PERTH (miningweekly.com) – Potash developer Highfield Resources will raise A$13-million in a share placement to institutional, sophisticated and professional investors to fund early work at its Muga project, in Spain.

The ASX-listed company has received firm commitments for the placement of 21.6-million shares, at a price of 62c each. The shares will be placed in a single tranche under the company’s existing placement capacity.

The offer price represented a 10.1% discount to Highfield’s last closing price and a 15% discount to the company’s 10-day volume weighed average share price.

Participants in the share placement will also receive one unlisted free attaching option for every two new shares subscribed for, with a 93c exercise price and an exercise date of 18 months from issue.

“We are pleased to announce the completion of the placement which was well supported by existing and new institutional investors. We welcome all new shareholders to the company and thank existing shareholders for their ongoing support,” said CEO Ignacio Salazar.

“Representing approximately 6% of our market cap, this placement is minimally dilutive, while providing the company with a strong position to continue to move Muga forward, finalise the project financing and negotiate with strategic investors.”

Funds raised will go towards the continued early work construction activity at Muga, finalising debt funding arrangements and putting Highfield in a strong position to progress negotiations with strategic investors.

The recently completed updated feasibility study estimated a capital cost of €436-million for the Phase 1 operation and €226-million for Phase 2. This was up from the previous estimate of  €398-million for Phase 1 and €209-million for Phase 2.

C1 costs for the project have also increased from the €76/t estimated in 2021 to €91/t.

The mine plan for Muga has been maintained with the project expected to have a 30-year min -life and Phase 1 of the operation producing 500 000 t/y of potash and Phase 2 increasing production to one-million tonnes a year.