Highfield Resources Limited (HFR) Earnings Call Transcript & Summary

And welcome to the Highfield Resources Limited 2024 AGM webcast. I'd now like to hand the conference over to Mr. Paul Harris, Chairman. Please go ahead.

Thanks very much. Good afternoon, everyone, and good morning to those in the Northern Hemisphere. And welcome to the Highfield Resources Annual General Meeting. It's now 3:30 in Adelaide. So I declare the meeting open. My name is Paul Harris, and I'm Chair of the Highfield Resources and also Chair in the meeting today. I advise that we do have a quorum here today, and that is in accordance with the company's constitution. So I declare the meeting open. The team here today, to my left here, I've Katelyn Adams, our co sec; Pauline Carr; and Luke Anderson and also 2 of our nonexec directors. And also in line, we've Roger Davey from London with his hand up there. Also on the line is our CEO and Managing Director, Ignacio Salazar from Pamplona. We also have Olivier Vadillo, who's Head of Investor Relations also on the video link. And there'll be -- both Ignacio and Olivier will be giving a presentation after the formal part of the meeting. Also here, we've with us Elvis Jurcevic, who is -- helps us with our IR here in Australia. And we also have Julian McCarthy from PwC who's our company's auditor, who's the leading engagement partner from PwC, and who can certainly be asked any questions in relation to -- yes come in -- in relation to the accounts. So firstly, just we're going to touch on administration. We'll firstly cover the formal items of business and any shareholder questions relating to each of those resolutions. And then Ignacio and Olivier will provide an update presentation. And then finally, other shareholder questions will be addressed at that point in time. So before we start for part of the meeting, I'd like to give a couple of quick housekeeping points. Questions to the Board or the auditors regarding the financial report or specific to the resolutions being presented today will be addressed throughout the formal section of the meeting. All other questions will be addressed after the Chair's address and the presentation. When asking questions, please state the registered holding name, and if appropriate, the specific resolution the question is relating to. For those attending virtually, can you submit the questions verbally and typed. If you wish to ask a question verbally, you will need to dial into the conference using the details that are shown underneath the webcast video. At the relevant item of business, please press the star key, followed by the #1 on your telephone keypad. To withdraw your request, please press star then 2. If you wish to ask a question via the webcast, you may do so at any time by typing into the Ask a Question box and clicking Submit. If you require any technical assistance during the meeting, please click on the help function on this webcast. Now we don't have any formal apologies today. So I'd like to just like to very quickly give the Chair address, which has been lodged with the presentation, which Ignacio and Olivier will be going through that's been lodged on the ASX in the last half hour. So formally, in terms of the Chair address, I'd like to welcome everyone from around the globe for this afternoon's AGM. This year has been a significant one for Highfield with substantial progress made on our flagship Muga Potash Mine and also changes to our Board of Directors. In addition to the amazing efforts of securing all the key mega projects in 2023, we updated the Muga feasibility study, which reconfirmed the outstanding project metrics of the 30-year mine life. The project economics are robust with an NPV8 of over EUR 1.8 billion, which obviously converting to Aussie, that's a fairly significant number and a 24% IRR post tax. The EBITDA is projected to be EUR 340 million per annum in full production. The pre-production capital at -- for Phase 1 has stayed constant at EUR 449 million. We're strategically located in the middle of the Western European market, with excellent access to ports, transport and renewable grid power. Our mine access is straightforward with shallow mineralization and low technical risk with the conventional mining and processing methods. We continue to work diligently to secure the remaining financing required for Phase 1. We're in negotiations with a range of parties encompassing strategic partners, non-dilutive royalties, equity and offtake agreements. We like you have bee frustrated with the time taking to finalize these negotiations and will update the market as appropriate. We're delighted to have signed a binding offtake agreement with Maxisalt, a global Spanish chemical and salt producer and trader, to supply 75,000 tonnes per annum of by-product salt. During the year, we welcomed Mr. Luke Anderson to the Board this year. A qualified chartered accountant, Mr. Anderson brings over 25 years of experience in executive management, corporate development, corporate treasury, financial management and financial services in major international resource and transport companies across Australia and the United States. We certainly mourn the loss of our esteemed Board member, Mr. Brian Jamieson. His wisdom, passion and intellect will be greatly missed and has been. With the recent signing of our key construction contract with the EPOS-Tunelan construction start of the declines and underground facilities is planned to start later this year. We're very excited about the start of construction and look forward to keeping you updated on our progress. I'd also like to take the opportunity to thank our fellow Board members and management team led by Ignacio, and our dedicated employees for all their efforts over this year. I'd very much like to thank all of our shareholders for their loyalty and continued support over the last -- past