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
Deferred tax assets and deferred tax liabilities are offset
only if a legally enforceable right exists to set off current
the taxable temporary difference is associated with
tax assets against current tax liabilities and the deferred
investments in subsidiaries, associates or interests
tax assets and liabilities relate to the same taxable entity
in joint ventures, and the timing of the reversal of
and the same taxation authority.
the temporary difference can be controlled and it
is probable that the temporary difference will not
reverse in the foreseeable future.
i) Other Taxes
Revenues, expenses and assets are recognised net of
the amount of GST/VAT, unless 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 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 taxation
authority is included as part of receivables or payables in
the Consolidated Statement of Financial Position.
Cash flows are presented on a gross basis
in the
Consolidated Statement of Cash Flows, except for the GST/
VAT component of investing and financing activities, which
is receivable from or payable to the taxation authority, that
is disclosed as operating cash flows.
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:
•
•
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.
Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in
86 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
j) Impairment of Assets
l) Trade and Other Payables
Assets that have an indefinite useful life are not subject to
Trade payables and other payables represent liabilities
amortisation are reviewed for impairment at least annually
for goods and services provided to the Group prior to the
to determine
if events or changes
in circumstances
end of the financial year which are unpaid and arise when
indicate that the carrying amount may not be recoverable.
the Group becomes obliged to make future payments in
Other assets are tested for impairment whenever events
respect of the purchase of these goods and services.
or changes in circumstances indicate that the carrying
amount may not be recoverable.
Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after
An impairment loss is recognised for the amount by which
the reporting period. They are recognised initially at their
the asset’s carrying amount exceeds
its recoverable
fair value and subsequently measured at amortised cost
amount. The recoverable amount is the higher of an asset’s
using the effective interest method.
fair value less costs to sell 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.
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
k) Cash and Cash Equivalents
operating losses.
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.
The carrying value of cash and cash equivalents
is
considered to approximate fair value.
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.
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is
For the purposes of the statement of cash flows, cash and
virtually certain that reimbursement will be received, and
cash equivalents consist of cash and cash equivalents as
the amount of the receivable can be measured reliably.
defined above, net of outstanding bank overdrafts.
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 a finance cost.
Restoration provision
The Company has a legal obligation to dismantle and
remove certain items of property, plant, and equipment
and to restore and rehabilitate the land on which they are
situated.
A restoration provision is recognised and updated at
different stages of the development and construction
of a facility and then reviewed on an annual basis. When
the liability is initially recorded, the present value of
the estimated future cost of settling the rehabilitation
and restoration obligations is capitalised by increasing
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 87
the carrying amount of the related property plant and
equipment. Over time, the 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 accounted for
prospectively from the date of the change and added to or
deducted from the related rehabilitation asset, subject to
recoverability. The unwinding of the discount is recorded as
an accretion charge within finance costs.
The carrying amount
is capitalised unless the costs
incurred relate to an operation that does not have a future
economic benefit, in which case the costs are expensed.
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.
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:
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
• costs of servicing equity (other than dividends) and
binomial method (which is derived from the Black-
preference share dividends;
•
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
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
expenses during the period that would result from
ASX.
the dilution of potential ordinary shares;
The cost of equity settled transactions provided to
divided by the weighted average number of ordinary
employees (including Directors) by issue of shares is
shares and dilutive potential ordinary shares, adjusted for
measured by reference to the fair value of services
any bonus element.
received unless this cannot be measured reliably, in
88 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
which case the cost is measured by reference to the fair
a replacement award on the date that it is granted, the
value of the shares issued.
The cost of equity-settled transactions with non-
employees is measured by reference to the fair value
cancelled and new award are treated as if they were a
modification of the original award, as described in the
previous paragraph.
of goods and services received unless this cannot be
ii) Cash-settled transactions
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).
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
In valuing equity settled transactions, no account
the Company.
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 cash-settled transactions is measured
initially at fair value at the grant date using the binomial
method taking into account the terms and conditions
The cost of the equity settled transactions
is
upon which the instruments were granted. This fair
recognised, together with a corresponding increase
value is expensed over the period until vesting with
in equity, over the period in which the performance
recognition of a corresponding liability. The liability is
conditions are fulfilled, ending on the date on which the
remeasured to fair value at each balance date up to and
relevant employees become fully entitled to the award
including the settlement date with changes in fair value
(“vesting date”).
recognised in profit or loss.
The cumulative expense recognised for equity settled
transactions at each reporting date until vesting date
r) Convertible Notes
reflects (i) the extent to which the vesting period
Convertible notes are classified as a financial liability on
has expired and (ii) the number of awards that, in the
the grounds they represent a contractual obligation that
opinion of the Directors of the Company, will ultimately
will be settled in the Company’s own equity instruments.
vest. This opinion is formed based on the best available
The notes are determined to contain a host debt and a
information at balance date. No adjustment is made for
conversion option. Conversion options that are assessed
the likelihood of the market performance conditions
as derivatives are to be accounted for as liabilities but
being met as the effect of these conditions is included
separately from the host instruments because the fair
in the determination of fair value at grant date. The
value of the conversion feature is affected by changes in
charge or credit to profit or loss for a period represents
the fair value of the underlying shares.
the movement in cumulative expense recognised at the
beginning and end of the period.
