Highfield Resources accelerates progress at Spanish potash projects
Highfield Resources (ASX:HFR) has stepped up the pace following a recent $10 million investment by EMR Capital, accelerating development at its three 100% owned Spanish potash projects.
A first tranche of $5,126,688 was received in May from the recent placement to EMR, struck at a price of $0.30 per share - a premium to the share price at the time.
Given the advanced nature of the Spanish assets, there are near term production prospects.
Key points of progression of potash project:-
- A five hole validation drilling campaign on Sierra del Perdon project is due to commence in June 2013.
- Significantly, at the Javier project historical core has been re-assayed with a maiden JORC Resource estimate expected in July 2013.
- A ten hole drilling campaign on Javier project is set to commence in July 2013.
- Metallurgical testwork commenced on historic Javier core samples.
- A second Pintano project permit has been issued.
- Three additional key Spanish appointments have been made.
- The Pamplona office is now operational.
Sierra Del Perdon Potash project
A 3D model of the Sierra del Perdon evaporite basin has been created that details the infrastructure from the two former operating mines.
This 3D model has been used to prepare a confirmatory drilling campaign of five holes. Each hole is relatively shallow with depths ranging between 250 metres and 400 metres below surface.
The five hole drill campaign will test the company’s hypothesis with its primary aim:
- Provide sufficient data for a JORC Resource estimate;
- Test whether it is possible to re-enter the historic mine areas via a decline to mine unmined areas of mineralisation; and
- Provide core samples for mineralogical and metallurgical testwork to determine the optimum process plant design and the mass balance.
The drilling campaign is expected to be completed in Q3 with results expected in Q4 2013.
Javier Potash project update
The Javier project historical core has been re-assayed, a JORC Resource estimate is expected for the Javier project in July 2013.
A ten hole drilling campaign has been designed to test the extents of the Javier evaporite basin.
The drilling campaign will test the potash potential historically intersected at relatively shallow depths ranging between 300 metres and 530 metres below surface.
In addition, core samples from three drill holes have been re-assayed by North Rim with the results presented below.
The analytical results were prepared by the Saskatchewan Research Council (SRC) in Saskatoon, Canada.
Assays were analysed for potash exploration geochemistry using the analytical ICP-OES method. SRC included lab blanks and standards and follows stringent QA/QC protocol. North Rim inserted independent standards as an additional quality check.
The deposit geology is defined by a hanging wall salt, an upper potash seam (sylvinite), an interbed salt, a lower potash seam (sylvinite) and a footwall salt.
The NGR drill hole appears to be the most promising recording a lower potash seam intersect of 1.36m at 25.2% KCl within a 4.39 metre intersection with an overall weighted KCl average of 19.15% (KCl values due to sylvite).
The depth of this intersection occurs in the interval between 300.30 metres to 304.69 metres below surface.
Pintano Potash project update
On 27 May 2013 the second and final Pintano project permit was issued by the Aragon Administration.
Puntarron is a significant permit and ensures the company preserves potential resource upside if the mineralisation extends into deeper sections of the Pintano evaporite basin.
A drilling campaign for Pintano is expected in Q4 of the current Calendar Year. This drilling campaign has been designed to complement the four existing drill holes that show mineralisation within the project area.
The company’s office in Pamplona is now operational and houses all of the company’s Spanish based team.
During the past month three additional key appointments have been made by Highfield’s 100% owned Spanish subsidiary.
An environmental scientist has been appointed to drive the environmental approvals process; a qualified lawyer with deep planning experience has been appointed to drive the community engagement and planning process; and an additional project geologist has been appointed to work on the second concurrent drilling campaign planned to commence in Javier in July 2013.
Comparative advantages of Highfield's potash projects - "enhanced profit margin"
- Ability to sell waste by product – sodium chloride (likely to be +$150 / tonne of potash sold)
- Because the salt will not have the environmental issues of what to do with it once extracted (a lot of projects are looking at reinjecting it) (likely to be +$20 / tonne)
- Ability to sell into Spanish market (likely to be +$40 / tonne – based on most potash being sold FOB Vancouver – we avoid shipping and internal transport costs)
- No royalties (likely to be around +$40 / tonne based on a global average)
- Tax incentives (likely to be +$10 / tonne)
The enhanced profit margin is the reason why Highfield is likely to have one of the most commercially viable projects of any non producing potash junior and no doubt a reason for EMR's investment.
On April 17, with the Highfield share price at $0.17, Proactive Investors wrote "the placement to EMR Capital represents an inflexion point in the company’s evolution, providing catalysts and milestones for value accretion and should see growth in the company's valuation in the medium term.
"We estimate the market valuation and share price of Highfield Resources in the $0.40-$0.50 range in the next 12 months." We see nothing to change our minds on this range, today's progress validates our model.
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