Chinese state-controlled coal giant Yankuang Energy is set to become the majority shareholder in ASX-listed prospective potash producer Highfield Resources in a proposal that would also secure the remaining funding for the first phase of Highfield's Muga potash project in Spain.
The two firms along with a number of investors signed a non-binding initial agreement on 19 July, under which Highfield would acquire Yankuang's wholly owned subsidiary Yancoal Canada, which includes its Southey potash project in Saskatchewan, Canada, and the rights to four other potash mining projects.
In return, Highfield would issue new ordinary shares to Yankuang, making Yankuang the firm's largest shareholder.
The deal would also see Highfield raise $220mn, of which Yakuang would provide $90mn, to fund the Muga project, which would mean that phase 1 of the project — with a capacity of 500,000 t/yr — would be fully funded.
Highfield Resources began initial construction at the 1.3mn t/yr Muga potash mine in 2022. The project is located in the provinces of Navarra and Aragon close to Atlantic ports, ideal for shipments to the US and Brazil, as well as the MOP market in Europe.
The Southey project has a planned MOP capacity of 2.8mn t/yr utilising solution mining. It has already acquired environmental approval and completed a feasibility study.
The prospective deal represents a potential production capacity of 3.8mn t/yr across all the potash projects.