The initial carrying amount of the host debt instrument
is the residual amount after separating the embedded
No expense is recognised for awards that do not
derivative on the date the contract is entered into. The
ultimately vest, except for awards where vesting is
embedded derivative is measured at fair value at initial
conditional upon a market condition. Where the terms
recognition, and the remaining residual amount is allocated
of an equity settled award are modified, as a minimum
to the debt host. For subsequent measurement, the host
an expense is recognised as if the terms had not been
debt is measured at amortised cost using the effective
modified. In addition, an expense is recognised for
interest method whereas the embedded derivative is
any increase in the value of the transaction as a result
subsequently measured at fair value through profit or loss
of the modification, as measured at the date of the
at each reporting period.
modification.
Upon conversion of the convertible notes to ordinary
Where an equity settled award is cancelled, it is treated
shares, the carrying amount of the host liability (at amortised
as if it had vested on the date of the cancellation,
cost, updated to the date of conversion) together with the
and any expense not yet recognised for the award is
updated carrying amount of the derivative liability, is de-
recognised immediately. However, if a new award is
recognised and transferred to equity such that no gain or
substituted for the cancelled award, and designated as
loss is recognised on settlement.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 89
s) Critical Accounting Estimates and
Judgements
The preparation of these financial statements and the
application of accounting policies require 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.
The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are
material to the financial statements are:
Exploration and evaluation expenditure in the
current developing phase and transition to
development
impairment if facts and circumstances suggest that the
carrying amount exceeds the recoverable amount. To
test this the Company performed an analysis of its Muga
related capitalised assets in accordance with paragraph
20 of AASB 6 to determine if there is any indication of
impairment. The Group also takes account of AASB 136
“Impairment of Assets”, whereby an impairment loss will
be considered if a number of circumstances concur.
t) New and Amended Standards Adopted
by the Group
The Group has applied the following standards and
amendments for the first time for its annual reporting
period commencing 1 January 2023:
•
AASB 2021-2 Amendments to Australian Accounting
Standards – Disclosure of Accounting Policies
Definition of Accounting Estimates.
u) New Standards and Interpretations Not
Yet Adopted
Certain new accounting standards and interpretations have
been published that are not mandatory for 31 December
The application of
the Group’s accounting policy
2023 reporting periods and have not been early adopted
for exploration and evaluation expenditure requires
by the Group. These standards are not expected to have
judgement
in determining whether future economic
a material impact on the entity in the current or future
benefits are likely either from future development or sale
reporting periods and on foreseeable future transactions.
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.
Whilst technical feasibility of the Muga Mine Project has
been duly proved and certified by the different consultants
that have thoroughly reviewed the Project, commercial
feasibility is subject to the Company raising sufficient
equity funding, which as at the date of this report has not
been yet achieved.
Asset impairment
The Group’s key assets
(Exploration and evaluation
and Property, Plant and Equipment) are assessed for
90 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
3. Expenses
Professional and consultants’ fees
Corporate advisory fees
Legal fees
Financial advisory fees
Other
31 December 2023
$
31 December 2022
$
(396,076)
(370,424)
(1,017,843)
(144,265)
(1,928,608)
(391,144)
(76,865)
(373,568)
(106,279)
(947,856)
4. Auditors’ 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
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
5. Income Tax
a) Income tax expense
Major component of tax expense for the period:
Current tax
Deferred tax
31 December 2023
$
31 December 2022
$
82,558
-
54,754
-
35,448
118,006
27,324
82,078
31 December 2023
$
31 December 2022
$
-
-
-
-
-
-
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 91
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
(12,115,323)
(5,789,353)
Tax calculated at domestic tax rates applicable to profit/(losses) in the respective countries
(Spain 28.0%, Australia 30.0%)
(3,514,690)
(1,671,969)
Non-deductible expenses
Net income tax (loss)/benefit not brought to account
Income tax expense
25,116
3,489,574
-
37,171
1,634,798
-
31 December 2023
$
31 December 2022
$
c) Deferred tax
The following deferred tax balances have not been brought to account:
Net deferred tax asset not recognised
d) Unused tax losses
The following deferred tax balances have not been brought to account:
Unused tax losses
The benefit for tax losses will only be obtained if:
31 December 2023
$
31 December 2022
$
19,737,331
17,737,983
31 December 2023
$
31 December 2022
$
53,955,667
43,504,420
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.
92 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
6. Loss per Share
Loss used in calculating basic and diluted EPS
(12,115,323)
(5,789,353)
31 December 2023
$
31 December 2022
$
Weighted average number of ordinary shares used in calculating basic loss per share
389,982,788
365,436,339
Number of Shares
Number of Shares
Effect of dilution:
Share options
-
-
Adjusted weighted average number of ordinary shares used in calculating diluted loss per share
389,982,788
365,436,339
Basic and diluted loss per share (cents)
(3.11)
(1.58)
The 29,737,486 options outstanding at 31 December 2023 (18,931,052 owned by KMP and employees), (31 December 2022:
35,820,051 options, 25,013,617 owned by KMP and employees) 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 materially change the
number of ordinary shares or potential ordinary shares outstanding between 31 December 2023 and the date of completion
of these financial statements.