challenging year. We're now at the junction of a very exciting stage in Highfield's development, and I look forward to Highfield continuing its positive trajectory towards becoming a successful and sustainable long-life producer of potash. So thank you, everyone. I'd like -- now like to move to the formal part of the business of this meeting. The notice of meeting was made available to all shareholders on the 30th of April in accordance with the Corps Act. If there's no objections, I propose that the notice of meeting be taken read. I advise that no that no notice of any other items for today's agenda has been received and therefore declare that the only matters for our meeting today that can be dealt with are those set out in the notice of meeting. In terms of voting, given this meeting is being held as a hybrid fashion, we'll be conducting votes on each resolution by way of poll. Shareholders attending virtually could access -- should access the URL as shown on the slide and follow the prompts to log in. When I shortly open the poll, please refresh your browser to be taken to the voting screen. To vote simply select the direction in which you'd like to cast your vote for each resolution. You must select next and then confirm to submit your vote. You'll be able to amend your vote until I close the poll. Instructions on how to access the electronic voting portal and the -- and a guide for the portal are available under the video of this webcast. For those attending in person, you should have received a voting card on which you can record your voting preferences. Please complete your voting at the appropriate time and then submit your voting card in the ballot box that will be circulated. Once the poll voting has been tallied, the results will be posted on the ASX following the conclusion of this meeting. Any directed proxies given to you by the shareholder will be automatically cast as directed to me, directed as when the poll is closed. I note any undirected votes available to me as Chairman, I intend to vote in favor of each item of business. In terms of the proxy votes submitted by the due date for the lodgement of proxies for each resolution will be set out on the slides that will be shown for each resolution following. Any shareholders attending virtually are encouraged to submit your questions through the Ask a Question box. Please include your registered shareholding name and the specific resolution of -- or item of business that it pertains to. You may also ask a verbal question by following the instructions below the webcast. The poll will remain open for a few minutes after the conclusion of the final item of business to allow votes to be submitted. I now declare the poll open on the resolutions. Those in attendance in person should receive your attendee card on entry. If you're not done so, please raise your hand. Those holding pink cards are entitled to vote. Today's resolutions will be voted on by poll, as I've said. If shareholder, whether voting by person, by proxy or by representative, is entitled to 1 vote for every share held. Your voting paper is on the reverse side of your pink card. Please complete your voting papers and submit it in the ballot box that will be circulated at the conclusion of the meeting. For those who are attending virtually, to vote electronically, you'll need to minimize your webcast on the device and separately visit the URL for the electronic voter portal that is again shown on the screen and under the webcast video. Okay. So we're now going to move to the ordinary business, which is the financial report, directors' report and independent auditor's report. So the first item of business is to receive and consider the financial report, directors' report and independent auditor's report for the financial period ending 31 December 2023, after which we'll continue the formal resolutions to be addressed in today's meeting. Note, as I've noted before, Julian McCarthy from PwC, the company's auditor, is available to answer any questions. We're not required to formally adopt these documents. However, I invite discussion of the financial statements should anyone have any questions. I inform the meeting that a copy of the company's annual report for the period 31 December '23 was lodged with the ASX on the 27th of March this year and sent to those shareholders who requested a hard copy. Copy of the '23 annual report is available for download from the company's website. So are there any questions in relation to the statements? We do just see -- no, we do have questions that have been -- we had received some questions online, which we'll answer at the appropriate time for the resolution. But if there are no questions in relation to the financial statements, we'll move to resolution 1. I inform the meeting that the explanatory notes accompanying the notice of meeting and the company's financial statements provides the background and details of the remuneration report. Please note that key management personnel of the company's leading directors and their closely related parties are excluded from voting on this resolution as set out in the notice of meeting. I now move the motion to consider and, if thought fit to pass, with or without amendment, the resolution contained on the slide as an ordinary resolution. I now invite discussion of that motion and will allow time to submit questions. Whilst I'm allowing the time, the directors unanimously recommend that the shareholders vote in favor of adopting the rem report. Proxy votes received for the resolution are displayed. This resolution is currently open to vote by conducting a poll. For those attending virtually, if you haven't done so already, please now electronically cast your vote on this resolution. For the members in physical attendance, please complete the voting papers, which will be collected after the meeting. [Voting]

