(MENAFN- ProactiveInvestors)
() has signed a Memorandum of Understanding with the Port Authority of Pasajés covering port capacity product to be produced and exported from its wholly-owned Muga Potash Mine in Northern Spain.
The company is also continuing negotiations for a similar agreement with the Port Authority of Bilbao.
The Atlantic Port of Pasajés is located 150 kilometres north by road of the Muga Mine site and is one of the largest commercial ports in the region.
With landside rail and road connections it currently handles around 3 million tonnes of dry bulk product annually and in addition is the export hub for some 600000 new cars and vans.
The port has confirmed available capacity of over 1 million tonnes of product per annum while the MoU confirms minimum capacity of 440000 tonnes of product per annum.
Earlier this month Highfield lodged a mining concession application for Muga using an improved mine plan capable of producing more than 1 million tonnes of K60 product per annum.
Key milestones are approaching with the DFS on track for completion in March 2015; targeting commencement of construction in the fourth quarter of 2015; and targeting first production in the first half of 2017.
€œLogistics and in particular port capacity are key to our commercialisation strategy especially to markets outside Europe€ managing director Anthony Hall said.
€œThe Port of Pasajés is closer to our site and on an operating cost basis should give us a better result relative to the logistics solution that was contemplated in the Pre-Feasibility Study.
€œWe continue to negotiate a similar MOU with the Port of Bilbao to maintain optionality and to ultimately allow for greater scale from our potash mines.€
Port capacity available
The MoU with the Port Authority of Pasajés gives a non-binding commitment of port capacity for all product that is expected to be produced and exported from the Muga Project.
It also confirms the availability of significant port capacity.
Under the MoU both parties will work together to locate shipping facilities at the Port enabling in excess of 440000 tonnes of product handling per year.
This is planned to be available and operational from early 2017.
Importantly the facilities will allow for the shipment of over 1.5 million tonnes of product each year.
The collaboration is based on providing port facilities which will include:
- 100 metres of quay frontage;
- 6000 square metres for the construction of storage and handling facilities; and
- Additional space for vehicle manoeuvres and unloading.
Negotiations are continuing with the Port Authority of Bilbao for similar facilities which will give the company options in optimising logistics solutions for its sales and distribution of potash and related products.
Muga Potash Mine
Highfield recently lodged a mining concession application for the project.
This includes an improved mine plan consisting of two declines for underground mineral extraction and two 400 tonne per hour processing lines capable of producing more than 1 million tonnes of K60 product per annum.
Initial mine life estimated at 19 years with likely upside from recent drilling success and substantial unexplored permit areas.
The Muga Potash Project targets the relatively shallow potash (sylvinite) beds in the combined Muga-Vipasca Project that covers an area of more than 110 square kilometres.
Global fertiliser market
The global fertiliser market is worth around $200 billion.
Potash also known as Muriate of Potash (MOP) or potassium chloride (KCl) is the most common method of providing potassium to crops.
Over 95% of production is destined for use in fertilisers.
The global consumption of MOP is currently around 60 million tonnes per annum but this is expected to trend upwards as population grows and hence food demand grows.
Different views on production capacity exist but most believe there is a capacity gap beyond 2020.
Analysis
۪ Memorandum of Understanding to secure port capacity with the Port Authority of Pasaj̩s reinforces the value of being in a first world country.
Port of Pasajés is located just 150 kilometres by road from the Muga Project has landside rail and road connections and has available capacity of over 1 million tonnes of product per annum.
In addition the company continues to negotiate with the Port Authority of Bilbao for a similar agreement.
This gives the company two port options with the capacity and the willingness to provide port capacity saving time and money that will flow through to strengthen project economics.
Key milestones to come for Highfield:
- DFS on track for completion in March 2015;
- Targeting commencement of construction in Q4 CY2015; and
- Targeting first production in 1H of CY2017.
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