7. Cash and Cash Equivalents
Reconciliation of cash
Cash at bank
31 December 2023
$
31 December 2022
$
14,083,844
19,446,084
Reconciliation of operating loss after tax to net cash flow from operations
Loss after tax
(12,115,323)
(5,789,353)
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
Finance expense on convertible note
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
319,469
34,600
26,274
(18,041)
4,892,421
59,191
(3,107,707)
(9,909,116)
605,551
136,452
18,507
(7,378)
-
490,382
544,970
(4,000,869)
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 93
8. Other Receivables
Current
GST receivable
VAT receivable
Deposits
Prepaid expenses
Non-current
Guarantees
31 December 2023
$
31 December 2022
$
76,415
206,691
651
27,898,106
28,181,863
106,588
151,730
1,025
15,673,085
15,932,428
1,208,422
1,208,422
1,224,574
1,224,574
GST/VAT receivable are non-interest bearing and generally receivable 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 restoration 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.
Prepaid expenses reflect the transaction costs directly attributable to the formalisation of the Project financing for Muga,
to be included as part of amortised cost of debt facility when drawn down. The breakdown of these prepaid expenses is as
follows:
Prepaid expenses
Banks’ upfront fees
Banks’ commitment fees1
Agent fees
Legal fees
Financial advisor success fees
Due diligence costs
1 This amount has not yet been paid. Refer to the note 12.
31 December 2023
$
31 December 2022
$
11,731,176
9,889,127
637,372
826,772
3,001,366
1,812,293
11,320,266
-
-
915,893
2,896,237
540,689
27,898,106
15,673,085
94 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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
31 December 2023
$
31 December 2022
$
13,779,758
(651,804)
13,127,954
4,783,362
8,199,165
171,701
(26,274)
13,127,954
5,396,519
(613,157)
4,783,362
60,499
4,768,403
(27,033)
(18,507)
4,783,362
Additions to Property, Plant and Equipment represent the amount of the Construction Tax payable to the townhall of Sangüesa.
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 2023
$
31 December 2022
$
126,574,416
16,397,459
4,341,638
147,313,513
118,384,403
7,679,672
510,341
126,574,416
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.
Exploration and evaluation assets are assessed for impairment if sufficient data and circumstances suggest that the
carrying amount exceeds the recoverable amount. Any impairment loss is recognised through the Profit and Loss account.
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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 95
11. Trade and Other Payables
Trade payables
Other payables
Accruals
31 December 2023
$
31 December 2022
$
9,149,545
-
7,747,130
16,896,675
2,519,996
11,976
6,183,433
8,715,405
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.
12. Financing Liabilities
Commitment fees
Upfront fees
31 December 2023
$
31 December 2022
$
9,889,127
-
9,889,127
-
11,323,883
11,323,883
Financing liabilities refer to the fees payable to the banks that participate in the Project financing for Muga.
Commitment fees are accrued since execution of the Financial Agreement on 22 December 2022 and are calculated applying
a certain rate on the lenders’ available commitment to date.
Upfront fees accrued at 31 December 2022 amounting up to 2.25% on the total amount of the Facility were due within 90
days of signing the Financial Agreement on 22 December 2022. These fees were paid during the year ended 31 December
2023.
Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value.
13. Non-Current Liabilities
Host debt component – Convertible Note
Derivative financial liability – Conversion Option
Restoration provision
Other non-current liabilities
31 December 2023
$
31 December 2022
$
22,790,641
8,017,843
215,468
2,811,167
33,835,119
-
-
198,843
-
198,843
96 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
On 22 May 2023 the Group entered into a Convertible
Note agreement with EMR and Tectonic Investment
Management. The agreement with a maturity date of
24 months consisted of the issuance of 1,938 notes
(arrangement fee at 2% added to the original 1,900 notes
instead of being paid in cash at conversion date) bearing
an interest rate of 14% annually. The interest will be paid
in kind via an addition to the convertible notes amount
and will mandatorily be converted into fully paid ordinary
shares in the Company before the first drawdown of the
€320.6 million senior loan facility secured with a group of
European banks to fund the Muga Project.
A further US$6 million (A$8.9 million) investment was
secured in December 2023 in the form of convertible
notes issued on similar contractual terms to the previous
issuance in May 2023. The same strategic investors plus
another institutional investor were the lenders. As of 31
December 2023, proceeds from the notes owned by the
institutional investor had been received and hence, 102
notes were issued. Proceeds from the remaining 612 notes
were received in early 2024.
The Convertible Note has been determined to contain
a host debt and a conversion option. Where borrowings
include a conversion option, the portion of the proceeds
that relate to the fair value of the conversion option are
recognised as an embedded derivative.
For determining the initial fair value of the conversion
option, a Black-Scholes option pricing method was used
with the following assumptions:
Options issued in May 2023:
a) conversion option price of $0.515;
b) share price at inception of $0.560;
c) expected volatility of 45%;
d) convertible note term of 2 years; and
e) a risk free interest rate of 3.33%.
Options issued in December 2023:
a) conversion option price of $0.315;
b) share price at inception of $0.330;
c) expected volatility of 50%;
d) convertible note term of 2 years; and
e) a risk free interest rate of 3.90%.
The initial carrying amount of the host instrument is the
residual amount after separating the embedded derivative
on the date the contract is entered into. The embedded
derivative is measured at fair value at initial recognition, and
the remaining residual amount is allocated to the debt host.
