Highfield Resources Advances Goyo Appeal at Spanish Supreme Court Amid 24% Payroll Cut

Spanish Supreme Court’s Acceptance of Goyo Appeal Marks Key Permitting Progress

In the quarter ending 30 June 2026, Highfield Resources announced the Spanish Supreme Court's formal admission of its appeal concerning the procedural ruling on the Goyo mining concession. This development represents a pivotal step in the company’s pursuit of legal certainty over the permitting framework for the Muga Potash mine project. The court’s decision enables a full judicial review addressing whether a single unified concession should have been issued by one administration rather than the three concessions originally granted.

The procedural issue originates from a ruling by the Superior Court of Justice of Navarra (TSJN), which identified a procedural flaw in the administrative coordination process related to the Goyo mining concession. Importantly, the TSJN did not dispute the technical feasibility of the Muga Project, the environmental assessments, or the mineral rights. During the quarter, Highfield prepared and submitted its appeal brief to the Supreme Court as per the court’s schedule, advancing the judicial process.

Background on Procedural Challenge and Related Legal Proceedings

The procedural challenge stems from guidance received by Highfield’s Spanish subsidiary, Geoalcali S.L.U., in 2014 from the Spanish Government, advising the company to apply for three separate mining concessions: Goyo, Muga, and Fronterizo. Highfield obtained these three concessions accordingly. However, the TSJN later ruled that procedurally a single unified concession should have been issued, despite no substantive issues with the mining rights or project viability.

Separately, Highfield achieved a positive outcome in related litigation when the Superior Court of Justice of Madrid (TSJM) fully dismissed Ecologistas en Acción’s challenge against the Fronterizo mining concession. The TSJM rejected all procedural and environmental claims and confirmed that the administrative process complied with Spanish law, also awarding costs against the claimant, thereby validating the permitting process for this part of the Muga Project.

Strategic Decision to Relinquish Sierra del Perdón Tenement

During the quarter, Highfield decided not to pursue further development of the Sierra del Perdón tenement following the expiration of its exploration permits. This decision was based on the tenement’s limited prospectivity and the strategic advantage of focusing resources on the Muga Project, a world-class potash asset. Since the Sierra del Perdón project was fully impaired in 2020, this decision does not impact the company’s financial standing and allows management to concentrate capital and personnel on advancing the core asset.

This portfolio rationalization aligns with Highfield’s priority to focus on the development and construction of the Muga Potash mine. The relinquishment streamlines operations while awaiting judicial resolution of the Goyo concession matter. No significant exploration was conducted during the quarter, consistent with the focus on development over greenfield exploration.

Global Potash Market Stability and European Price Trends

Global potash market fundamentals remained broadly stable during the quarter, with supply-demand dynamics supporting current price levels. Although some sanctions on Belarus eased, geopolitical factors and constrained production outside a few major suppliers continue to influence global supply. These structural constraints have supported potash price resilience recently and are expected to benefit Highfield’s market position once Muga reaches production.

Demand for muriate of potash (MOP), Highfield’s intended primary product, remained strong, supported by favorable agricultural fundamentals and steady application rates in key regions. In Europe, a critical market for Muga’s output, granular MOP prices held firm at around a380 per tonne, reflecting balanced regional supply and demand. While near-term price fluctuations may be affected by geopolitical and macroeconomic factors, the medium-term outlook remains positive, driven by disciplined supply growth, resilient demand, and the global need to enhance crop yields.

Significant Payroll Reductions and Workforce Optimization

Highfield implemented substantial cost-saving measures during the quarter, achieving a 24% reduction in average monthly payroll compared to the previous quarter. This reduction reflects the continuation of the staff furlough scheme (ERTE), initiated on 1 March 2025 and extended through the end of 2026, along with a 30% reduction in workforce size to nine employees. These actions underscore management’s commitment to preserving cash while maintaining essential operational capabilities amid permitting uncertainties.

Alongside workforce adjustments, the company reduced related expenses and discretionary costs, aiming to further decrease monthly cash outflows in the following quarter. The furlough scheme has continued with full staff support, demonstrating workforce cooperation during this challenging period. Collectively, these measures reflect a disciplined, lean operational approach suited to the uncertain timeline for Supreme Court appeal resolution.

Fourth Convertible Note Tranche Received and Liquidity Status

Highfield’s financial position strengthened with the receipt of a fourth A$700,000 tranche under its Convertible Note Facility in July 2026, post-quarter end. As of 30 June 2026, the company held A$1.46 million in cash. Despite the Appeal Allowed Event in May 2026 releasing Noteholders from obligations to subscribe for further funding under the Tranche 3 Convertible Note Deed, Noteholders agreed to provide this additional tranche, signaling confidence in Highfield’s strategy and outlook.

The company emphasized that this tranche does not obligate Noteholders to future funding, highlighting the discretionary nature of ongoing support. Highfield remains focused on disciplined cash management, prioritizing low cash burn operations while maintaining financial flexibility. The combination of reduced costs, workforce restructuring, and continued Noteholder backing provides sufficient resources to sustain operations and advance the Muga Project during the Supreme Court proceedings.

Annual General Meeting Outcomes and Governance Stability

All resolutions at Highfield’s Annual General Meeting on 27 May 2026 were approved, reflecting strong shareholder support for management’s strategic and operational approach amid financial and permitting challenges. The successful passage of resolutions grants management a clear mandate to pursue Muga Project objectives and shareholder value creation. Related party payments during the quarter totaled A$146,000 for executive and non-executive director salaries and fees, consistent with a streamlined management structure.

Shareholder engagement and governance remained robust, with the company maintaining appropriate disclosure and reporting standards as an ASX-listed entity. The AGM results demonstrate stakeholder confidence in management’s handling of permitting challenges affecting project timelines.

Outlook and Priorities for Q3 2026

Looking ahead to Q3 2026, Highfield plans to focus on two main priorities: advancing value realization strategies for shareholders and noteholders, and progressing resolution of the Goyo mining concession administrative matter pending the Spanish Supreme Court’s decision. These efforts reflect the company’s dual challenge of preserving shareholder value while navigating critical judicial proceedings necessary for Muga Project development.

The timing of the Supreme Court’s resolution remains uncertain, and investors should monitor updates on appeal progress. While admission of the appeal is positive, it represents an initial step in a potentially lengthy legal process. Highfield’s low-cost operational model and liquidity position support sustained activity during this period, but future capital needs and potash market conditions will influence development progress once legal clarity is achieved. Investors are advised to track announcements on the Goyo appeal outcome and the company’s financing status.