Potash hopeful Highfield Resources has locked in binding agreements with a group of strategic Asian investors aimed at delivering more than A$250 million in funding for its flagship Muga project in Spain while adding a new project in Canada.
The company struck a non-binding agreement Yankuang Energy and several then-undisclosed strategic investors in July to raise US$220 million that contemplated the acquisition of the Southey potash project in Saskatchewan.
Details have now been agreed upon for deals that will see control of the company and its board pass into the hands of China-based Yankuang, which is 52.83%-owned by Shandong Energy.
The final agreements will raise $170 million, with Yankuang putting in up to $90 million, clean energy investor Beijing Energy $50 million, and Singapore-based trading group Taizhong Global $30 million.
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A further undisclosed strategic investor has indicated it is willing to put up $20 million on the same terms.
The cornerstone placement will issue shares at A50c each, a 62% premium to recent trading.
Highfield is negotiating with other investors for a further US$50 million.
Highfield said Yankuang had transformed Yancoal into a leading ASX-listed coal producer and was looking for similar success by positioning Highfield as a globally significant potash producer.
A listing in Hong Kong will be considered to improve trading liquidity and access to capital.
To get the company through the next few months, existing major shareholder EMR Capital will aid Highfield in raising up to A$22.4 million in short-term funding via a $17.9 million institutional placement and a share purchase plan seeking around $4.5 million.
The raisings are priced at 29c, just below its last traded price of 30c yesterday and 40% below the cornerstone placement.
As part of the transactions Highfield and Yankuang have entered into a binding implementation agreement that will see Highfield issue around $286 million worth of shares for Southey, a circa C$3 billion brine development.
The thrust of the cornerstone placement is the advancement of the shovel-ready US$479 million Muga hard rock potash project's stage one development, combined with the $342 million in syndicated debt.
Highfield managing director Ignacio Salazar said the funding initiatives gave the company a platform for the development of Muga stage two and Southey.
The various transactions require the nod from Australia's Foreign Investment Review Board and approvals from regulators in Spain, Canada and China and Highfield shareholders.
Approvals are expected in early 2025.
Highfield's board intends to unanimously recommend the Yankuang deals, assuming a favourable report from an independent expert.
Shares in Highfield were steady at 30c today, capitalising it at $118 million.
The stock has traded as high as 46c over the past year and was above $1 two years ago.