For subsequent measurement, the host debt is measured
at amortised cost using the effective interest method; and
the embedded derivative is subsequently measured at fair
value through profit or loss at each reporting period.
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 been raised which
reflects the estimated rehabilitation and restoration costs
existing at the 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 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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 97
14. Issued Capital
a) Issued and paid-up capital
Issued and fully paid
b) Movements in ordinary shares on issue
31 December 2023
$
31 December 2022
$
206,740,655
203,613,937
Opening balance
Shares issued1
Shares issued upon conversion of unlisted options1
Employee share options exercised
Transaction costs on share issue
1 December 2023
31 December 2023
31 December 2022
Number of shares
$
Number of shares
$
387,042,791
203,613,937
364,429,887
190,014,905
5,140,942
3,140,629
21,612,904
13,400,000
-
-
-
-
-
(13,911)
1,000,000
-
-
810,000
63,600
(674,568)
392,183,733
206,740,655
387,042,791
203,613,937
• 5,140,942 ordinary shares were issued during the year ended 31 December 2023 to settle the success fees charged by
the Company’s financial advisor following the execution of the Senior Debt Facility Agreement.
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. The issuance of shares included the issue of 10,806,434 unlisted free options to investors
exercisable at $0.93 per option. Each option entitles the holder to one ordinary share in the Company. These options are
exercisable in whole or in part at any time during the period commencing on the date of grant (19 December 2022) and
expiring on 16 June 2024.
• 1,000,000 shares were issued upon conversion of unlisted options exercisable at $0.81, expiring on 30 June 2023.
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
$142,999,637 at 31 December 2023. 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.
98 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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 2023
$
31 December 2022
$
26,778,823
7,539,619
1,000
26,459,354
3,298,540
1,000
34,319,442
29,758,894
26,459,354
319,469
-
25,917,403
605,551
(63,600)
26,778,823
26,459,354
The share-based payment reserve is used to record the fair value of options 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 2023.
Foreign exchange translation reserve
Opening balance
Foreign exchange translation difference
Closing balance
3,298,540
4,241,079
7,539,619
2,468,168
830,372
3,298,540
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 are 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 2023
$
31 December 2022
$
(85,650,099)
(12,115,323)
(79,860,746)
(5,789,353)
(97,765,422)
(85,650,099)
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 99
17. 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:
Short term employee benefits
Share-based payments
Post-employment
Total
31 December 2023
$
31 December 2022
$
1,669,776
284,141
4,122
1,958,039
1,537,321
303,101
6,927
1,845,349
Key management personnel are defined as those persons having 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.
18. Related Party Disclosures
a) Key management personnel
Please refer to note 17 Remuneration of Directors and Other Key Management Personnel.
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 2023
31 December 2022
Australia
Spain
100%
100%
100%
100%
100 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
19. Financial Risk
Management
are evaluated to determine the optimal mix of capital
resources for capital needs.
The Group aims to maintain sufficient cash facilities to
meet the operating requirements of the business and
Exposure to foreign currency risk, credit risk, liquidity risk
where appropriate investing excess funds in highly liquid
and interest rate risk arises in the normal course of the
short-term investments.
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
At 31 December 2023, the Company has sufficient liquid
assets to meet its financial obligations. The responsibility for
liquidity risk management rests with the Board of Directors.
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other
payables. The contractual maturities of all trade and other
Liquidity risk is the risk that the Group will encounter
payables are less than 6 months.
difficulty in meeting the obligations associated with its
financial liabilities as they fall due. The Group’s approach
b) Interest Rate Risk
to managing liquidity is to ensure, as far as possible, that
it will have sufficient liquidity to settle its liabilities when
they are due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to
the Group’s reputation.
The Group also manages liquidity risk by producing regular
cash flow forecasts to ensure that there is a clear and
up-to-date view of the short to medium term funding
requirements and the sources of those funds. Alternatives
Interest rate risk arises from the Group’s cash and cash
equivalents earning interest at variable rates. The Group
manages this risk by investing in short term deposits where
appropriate.
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.
for sourcing future capital needs include the issue of equity
At 31 December 2023, the variable interest rate exposure
instruments, as well as debt financing. These alternatives
of the Group was:
Interest bearing financial instrument
Cash at bank or at hand
31 December 2023
$
31 December 2022
$
14,083,844
19,446,084
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 101
The Company holds substantially all of its cash and cash equivalents in Euros and Australian dollars. In the year ended 31
December 2023 interest earned on Euros balances totaled €11,000 whereas interest earned on Australian dollar balances
were $152,815. In the year ended 31 December 2022, $33,067 was earned due to the positive impact of the interest rate
values.
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
Interest rate sensitivity
The Company’s interest rate sensitivity is determined by the amount of cash it holds in both Euros and Australian Dollars. The
Australian dollar interest rate is currently positive at 1.35% whereas the Euro interest rate is at 1.75%.
Based on the Group’s interest-bearing financial instruments held as at 31 December 2023, if interest rates had increased or
decreased by 75 basis points from the year end rates, with all other variables held constant, profit and loss and equity for the
year would have increased (decreased) by the amount shown below. The analysis was performed on the same basis for 2022.
