Highfield Resources Secures Backing from China Minmetals Arm, Advances Muga Expansion | ASX 200 Update

Highlights:

• Highfield Resources Ltd (ASX:HFR) signs non-binding agreement with Qinghai Salt Lake Industry Co. Ltd for a major equity placement

• EMR Capital supports operations through fresh standby loan and loan note extension

• Muga potash project in Spain positioned for development alongside Canada’s Southey project acquisition

Highfield Resources Ltd (ASX:HFR), part of the materials sector on the ASX 200 index, has taken a significant step toward its strategic production goals in the global potash market. The company announced a new funding arrangement and cooperation framework with Qinghai Salt Lake Industry Co. Ltd, a subsidiary of China Minmetals Corporation.

This cooperation, in the form of a non-binding letter of intent, outlines Qinghai Salt Lake’s interest in a proposed equity placement, which would see it emerge as the largest shareholder in Highfield Resources. The agreement sets an exclusivity window for due diligence and negotiations, with a binding term sheet anticipated upon successful completion of these processes.

Capital Deployment and Development Plans

The planned cornerstone investment is aligned with the development of Highfield’s flagship Muga potash project, located in Spain’s Ebro Basin. The company is also advancing preparations to acquire the Southey project in Saskatchewan, Canada, previously held by Yankuang Energy Group.

The funds from the equity placement are expected to support construction readiness and permit Highfield to maintain momentum across its Spanish and Canadian tenements. The three main tenement areas – Muga-Vipasca, Pintanos, and Sierra del Perdón – together span a broad region suited for low-cost potash production due to favourable geological characteristics.

Qinghai Salt Lake, listed on the Shenzhen Stock Exchange, is the largest potash producer in China and is also active in lithium carbonate output. Its parent company, China Minmetals Corporation, is a major state-owned enterprise operating across global mineral markets. The strategic alignment with Highfield enables Qinghai to expand its international resource portfolio while providing Highfield with operational and financial stability.

Continued Support from EMR Capital

To complement the Qinghai agreement, Highfield Resources has secured additional financial support from EMR Capital through a standby loan facility. The unsecured loan will provide liquidity for operational continuity and business transition activities during the current negotiation phase.

EMR Capital has also extended the maturity date of its existing convertible loan notes, offering Highfield additional time to advance its planned transaction with Qinghai Salt Lake. The extensions offer a longer runway for the company to achieve required conditions under the proposed framework agreement.

EMR Capital remains engaged with Highfield Resources as the company manages multiple moving parts in its expansion, including the coordination of the Yancoal Canada acquisition that would facilitate the transfer of the Southey project. This follows a previous agreement in which Yankuang Energy and related stakeholders had committed to a combined capital raising to support Highfield’s international growth.

Operational Advantages of the Muga Project

The Muga project is viewed as a low capital expenditure, high-margin development due to its shallow mineralisation and absence of overlying aquifers, removing the need for costly underground shaft construction. These characteristics provide advantages over conventional potash developments in other regions.

Construction plans for Phase 1 of Muga include the development of a production line capable of delivering significant output, with future expansion phases expected to increase production capacity. The permitting process for the project has been finalised, allowing for expedited construction once financing and partnership structures are confirmed.

Shareholder Alignment and Timeline

Highfield Resources has received support from both Yankuang Energy and EMR Capital for the ongoing transaction process. The company is coordinating efforts to address any structural considerations stemming from prior agreements to ensure alignment with the new Qinghai-backed proposal.

Under the letter of intent, Qinghai Salt Lake retains exclusive rights to conduct due diligence until the end of June, with a possible extension if necessary. A market call has been scheduled by Highfield to communicate the developments to stakeholders and provide updates on its capital and operational progress.