Are there any verbal questions to be answered?

Chair, there are no phone questions for this item.

Thank you. So with no further questions, I'll move to the next item of business, which is resolution 2, reelection of Mr. Roger Davey. I inform the meeting that the explanatory notes accompanying the notice of meeting provides the background and details of this item. I refer to the resolution as presented to you on the slide. And I'll now move the motion to consider and if they'll fit to pass with or without amendment that Mr. Roger Davey, having voluntarily retired in accordance with Clause 12.11.1 of the constitution and being eligible and offering himself for reelection, is reelected as a director with effect immediately following the conclusion of the meeting as an ordinary resolution. I now invite discussion of that motion and will allow time to submit questions. While we wait, I'd like to inform that each of the directors with Roger abstaining, recommend shareholders vote in favor of this resolution. The proxy votes received for this resolution are displayed. This resolution is currently open to vote by conducting a poll. For those attending virtually, if you haven't done so already, please now electronically cast your vote. For members in attendance, please complete your voting papers, which will be collected after all businesses have been considered. [Voting]

Are there any verbal questions from the floor?

Chair, there are no phone questions at this time.

Thank you. So we'll now move to resolution 3, which is the election of Mr. Luke Anderson as Director. I inform the meeting that the explanatory notes accompanying the notice of meeting provides a background and details of this item. I refer to the resolutions presented to you on the slide. And I now move the motion to consider and if thought fit to pass with or without amendment that Mr. Luke Anderson being a person who, in accordance with Clause 12 of the constitution, has at least 35 business days before the meeting served on the company notice of nomination to be a director. He's elected as a director with effect immediately following the conclusion of the meeting as an ordinary resolution. I now invite discussion of that motion and will allow time to submit questions. Whilst we wait, the directors with Luke abstaining, recommend that shareholders vote in favor of this resolution. The proxy votes received for this resolution are displayed. This resolution is currently open to vote by conducting a poll. For those attending virtually, if you haven't done so, please electronically cast your vote. And anyone in physical attendance, please complete your card. [Voting]

Are there any verbal questions in relation to this resolution?

There are no phone questions for this resolution.

Thank you. With no further questions, I'll now move to the next item. Resolution 4, issue of options to Non-Executive Director, Mr. Luke Anderson. I inform the meeting that the explanatory notes accompanying the notice of meeting provides the background and details of this item. I refer you to the resolution as presented to you on the slide. And I'll now move the motion to consider, and if thought fit to pass with or without amendment the following resolution as an ordinary resolution that for the purposes of Section 195(4) of the Corps Act, Listing Rule 10.11 and for all other purposes, approval is given to the issue by the company of 1 million options to Mr. Luke Anderson or his nominee on the terms and conditions set out in the Explanatory Memorandum. I now invite discussion of that motion, and we'll allow time to submit questions. Whilst we wait, I'd like to inform that each of the directors with Luke abstaining, recommend that shareholders vote in favor of the resolution. Proxy votes received for this resolution are displayed. This resolution is currently open to vote by conducting a poll. For those attending virtually, if you haven't done so already, please now electronically cast your vote. And for those in the attendance, please complete your card. [Voting]

Are there any verbal questions to be answered in relation to this resolution?

