Highfield Resources has secured credit approval for €320.6m in senior secured project financing to fund the construction and development of its Muga Potash Project in Spain. The financing comprises a €300m Senior Debt Facility and a €20.6m Cost Overrun Debt Facility. The credit approval follows a thorough due diligence process and complements Highfield's cash preservation strategy. The company is also progressing negotiations with strategic investors and a lease facility with Macquarie. Highfield CEO Ignacio Salazar said securing project finance was a crucial step in moving the construction of the project forward.
Highfield Resources secures €320.6 million in senior secured project financing for Muga development
Highfield Resources Ltd (ASX:HFR) has secured credit approval for €320.6 million (~A$495.9 million) in senior secured project financing that will help fund the construction and development of its 100%-owned Muga Potash Project in Spain.
The company has received credit approvals from a syndicate of four international financial institutions acting as Mandated Lead Arrangers (MLAs) including BNP Paribas (EPA:BNPP) S.A., ING Bank N.V., Natixis CIB and Societe Generale (EPA:SOGN) (London Branch).
The senior facilities will comprise two financing agreements:
- a Senior Debt Facility of €300 million to fund the construction and development of the project.
- a Cost Overrun Debt Facility of €20.6 million to be used, if required in the construction and development of the project.
Due diligence leads to 10-year term
The MLAs undertook thorough due diligence before making their decision and included a group of specialised consultants in technical, social, environmental, marketing and legal matters.
The term of the Senior Debt Facility will be 10 years and the term of the Cost Overrun Debt Facility will be five years.
This credit approval complements Highfield’s stringent cash preservation strategy, which sees it with a cash balance at the end of the third quarter of A$11.3 million.
The company is also making strong progress in negotiations with strategic investors and on the €23.3 million equipment operating lease facility with Macquarie.
"We are delighted to announce the credit approval of €320.6 million debt facilities from BNP Paribas, ING, Natixis CIB and Societe Generale,” Highfield CEO Ignacio Salazar said.
“This milestone represents the conclusion of an intensive and extensive due diligence process which included site visits by the MLAs and independent experts conducting environmental, social, technical, marketing and legal evaluations of the project.
"With the preliminary works around the mine gate getting finalised, securing project finance was an essential step to move the construction of the project forward.”
HFR shares are up 12% to A$0.84 while the company's market cap is approximately A$292.34 million.