While global markets have done little to cool investor anxiety this year, Foster Stockbroking is eyeing potash-focused Highfield Resources Ltd (ASX:HFR) as a potential winner.
In a research paper published this morning, the firm lauded Highfield’s receipt on Wednesday of two key licences for the construction of a process plant at its Muga potash mine in northern Spain.
Construction-ready
Granted by the Townhall of Sangüesa in Navarra, the licence follows a separate permit — received in June 2022 from the Townhall of Undués de Lerda in Aragón — for the construction of the mine itself. With both licences now in hand, Highfield has all the necessary permits to begin full-scale production of the Muga project.
“The grant of the pending construction licence in Navarra for the process plant is a critical milestone for Muga,” Highfield Resources chief executive Ignacio Salazar said.
“I do not think I am exaggerating by saying that we all feel this licence closes a long permitting chapter for Highfield.”
That, according to Foster Stockbroking, leaves financing as the only remaining concern. Highfield has already secured a €320.6 million (A$520 million) debt facility with a syndicate of banks, but is now seeking contribution from a strategic partner, such as a private equity group.
All going to plan, Highfield is expected to land both financial backing and a final investment decision by mid-2023. That would give way to a two-year construction period beginning in the second half of the year, with production to begin in late-2025.
12-month forecast gets a modest rise
Though Foster Stockbroking maintains a high-risk sentiment for Highfield, it also lists the company as a “buy”, boosting its 12-month share price target from $1.82 to $1.83.
Based on the company’s closing share price on Thursday of $0.64, that would represent an investment return of almost 186%.
Written by Oliver Gray.