No, there are no phone questions for this resolution.

Thank you. So with no further questions. I now move to, I think, the final resolution. Yes, the final resolution, which is the approval of the 10% placement facility. So I inform the meeting that the explanatory notice accompany the notice of meeting provides the background and details of this item. As the approval of the 10% placement facility is a special resolution, I note that it requires the approval of 75% votes cast by shareholders on this resolution. I now move the motion to consider and, if thought fit to pass with or without amendment, the following resolution as a special resolution as opposed to an ordinary one. That pursuant to and in accordance with Listing Rule 7.1A and for all other purposes, shareholders approve the issue of equity securities up to 10% of the issued capital of the company at the time of the issue calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions set out in the Explanatory Memorandum. I now invite discussion of that motion. We'll allow time to submit questions. Whilst we do that, the directors recommend shareholders vote in favor of this resolution. The proxy votes received on the resolution are displayed on the screen. This resolution is currently open to vote by conducting a poll. If you're attending virtually, please now electronically cast your vote. And if you're in attendance, please complete your card. [Voting]

Are there any verbal questions to be answered in relation to this resolution?

Chair, there are no phone questions for this resolution.

Okay. Thank you for that. So just for those in attendance physically, please complete voting papers and they'll be collected shortly by Jake here. So this concludes the resolutions to be presented at this meeting. Please submit any votes through the online platform for those attending virtually. For those attending in person, please submit your votes in ballot box, which will come around now. I'll allow for a few moments the voting to be completed. So this concludes the formal part of the AGM of Highfield Resources. So once they're collected, we'll close the poll and the results of the meeting will be released to the ASX when they're tallied later today. So we thank you all for attending the Highfield Resources Limited Annual General Meeting. And we declare the formal meeting closed. I'd like to hand to Ignacio and Olivier in a minute to give an update on the company's activities and the presentation that they'll be talking, it has been lodged online. There has been a couple of questions. So I'm just going to -- so we're going to move now to the informal part of this just before you move to the presentation of this sort, given we've got questions coming in at different points. We've had one question which I might just kick off quickly now. Just in relation to why directors haven't been buying shares at multiyear lows? It's a really good question. And I actually had a meeting with one of the significant shareholders recently with, I think, Ignacio was on the line as well, yes, you were. And it's a good question because it is a multiyear lows and it's incredibly frustrating for everyone, and I did inform that -- to that shareholder with my personal circumstances, I've recently bought shares in 2 other companies that I'm involved with. I can't buy shares in the company at the moment. And I can say that the other directors can't either. So it is frustrating, and that's a good question from Mr. Harrington. So hopefully, there will come a point in time, where we all claims that we can because it's certainly a significant attractive value at this point in time. So what I might do now is move to the informal presentation from Ignacio and Olivier. So I'm going to pass over to you, Ignacio.