Effect on Post Tax Loss ($)
(Increase)/decrease
Effect on Equity incl. accumulated losses ($)
Increase/(decrease)
31 December 2023
31 December 2022
31 December 2023
31 December 2022
Increase 75 basis points
Decrease 75 basis points
105,629
(105,629)
145,846
(145,846)
105,629
(105,629)
145,846
(145,846)
c) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and cause
the Company to incur a financial loss. The Company’s maximum credit exposure is the carrying amounts in the Consolidated
Statement of Financial Position.
The Company holds financial instruments with credit worthy third parties. At 31 December 2023, 99.9% of the Company’s
cash and cash equivalents were held in financial institutions with a rating from Standard & Poors of A - or above (long term).
The Company had no past due or impaired debtors as at 31 December 2023.
d) Foreign Currency Risk
The Group undertakes certain transactions denominated in currencies other than the functional currency of the Group, hence
exposures to exchange rate fluctuations arise. Exchange rate exposures may be managed within approved policy parameters
utilising forward foreign exchange contracts. The carrying amounts of the Group’s foreign currency denominated monetary
assets and monetary liabilities at the balance date expressed in Australian dollars were as follows:
Euro
US dollars
GB pounds
Total
Liabilities ($)
Assets ($)
31 December 2023
31 December 2022
31 December 2023
31 December 2022
26,493,812
19,871,361
1,105,777
2,910,931
-
-
-
-
15
-
-
-
26,493,812
19,871,361
1,105,792
2,910,931
102 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
The monetary assets and liabilities in the table above for the current period include the balances of the Company’s Spanish
subsidiary as well as of the Company itself.
Foreign currency sensitivity analysis
The Company is exposed to Euro currency fluctuations. The following table details the Group’s sensitivity to a 10% increase
and decrease in the Euro against the Australian dollar on the above foreign currency denominated monetary assets and
liabilities, expressed in Australian dollars.
31 December 2023
Profit or loss
Translation Reserve
31 December 2022
Profit or loss
Translation Reserve
e) Fair Value
Euro Movement
Increase ($)
Decrease ($)
-
-
(2,820,891)
2,308,002
-
-
(1,884,493)
1,553,526
The carrying amounts of current receivables and current payables are considered to be a reasonable approximation of their
fair value.
i) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that
are recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the
inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed
under the accounting standards. An explanation of each level follows underneath the table.
Recurring fair value measurements
Note
Level 1
Level 2
Level 3
Total
At 31 December 2023
Financial liabilities
Derivative – Conversion option
Total financial liabilities
13
-
-
-
8,017,843
8,017,843
-
-
-
-
8,017,843
8,017,843
Recurring fair value measurements
Note
Level 1
Level 2
Level 3
Total
At 31 December 2022
Financial liabilities
Derivative – Conversion option
Total financial liabilities
13
-
-
-
-
-
-
-
-
-
-
-
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 103
There were no transfers between levels 1 and 2 for recurring fair value measurements during the year.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques
that maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant
inputs required to fair value an instrument are observable, the instrument is included in level 2.
ii) Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
• for Derivative - Conversion options – option pricing models (e.g. Black-Scholes model)
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 issued during the period
Options issued in prior periods
31 December 2023
$
31 December 2022
$
127,003
192,466
319,469
409,286
196,265
605,551
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 2023:
Exercise
price
Number at
start of the
period
Granted
during the
period
Exercised
during the
period
Cancelled
or forfeited
during the
period
Grant Date
Expiry date
30/06/2023
31/12/2026
30/06/2023
31/12/2027
30/06/2023
31/12/2028
30/06/2023
31/12/2026
30/06/2023
31/12/2027
30/06/2023
31/12/2027
30/06/2023
31/12/2026
30/06/2023
31/12/2027
30/06/2023
31/12/2028
$0.79
$0.79
$0.79
$0.79
$0.79
$0.79
$0.79
$0.79
$0.79
-
-
-
-
-
-
-
-
-
879,7661
879,7652
879,7653
90,0004
90,0005
90,0006
801,6687
801,6668
801,6669
5,314,296
-
-
-
-
-
-
-
-
-
-
Number at
end of the
period
Exercisable
at end of the
period
879,766
879,766
879,765
879,765
90,000
90,000
90,000
-
-
90,000
-
-
-
-
-
-
-
-
(15,000)
786,668
786,668
-
-
801,666
801,666
-
-
(15,000)
5,299,296
1,756,434
104 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
1 Options granted to the Chief Executive Officer. The options vested on satisfaction of the recipient’s continued employment vesting
condition at 31 December 2023.
2 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.
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 2025.
4 Options granted to the Chief Financial Officer. The options vested on satisfaction of the recipient’s continued employment vesting
condition at 31 December 2023.
5 Options granted to the Chief Financial Officer. The options will vest on satisfaction of the recipient’s continued employment vesting
condition at 31 December 2024.
6 Options granted to the Chief Financial Officer. The options will vest on satisfaction of the recipient’s continued employment vesting
condition at 31 December 2025.
7 Options granted to other employees. The options vested on satisfaction of the recipients’ continued employment vesting condition
at 31 December 2023.
8 Options granted to other employees. The options will vest on satisfaction of the recipients’ continued employment vesting
condition at 31 December 2024.
