Pareto Securities, Research Reports

DFS sows the seeds of development ( By Pareto Securities)

March 30, 2015

Highfield Resources has completed its Definitive Feasibility Study (DFS) for its flagship Muga potash project in Spain. Muga will produce 1.12Mt of Standardised K60 Muriate of Potash (MOP) per annum generating some of the largest margins in the industry with the lowest capital cost and intensity in the market. The DFS parameters exceeded our upside case production scenario (grade &tonnes) and accordingly has driven our valuation higher. The totalcapital cost was slightly higher and operating costs slightly lowerthan our assumptions. Our valuation has increased to AUD 2.52/share (from: AUD 1.67/share). We retain our BUY recommendation and our Price Target has increased to AUD 2.00/share (from AUD 1.35/share) based on a 0.80x NPV multiple.

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