Thanks a lot, Paul. And good afternoon, everybody. Good morning to those coming -- let's say, in this part of the world. And very glad to see you. I'm together with Olivier, we go through the presentation, obviously, focusing on progress. But to keep you hopefully a good overview. If we move to the next slide, we've the usual disclaimer. And the next one, please. Just coming to the beginning of the presentation. Obviously, you've seen this many times, but just good to go through this once again. We're obviously based in Northern Spain, in Pamplona, the Muga is a 2-phase project, 1 million tonnes of MOP at the end of the second phase, 0.5 million first phase. That is what we're now transitioned to construction of the phase. And very standard conventional underground room and pillar, and conventional flotation and crystallization processing. So easy -- well, not easy, but straightforward methods. And declines rather than shafts with many people see at these potash projects, probably are taking a bit with the complexity of technical side of the project and our -- in our case, with Muga very conventional techniques here. While you see that apart from Muga, where we obviously are putting 99.9% of the attention, we've other very interesting projects in the future in Sierra del Perdon, where we could have another Muga closer to Pamplona and moving into Aragon. We'll go to the next one, please. Well, talking about the potash markets and obviously, Olivier is here, if any other further questions, but very strong fundamentals. I think we know that is difficult to argue against it. Arable land decreasing, as you see there, and the population growing, that is not going to change. The only way for that equation to work -- to create, let's say, to generate more crops, more food for the planet with more people when you've less land is through the NPK. And K, of course, is potassium, it's very important element. And that NPK is responsible for more -- well, around half of the current production in the world. So it's not a small matter. And you see what happened. We discussed this in the past, COVID and the invasion of Ukraine created that big spike, but the fundamentals going forward are still there. And that's why companies like BHP, Anglo keen in the future in this commodity -- still are relatively not as well known as copper or gold obviously, and sometimes confusing MOP with SOP, especially in Australia. But it's a commodity with a very strong future. And as I said, that's why these bigger companies are very keen to get in. Next one, please. We get simply an introduction and especially, let me focus on the progress. Please, next one. The team, let me say that, very quickly lean and mean team. Obviously, we, not by design, by necessity, had several changes in the past on the permitting social area. After that, on the financial -- financing area in the team from -- well, at the time of transition in the company. And we've been doing some changes as well in -- I mean, the latest one, probably, Carles, who's the former President of ICL Spain. It's the older potash -- was the only potash mine in Spain, so very relevant experience. But the technical team as well been -- being changed and being operated as we more forward. A lot is still to be done or something -- obviously, at the moment that we get ready for construction that will be as well -- that thing will be revamped as where we're a bit holding. But a very much everybody focused in Spain with a lot of construction experience, mining experience and well, very much tested in the last few years more on the financing and permitting and social sites. And now moving into the next phase on construction. So next one, please. Well, this is -- let me go quickly. I think everybody will be pretty aware of developments, but we started doing this ticks on the box because a lot of times -- and we're going to focus obviously what is spending, but let me start quickly going through what has happened because we sometimes tend to -- just to keep a bit of an overview. So we were fully permitted and I'm sure for many shareholders, major and all of us major, let's say, step in this company. And this is the end of March, beginning of April 2023. That is where we got the final license from Sanguesa. We very quickly got into -- we call it successful because indeed, we got a fast-track expropriation process, which is not necessarily -- well easy to get. But the meaning of that is that we've access to all the land we need even if there is some work still to be done in terms of fixing the prices with a few -- well, 2 or 3 really landowners who still are well debating with us, but that's normal. The important thing is the access to the land is guaranteed. We signed a binding agreement on salt already. For us, we always have said that. We feel the offtake is the -- it's not something that has to manage, it's the biggest strategic advantage of this project. So in fact, we're -- for us, that is right now a tool to get equity and financing rather than something that has to be taken care of, but on the salt side rather than potash, we felt it was a good move. Economics updated. Again, in the Australian environment, huge concerns during '22, '23 about inflation pressure. So that was a heavy effort, not only just to get the final numbers updated, but is also through a tendering process and a lot of discussions with contractors, suppliers. And that's why, by the way, I maybe jump in something that we did in '24 was no surprise to us that the agreements we signed with Acciona and EPOS were fully in line with the economics we presented at the end of '23 because obviously, we signed the agreement in '24, but a lot of work have been taken place before that. A construction preliminary works. We see that in a minute. Financing, I've another slide. I'll talk to that. That is the one is a lot of work and progress, but that is where we're missing the final piece of the puzzle to transition to the bulk of construction as we know. Maybe the next one, please, is where very simply the picture. Not -- we've discussed this a few times already for, again, people waiting for the permitting and waiting for the project. I'm waiting for the beginning of construction, Important to say that we already started construction. It's not a small work. This is the box cut and some -- a few shareholders have been there and many investors. So I think it's been for the communities, for the investors, shareholders, it's good to see that this is already becoming very real. And this is -- at the beginning of '24, this was completed. So please, the next one. Well, yes, I refer to that quickly because the prior -- previous slide was 23, this is 24. Now in the last few months, the construction as we see the beginning of the bulk of construction approaching quickly, then we've formalized our discussions and negotiations with EPOS-Tunelan for the construction of declines. I think they're very well -- not sure how much these companies are known, but very strong Portuguese company, EPOS with a lot of experience in South American mining. Tunelan is the contractor, who does