9 Options granted to other employees. The options will vest on satisfaction of the recipients’ continued employment vesting
condition at 31 December 2025.
The model inputs for options granted during the year ended 31 December 2023 included:
a) options were granted for no consideration;
b) expected lives of the options range from 3.5 to 5.5 years;
c) share price at grant date of $0.545 (30 Jun 2023);
d) expected volatility at 50%;
e) expected dividend yield of Nil; and
f) a risk free interest rate from 3.98%.
The table below summarises options granted during the year ended 31 December 2022:
Grant Date
Expiry date
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
Exercise
price
Number at
start of the
period
$1.07
$0.94
$0.94
$0.94
$0.94
$0.94
$0.94
-
-
-
-
-
-
-
Granted
during the
period
1,000,0001
736,4402
736,4393
736,4394
815,3345
815,3326
815,3237
5,655,307
Exercised
during the
period
Cancelled
or forfeited
during the
period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Number at
end of the
period
Exercisable
at end of the
period
1,000,000
1,000,000
736,440
736,440
736,439
736,439
-
815,334
815,334
815,332
815,323
-
5,655,307
2,551,774
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 105
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.
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.
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.
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%.
As at the date of this report there were 18,931,052 unissued ordinary shares under options owned by Group NEDs and
employees.
The details of the options are as follows:
Number
1,622,191
1,272,056
333,333
1,819,812
1,000,000
1,155,357
333,334
1,568,148
780,667
736,440
1,414,430
780,665
1,756,434
815,323
1,771,431
1,771,431
18,931,052
Exercise Price $
$0.83
$0.81
$0.47
$0.865
$1.07
$0.81
$0.47
$0.865
$0.94
$0.94
$0.865
$0.94
$0.79
$0.94
$0.79
$0.79
Expiry Date
31 December 2024
31 December 2024
31 December 2024
31 December 2024
30 June 2025
31 December 2025
31 December 2025
31 December 2025
31 December 2025
31 December 2025
31 December 2026
31 December 2026
31 December 2026
31 December 2027
31 December 2027
31 December 2028
106 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
Other than this, there are 10,806,434 additional vested options available for the investors that participated in the equity raise
carried out in December 2022 exercisable at A$0.93 and expiring on 16 June 2024.
The following options were issued during the financial year:
•
•
•
1,771,434 options with an exercise price of $0.79, expiring on 31 December 2026.
1,771,431 options with an exercise price of $0.79, expiring on 31 December 2027.
1,771,431 options with an exercise price of $0.79, expiring on 31 December 2028.
The following options forfeited during the financial year:
•
•
•
99,934 options with an exercise price of $0.865, expiring on 31 December 2026.
34,667 options with an exercise price of $0.94, expiring on 31 December 2026.
15,000 options with an exercise price of $0.79, expiring on 31 December 2026.
The following options were cancelled during the financial year:
•
•
736,439 options with an exercise price of $0.94, expiring on 31 December 2026.
736,439 options with an exercise price of $0.94, expiring on 31 December 2027.
The following options lapsed during the financial year:
•
•
•
•
•
•
•
•
•
6,000,000 options with an exercise price of $0.81, expiring on 30 June 2023.
1,818,171 options with an exercise price of $0.83, expiring on 31 December 2023.
1,470,965 options with an exercise price of $0.81, expiring on 31 December 2023.
333,333 options with an exercise price of $0.47, expiring on 31 December 2023.
29,548 options with an exercise price of $0.81, expiring on 31 December 2024.
26,837 options with an exercise price of $0.81, expiring on 31 December 2025.
39,674 options with an exercise price of $0.865, expiring on 31 December 2024.
34,187 options with an exercise price of $0.865, expiring on 31 December 2025.
21,667 options with an exercise price of $0.94, expiring on 31 December 2025.
The movement of the options during the year was as follows:
Opening balance
Granted
Exercised
Forfeited
Cancelled
Lapsed
Vested and exercisable at year end
31 December 2023
31 December 2022
Average exercise
price per share
option
Number of options
Average exercise
price per share
option
Number of options
$0.886
$0.790
-
$0.875
$0.940
$0.803
$0.898
$0.850
25,013,617
5,314,296
-
(149,601)
(1,472,878)
(9,774,382)
18,931,052
14,572,867
$0.855
$0.963
$0.81
-
$0.84
$0.83
$0.886
$0.83
24,962,030
5,655,307
(1,000,000)
-
(382,550)
(4,221,170)
25,013,617
20,395,720
The weighted average remaining contractual life of options outstanding at end of period is 2.47 years.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 107
21. Other Expenses
Advertising and Promotion
Computer and Software Expenses
Subscriptions and Memberships
Investor Relations
Projects costs
Insurances
Rents
Other administration expenses
22. Geographic Segment Analysis
a) Net interest (paid)/received
Australia
Spain
b) Non-current Assets
Australia
Spain
31 December 2023
$
31 December 2022
$
86,697
121,120
77,486
132,781
1,797
667,510
249,755
125,487
74,363
152,823
66,160
114,046
37,715
655,781
205,465
68,974
1,462,633
1,375,327
31 December 2023
$
31 December 2022
$
152,815
18,042
170,857
33,067
-
33,067
31 December 2023
$
31 December 2022
$
-
161,649,889
161,649,889
-
132,582,352
132,582,352
108 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
23. Events after the
Reporting Period
The Extraordinary General Meeting held on 9 February
2024 approved the issue of convertible notes to EMR.
