Highfield Faces Regulatory Hurdles as Strategic Deal Collapses and Lenders Exit

Strategic Financing and Investment Update

Highfield Resources Limited has announced a significant A$10 million convertible note investment from its existing strategic shareholders, including funds managed by EMR Capital Management Limited and Tectonic Investment Management. This financial support comes shortly after the collapse of a proposed strategic transaction involving China Minmetals Corporation and Yankuang Energy Group, which had been anticipated to bolster Highfield's development plans.

The termination of the implementation agreement with Yankuang Energy followed China Minmetals’ decision not to proceed with the transaction. This development marks a pivotal moment for Highfield, compelling the company to pivot towards strengthening its financial position through existing investor support rather than new strategic partnerships.

Project Finance Facility Termination and Cash Management

In parallel with the investment news, Highfield confirmed that the last remaining lenders; ING, HSBC, and Caja Rural de Navarra; have exited the Senior Secured Project Finance Facility. The full termination of this facility eliminates further commitment fees, a relief for the company as it focuses on preserving cash amid ongoing project development challenges.

Highfield continues to exercise disciplined cash management, postponing non-essential expenditures and extending a furlough scheme affecting 20% to 50% of staff salaries. As of 30 September 2025, the company held A$3.98 million in cash, with the new funding expected to provide a runway through to the first quarter of 2027.

Regulatory and Permitting Challenges

Legal hurdles remain a key concern, particularly regarding the Goyo mining concession. A procedural flaw identified by the regional Superior Court of Justice of Navarra requires rectification, with the Spanish Supreme Court expected to rule on an appeal in November 2025. While this introduces uncertainty, Highfield is actively engaging with government authorities to resolve the matter, hoping for an administrative solution that could expedite progress.

Despite these challenges, the Government of Navarra has reaffirmed its institutional support for the Muga Potash Project. The President of Navarra, Ms Chivite, emphasized the project's importance to regional economic growth and strategic sectors such as agrifood, underscoring the project's alignment with sustainable development goals.

Corporate and Board Developments

Highfield's board saw changes with the resignation of EMR nominated Non-Executive Director Luke Anderson, who stepped down to pursue a full-time executive role elsewhere. His replacement, Carles Aleman, brings over 30 years of international experience in chemical and mining industries and currently leads the company’s Spanish subsidiary, Geoalcali S.L.U., which owns the Muga Project.

These leadership adjustments come at a critical juncture as Highfield advances its construction readiness plans for Muga and seeks to finalize the convertible note investment, subject to shareholder approval expected by mid-December 2025.

Market Context and Outlook

Potash market fundamentals remain broadly stable, with European granular MOP prices holding around €380 per tonne despite ongoing geopolitical tensions. Highfield’s Muga Project, strategically located in a European agricultural region with a supply deficit, remains well positioned to capitalize on these market dynamics once operational hurdles are cleared.

Looking ahead, Highfield plans to focus on resolving the Goyo concession issue, progressing construction readiness, and reengaging with potential strategic partners to secure the project's future.