all the tunnels in Northern Spain. So we feel it's a very good joint venture and the right candidate to do the declines. Acciona, I think they tell me they've bigger business in Australia than in Spain, but obviously, from a civil work point of view, in Spain, probably again, is the best candidate. So not only we're -- have signed these agreements in line with our plan, but also, I think this is the right structure and the right candidates to help us through the process. And we made a point in our latest press release, I think, obviously, a lot of anxiety about how the rest of the financing is going. So it is a lot of work that is difficult to communicate when, obviously, with -- given disclosure obligations, but very much in the -- and I'll refer to that in a minute. These negotiations coming to be completed at the end of the quarter 2. The next one, I think we've the funding. So let me expand a bit on that. But basically, I know these are debts, but I consider that also an asset. The trade finance debt with these 6 banks, I mean, sometimes we get questions completed -- committed, secure, so that is there. And they're obviously very much going together with us through the final strategic process and financing process, very keen to see and very committed to the company and to the efforts we're doing for -- you can imagine banks like this. So that is, as I said, done. We have, in addition to that, the EUR 25 million from Macquarie that is probably a more straightforward lease on mining equipment and that is obviously in place, where all the effort has been taken place in the last few months. And especially after the permitting, it's very difficult to -- overall very little appetite for strategic investors to take any permitting risk, but after the permitting is in place, has been on the strategic process. The company that's -- the size of the company doesn't allow to go to the market and raise the money there. It has to be -- their needs to be on a strategic. I think we all are aware of that, that not only reduces the gap -- the equity gap, but also at the same time, provides reassurance to the rest of investors in the market to complete the financing. So we discussed that. We look at this -- we're really working with a strategic and by strategic, it's not simply people that are going to put their money to complete the gap. There are synergies and there are -- well strategics been doing the business together. And we felt and compelled in the last press release to express within the limits. I mean, compared to -- I can understand anxiety on the side of investors and shareholders to know what's going on, and you can understand frustration on our side that we're very limited compared to the permitting process, where we were obviously -- it's a lot easier to communicate progress. Here, we're very restricted what we can say. So I think what we want to transfer is that we've plans in place with strategics and agreed plans in which the negotiations conclude at the end of quarter 2 or around that point and that is what we transfer to the market. So the process going through, I think, based on very solid foundation now. So really strategies and the sort of the way I maybe try to say is the sort of deals that will create a value in itself. It's not simply -- well has a bit of money, but create value by creating synergies. So hopefully, that is closed and then okay, that will be the final piece when all the rest is, as you can see, very much advanced and progress. Next one, please. I'll try to -- for a bit of time, cover progress and show, as I said, typically, I mean, those ticks in the box simply to keep an overview of what is -- has been done, which is quite a lot on what is spending, that is obviously the main emphasis right now. And as I said -- as you also know, once we're ready, the construction of the mine would be 2.5 years. So -- and we feel very confident, marketing, offtakes everything else just in the right place. Preparation for construction is there. Obviously, the technical team as soon as we're ready, will have an increase. And well, we're absolutely convinced that's ready to go and build Muga on time and on budget. Next one, please. Highfield resources. We've a very -- I think, 1 slide, the next one, simply to summarize. I think people are pretty aware of this. In terms of the market and the sector, very difficult to argue long-term fundamentals for potash MOP. In this case, very -- it's a commodity as now is defined critical future-facing community. So very, very strong thematic, where companies like BHP and as I said, Anglo are coming in. And all of that in a project, Muga that, in my view, again, difficult to argue it's strong competitive advantages. The location is the obvious one compared to peers in Canada or in Russia that has to track, well, 2,000 kilometers to get to the port and then go long distances. We'll be tracking -- I mean, a lot of farmers or customers will come to our mine to pick up the -- the potash location is obviously the most important one. Shallow mineralization, again, so that means no shafts and all the infrastructure outside the mine in place. I mean, anybody who has visited the mine has been really very surprised to see, well, everything that is and how it is, and how easily accessible, again, once you compare to other projects. That means very strong margins, top quartile. The levels of EBITDA of EUR 340 million. Net present value, EUR 2 billion -- close to EUR 2 billion, so very appealing economics. And again, with great finance in place, which is very attractive and ready from the permitting and from the project perspective. So that is also very important to have the project ready to go. So that is the summary, please the next one of the sector and the project. And always a good reminder. We take it for granted, extremely strong environmentally. I mean, if anything else, the commitment and obligation of the mine, to rehabilitate the mine as we go along through backfilling and salt sales. There will be no residues left on surface. I mean, as they do in Germany and/or in Spain right now, the current mines that are 18, 19-year-old, of course anyway. And maintenance and some others. From a social perspective, all the work -- I mean, all the work we've been doing around the permitting, obviously, has been underpinned by our very strong -- very, very strong social support like -- and especially, by the way, the latest license and some of shareholders, which appreciate news on the Spanish papers, et cetera, who could have seen that. It's not only what we did, but all the community really leaning to get this through. And governance always, I think, very strong for a small junior company like us, always keeping very high standards, probably ahead of what all about, but typically the companies of our size typically have. So very strong credentials, very strong project in a very, very interesting potash business and really ready to go. So really looking forward to start the bulk of construction and making Muga in reality a real mine. I think next one -- that is everything. Paul, open to questions or comments.

