Rising costs flagged at Muga

3rd November 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – Capital costs for the Muga potash project, in Spain, have increased, ASX-listed Highfield Resources said on Thursday.

The 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 mine 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.

The updated feasibility study has re-estimated the projected net present value of Muga from the €1.89-billion considered in 2021, with an internal rate of return of 25%, to €1.82-billion and an internal rate of return of 21%.

At full production, Muga is now expected to generate earnings before interest, taxes, depreciation and amortisation of €410-million a year, up from the €400-million a year estimated in 2021.

“The company has done a lot of work with the banks in reviewing and mitigating the effect of the current global inflationary environment resulting in a thoroughly reviewed and updated feasibility study which reconfirms the outstanding value of the Muga project,” said Highfield CEO Ignacio Salazar.

“The current geopolitical situation as well as Muga being the next European potash mine reinforces both the compelling strategic nature and the status of the project.”

Construction of the Muga project started in June this year with earth movement in the mining gate area.

The next stage in the construction schedule involves building and establishing key infrastructure to provide electricity to the project, road access, water storage capacity for construction as well as basic above-ground installations. Specifically these works include the electricity line from the main electricity network to the plant and the mine gate as well as the road access to the project from the main road, and the North ponds to storage water generated while building the ramps. Basic urbanisation at the processing plant will also be part of this stage.

The main part of the construction consists of the ramps, civil works and the process plant and is expected to run for two to two-and-a-half years. Tendering is ongoing and construction agreements are being prepared.


Edited by Creamer Media Reporter



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