As reported on 11 March 2024 (refer ASX release 11 March
2024, “Highfield signs contract for the construction of the
declines at Muga potash project”), the Company signed
the agreement to construct the declines and underground
mining infrastructure with the Portuguese/Spanish joint
venture, EPOS-TUNELAN for a total cost of €48 million, in
line with the recent feasibility study. Works will commence
in H1, 2024 upon completion of funding and Final
Investment Decision.
27. Commitments
At 31 December 2023, 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 2023 amounted
to approximately $89.0m. Of this amount approximately
$87.2m will only become commitments once Notices to
Proceed are issued to equipment suppliers, which will only
occur once both permitting and financing have 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 $0.3m.
24. Contingent Assets
and Liabilities
There are no known contingent assets or liabilities as at 31
December 2023 (December 2022: Nil).
25. Dividends
No dividend was paid or declared by the Company in the
year ended 31 December 2023 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 2023.
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 190 community projects.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 109
28. Parent Entity Information
The following information relates to the parent entity, Highfield Resources Limited, at 31 December 2023 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
Non-current assets
Total assets
Current liabilities
Non-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 2023
$
31 December 2022
$
13,580,627
160,519,485
174,100,112
(291,991)
(30,808,484)
(31,100,475)
142,999,637
206,740,655
26,779,823
(90,520,841)
142,999,637
19,321,819
128,370,659
147,692,478
(167,927)
-
(167,927)
147,524,551
203,613,937
26,460,354
(82,549,740)
147,524,551
31 December 2023
$
31 December 2022
$
(7,971,101)
(5,044,119)
-
-
(7,971,101)
(5,044,119)
110 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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 2023 are in
accordance with the Corporations Act 2001, including:
i) complying with Accounting Standards (including the Australian Accounting Interpretations), the Corporations
Regulations 2001 and other mandatory professional reporting requirements, and
ii) giving a true and fair view of the Group’s financial position as at 31 December 2023 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
2023.
On behalf of the Board
Paul Harris
Independent Non-Executive Chairman
Adelaide, Australia
27 March 2024
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 111
112 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Highfield Resources Limited for the year ended 31 December 2023, 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
27 March 2024
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.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 113
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 2023 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 2023
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, including material accounting policy
information 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.
114 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Independent auditor’s report - Highfield Resources Limited (continued)
Material uncertainty related to going concern
We draw attention to Note 2 in the financial report, which indicates that the continuing viability of the
Group is dependent on further funds to progress the Muga project. This condition, along with other
matters set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on
the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
Audit scope
Key audit matters
• Amongst other relevant topics, we communicated
the following key audit matters to the Audit and
Risk Committee:
−− Carrying value of deferred exploration and
evaluation expense
These are further described in the Key audit
matters section of our report, except for the matter
which is described in the material uncertainty
related to going concern section.
• Our audit included assessing the financial
statements for risks of material misstatement
based on quantitative and qualitative assessment
of Highfield’s operations and activities.
• 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
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 115
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.
Key audit matter
How our audit addressed the key audit matter
Carrying value of deferred exploration and
evaluation expense
(Refer to note 10) $147,313,513
We have 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 2023 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.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter(s) described below to be the key audit matters to be communicated in our
report.
3
116 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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 2023, 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 through our opinion on the financial report. We
have issued a separate opinion on the remuneration report.
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
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 117
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 the directors’ report for the year ended 31
December 2023.
In our opinion, the remuneration report of Highfield Resources Limited for the year ended 31
December 2023 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
27 March 2024
5
118 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
118 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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 5 March 2024.
118
Highfield Resources Limited
31 December 2022 | Annual Report to Shareholders
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 119
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 119
120 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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
315
765
584
1,118
331
3,113
152,230
2,258,610
4,739,479
40,653,200
344,380,214
392,183,733
There were 369 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
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES
BCI MINERALS LIMITED
DEREK CARTER & CARLSA CARTER
ELEMENT AU SMSF PTY LTD
EDDINGTON, DANIEL & JULIE
CITICORP NOMINEES PTY LIMITED
PETER DAVID FERGURSON PTY LTD
BALL, CRAIG & SUSANNE
CELTIC CAPITAL PTE LTD
JONERIC PTY LTD
WHITING, MICHAEL ANDREW & TRACEY ANNE
MR. ANDREW BYRNES DOBLE
CARINYA INVESTMENTS (QLD) PTY LTD
WOOTOONA INVESTMENTS PTY LTD
CRX INVESTMENTS PTY LTD
DORICA NOMINEES PTY LTD
KANBAH PTY LTD
Number of shares
104,038,875
34,620,000
27,524,851
20,864,746
10,000,090
7,721,504
6,102,095
3,782,000
3,655,313
3,432,023
3,100,000
3,000,000
2,701,076
2,645,425
2,550,000
2,327,692
2,150,538
2,000,000
2,000,000
2,000,000
%
26.5
8.8
7.0
5.3
2.5
2.0
1.6
1.0
0.9
0.9
0.8
0.8
0.7
0.7
0.7
0.6
0.5
0.5
0.5
0.5
246,216,228
62.8
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 121
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 5 March 2024.