Thanks, Ignacio. Just before we open the floor for questions, we've had a couple of questions online. One of the questions from Mr. Spencer was just in relation to Ignacio had an interview on potash, which if you haven't seen, you should read, it's a very good article. And Ignacio was -- made some comments around funding the CapEx, which -- and there was just a question from Mr. Spencer around if some more information around that. I think, Michael, Ignacio said as much as you probably call in relation to that in his presentation. There's a detailed slide on that. There's not much more he can say further than what was just recently outlined then. There's another question which I might just throw to Olivier, what the MOP price was used in the feasibility study versus current spot?

Yes. Thanks. Thanks, Paul. So current prices in Europe are still holding up pretty well. European buyers are still reluctant to buy from Russia. Belarus is still under sanctions. So we're seeing European spot prices around EUR 360 a tonne at the moment. The price in the model is EUR 435 a tonne, but -- to put that into context, that is obviously a 30-year average price. That price was provided to us by CRU. So we haven't touched that price or altered it in any way. And again, really, if you focus on that price forecast compared to where we're today, the first 5-year average in the model is actually EUR 325 a tonne. So it's very much below current European spot prices. The expectation is that the price will stay around these levels for the next 5, 6 years, and then we'll see a strong uptick in prices going forward. So very comfortable with where the model is at with spot prices. And obviously, at the moment, spot prices are outperforming the price forecast that we've in our model.

Excellent. Thanks, Olivier. That question was from Alex Rose. We don't have any more questions online at the moment. I just want to open the floor up to any questions. Keith?

Yes, Keith Banfield, long-term holder. And can I just say a couple of complementary things, especially about Ignacio, your presentations, I just feel are just 110%, well done. And you mentioned to the frustration that you've in wanting to give the information, but -- particularly about financing, but the restrictions that you've got, I cannot imagine them being frustrated. And on the -- someone asked a question about it, you're looking at a thing you're calling royalty providers. Could you explain for some of this what that -- what a royalty provider or receiver is? And in terms of the balance by way of benefits to HFR versus the benefits to the person presumably going to get a forever royalty for whatever finance they put in. Could you tell me where the balance lies? Is it an even balance on an ignorant position? It just appears to me that by God, a royalty provider puts the capital in, has no subsequent costs regardless of the performance of the company, they even get paid, as I understand it, per tonne of the good stuff that's extracted. I'd -- sorry, but I'd suggest that if we're looking at financing by that way, maybe that we might not be -- it may not be the optimum way of financing.

