Highfield Resources Advances $426M Strategic Deal Amid Lender Reshuffle and Cost Cuts
Highfield Resources has made significant progress on its strategic transaction with Yankuang Energy and Beijing Energy, securing key regulatory approvals and restructuring its financing amid disciplined cost management.
- Yankuang Energy and Beijing Energy receive FIRB no objection statements
- Investment Canada Act approval secured for Canadian acquisition
- Senior Secured Project Finance Facility amended with major lenders exiting
- Implementation agreement sunset extended to June 30, 2025
- Company enacts furlough scheme and tightens cash flow management
Strategic Transaction Progress
Highfield Resources Limited (ASX: HFR) has reported substantial advancement in its strategic transaction with Chinese investors Yankuang Energy Group Co. and Beijing Energy International Co., Ltd. Both parties have received statements of no objection from Australia's Foreign Investment Review Board (FIRB), clearing a major regulatory hurdle for their proposed equity subscriptions totaling up to US$426 million at A$0.50 per share. This milestone is critical to Highfield's plan to raise US$220 million in equity capital and acquire the Southey potash project in Canada.
Complementing the Australian approvals, Highfield has also secured clearance under Canada's Investment Canada Act, satisfying another key condition precedent for the acquisition of Yancoal Canada Resources, a subsidiary of Yankuang Energy. The absence of any objection notices within the statutory period confirms regulatory acceptance of the transaction in Canada.
Financing Facility Restructuring
In parallel with these regulatory developments, Highfield is actively restructuring its Senior Secured Project Finance Facility. The company has formally requested amendments and waivers to accommodate the transaction, including waiving change of control provisions. Notably, three major lenders, Societe Generale, BNP Paribas, and Natixis, will exit the facility, while ING, HSBC, and Caja Rural will remain. Highfield is working closely with its financial advisor DBS Securities and potential new lenders to ensure the facility aligns with the evolving capital structure and project needs.
Additionally, Highfield is renegotiating its equipment operating lease facility with Macquarie Specialised Asset Services Ltd. This includes an interim lease contract for four Komatsu shuttle cars valued at US$4.7 million, with plans to extend and expand the lease once equity proceeds are received.
Operational and Corporate Updates
To preserve cash amid ongoing financing activities, Highfield has implemented a furlough scheme affecting 20% to 50% of staff salaries since March 2025 and postponed all non-essential expenditures. The company reported a cash balance of A$8.3 million as of 31 March 2025, down from A$11.96 million the previous quarter, reflecting payments for project finance commitment fees and operational costs.
Corporate governance changes include the resignation of UK-based Non-Executive Director Roger Davey and shareholder approval at the March 20 Extraordinary General Meeting for the share issues to Yankuang and Beijing Energy, as well as the appointment of their nominated directors to the board.
Project and Market Outlook
The Muga Potash mine development in northern Spain remains the company’s core focus, with all key permits and licenses secured. While no significant exploration occurred this quarter, the company is advancing construction readiness plans. Globally, potash prices have edged higher, with European granular MOP prices holding steady between €340 and €350 per tonne, supported by tariff-driven price increases.
Looking ahead, Highfield aims to finalize its strategic financing and complete the transaction by the extended sunset date of 30 June 2025. The company continues to engage with the Spanish government to resolve outstanding administrative matters related to the Goyo permit, a critical step for project progression.
Bottom Line?
Highfield’s strategic financing and regulatory milestones set the stage for a pivotal phase, but lender exits and cost controls underscore ongoing execution risks.
Questions in the middle?
- Will Highfield secure new lenders to replace those exiting the Senior Secured Project Finance Facility?
- How will the furlough scheme impact project timelines and operational momentum?
- What is the timeline for final Spanish regulatory approvals, particularly regarding the Goyo permit?