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
26.53%
Ordinary Shares
Various holders
WWB Investments Pty Ltd1
08/11/2017
34,620,000
Ordinary Shares
BCI Minerals Ltd
Seven Group Holdings (SGH) Ltd1
18/11/2021
10,000,090
8.83%
2.55%
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 5 March 2024 of 392,183,733.
Substantial Unlisted Options
Class
Number
Holders with more than 20%
Options over ordinary shares exercisable at $0.47 on or before 31 December 2024
333,333
Ignacio Salazar 333,333 options;
Options over ordinary shares exercisable at $0.47 on or before 31 December 2025
333,334
Ignacio Salazar 333,334 options;
Options over ordinary shares exercisable at $0.865 on or before 31 December 2024
1,819,812
Ignacio Salazar 591,803 options;
Options over ordinary shares exercisable at $0.865 on or before 31 December 2025
1,568,148
Ignacio Salazar 509,961 options;
Options over ordinary shares exercisable at $0.865 on or before 31 December 2026
1,414,430
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
1,517,107
Ignacio Salazar 736,440 options;
Options over ordinary shares exercisable at $0.79 on or before 31 December 2026
1,756,434
Ignacio Salazar 879,766 options;
Options over ordinary shares exercisable at $0.79 on or before 31 December 2027
1,771,431
Ignacio Salazar 879,765 options;
Options over ordinary shares exercisable at $0.79 on or before 31 December 2028
1,771,431
Ignacio Salazar 879,765 options;
On-Market Buy Back
There is no current on-market buy back.
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 2023.
122 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
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#
Area
Km2
Holder
Structure
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
Application
in process
Application
in process
35760
22.88
Geoalcali SLU 100%
35770
59.40
Geoalcali SLU 100%
35880
40.90
Geoalcali SLU 100%
123.18
Muga-Vipasca
Navarra Muga Sur
Investigation 25/09/2014 30/06/2020 3524
7.28
Geoalcali SLU 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
Application
in process
3495/20
16.80
Geoalcali SLU 100%
3510
30.24
Geoalcali SLU 100%
65.24
Total
209.80
Concession
Muga
Navarra Goyo
Concession
19/07/2011 01/07/2021 35780
15.30
Geoalcali SLU 100%
Muga
Aragón
Fronterizo
Concession
21/06/2012 01/07/2021 3502
9.00
Geoalcali SLU 100%
Muga
Aragón Muga
Concession
29/05/2013 01/07/2021 3500
14.40
Geoalcali SLU 100%
Total
38.70
38.70
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 123
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.
124 Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023
Important Information and Disclaimers
Forward Looking
Statements
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.
Dr Mike Armitage is a Member the Institute of Materials,
Minerals and Mining (“IMMM”) which is a ‘Recognised
Overseas Professional Organisation’ (“ROPO”) included
in a list promulgated by the Australian Stock 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 update of the matters based on the information
Such
information
contained
herein
represents
upon which the October 2021 Ore Reserve is based in the
management’s best judgement as of the date hereof based
form and context in which it appears.
on information currently available. The Company does
not assume any obligation to update any forward-looking
statement.
Competent Person
Statement for Muga-
Vipasca Potash Project
The Review of Operations contained within this annual
report was prepared by Mr. Ignacio Salazar, CEO and
Managing Director of Highfield Resources. The information
Mr. Chris Bray BEng, MAusIMM (CP) takes responsibility
for the review of the LOM plan that underpins the October
2021 Ore Reserve. Mr. Bray is a full-time employee and
Principal Consultant (Mining) at SRK. He is a member of
and 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 CP 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.
in this report that relates to the Ore Reserve reported with
Ms. Anna Fardell was a Senior Resource Geologist
an effective date 31 October 2021, is based on information
employed by SRK as of the effective date for the December
prepared by Dr. Mike Armitage. Dr. Mike Armitage is
2020 Mineral Resource estimate, and at that time had over
the Competent Person
(“CP”) who assumed overall
five years’ experience in estimating and reporting Mineral
professional responsibility for the Ore Reserve reported
Resources relevant to the style of mineralisation and type
at that time. The information related with the review of
of deposit described herein. Ms. Fardell is a registered
the Life of Mine (“LOM”) that underpins the October 2021
member of the Australian Institute of Geoscientists
Ore Reserve was prepared by Mr. Chris Bray, who was, and
(6555) and considered a Competent Person (CP) under
remains, a full-time employee of and Principal Consultant
the definitions and standards described in the JORC
(Mining) at SRK. The information in this update that relates
Code 2012. Ms. Fardell takes responsibility for the Mineral
to the Mineral Resources with the effective date of 31
Resource Statement and Exploration Target presented
December 2020 is based on information prepared by Ms.
here and consents to the inclusion in this update of the
Anna Fardell, a Senior Consultant at SRK Consulting (UK)
matters based on their information in the form and context
Limited at that time.
in which it appears.
Highfield Resources Limited | Annual Report to Shareholders. 31 December 2023 125
Competent Person
Statement for Mineral
Resources and
Exploration Targets other
than the Muga-Vipasca
Potash Project
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
Gonzalez Roldán consent to the inclusion in this report of
the matters based on their information in the form and
context in which it appears.
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