Yes. Okay. Well, many, many thanks for your comments, first of all, and thanks for the question as well. No, it is a very good one. Let me answer my own way. So maybe first of all, some of us in the Board, some shareholders, I'm aware of and myself. So we're under no illusion about royalties. It's not that we think it's a magic solution, and that's it, everything is great. We realize there is a balance here, absolutely. And has to be taken care of very carefully. Because exactly what you say, it is -- tends to be -- sorry, you asked me to explain what does it mean? They ask you -- they give you some money and they get a percentage of your top line. So you're right in the sense that they take from the top line, no matter what happens with your final profitability. So we're -- let me say, and maybe that gives you -- we're with our eyes wide open that these are solutions that are not -- well, everything perfect and happy going. It has a cost to the company. So with that in mind, when we've been looking at several options, I mean, this is one that -- simply, you've to balance. You've to balance the risk reward, the cost of the royalty compared to the alternative. And does it -- sometimes the royalty provider generates extra technical support because they -- obviously, they're specialists in the industry, so other shareholders are prepared to put equity. Sometimes as well, and again, I know -- and that is our frustration that we've to be at a vague in this. A lot of times -- or in our mind, sorry, I should say, we always try the royalty provider to come with an element of equity. So -- because we understand that there is -- in the interest of the company, they're fully aligned as possible. So I don't have a very -- it's not -- what I should tell you is that we're fully aware of the balance that needs to be a strike. It's not that we think is -- well, easy solution, and that's it. But it is something that, well, could -- well, obviously reduce the equity ask, could provide additional technical support to other investors to participate. And if you get -- if you strike the right balance in terms of economics, it may work. But no illusion that they take the money from the top line. They're also taking -- I mean, we're expecting the equity reward would be higher than -- or let me put, the royalty reward -- economic reward in economic trends should be lower than the equity reward. You need to strike the right balance and maybe that is the summary. And that is the way we've been working with this. And obviously, it's an option that we've to contemplate and we've been contemplating into the mix, not necessarily prefer or not prefer than others. But if the numbers work out, that is -- and we're going ahead with that, yes.

Once again, Ignacio, thank you for a brilliant presentation on that question. What I did mean at the beginning was also to highlight the ESG that Highfield have undertaken. And I think there's a bit of stuff going around now that suggests that companies are removing themselves from the ideas of ESG. But I'm so glad and proud that Highfield place ESG really highly, well done.

Yes. Many thanks for that. And maybe I'll make a very quick comment, if I can quickly. So I think because in -- the way I see it, we're really concerned. I'm thinking maybe those companies that are stepping out is because they were really more cosmetically stepping into ESG. We've, I think -- and that's why I like to talk about very specific points with the backfilling, with engagement. We've the level of engagement with communities, et cetera. This is really top ESG and we're really committed to keeping that direction. Well, by the way, in the case of equity, we don't have a choice. But in everything else, is really we're very committed. And talking to the international banks for the credit finance, we realize not only the right thing to do, but economically and even from that perspective, also deliver and this is the way we want to do the business. But thanks for your comments.

Thanks, Keith. Derek?

Well. Derek Carter here. Ignacio, how certain are you that you'll get this financed done by the end of the second quarter? You've got 4 weeks left.

Yes. No, I try to -- I explained a bit of that. So obviously -- and that's what I said is fully understandable the anxiety and hopefully, you understand our frustration that we cannot say a lot. But -- so -- and that's why we decided, let's say, what we know, and that is a fact and that we don't -- I mean, there's no disclosure issues. So we're working on specific deals, let me say, where the plan with the counterparty is to close around the end. I mean, if it's 30th of June or the beginning of June, we obviously cannot get -- but -- well, the plan itself, I know the date. I mean, it is by the end of quarter 2. But -- so that is a fact, and that is what we translated is obviously 2 parties at least or more that need to get work together, both parties, which is more than -- we're in agreement to do it, and that is where we're working. So that is what I can tell. What I can maybe tell you is the line of work we're doing now that is heading to this point, I'm sorry to be again a bit vague, I feel bad to be like that. There is nothing else I can do. It's a line of what we've been working for the -- I think that is maybe an important element. By the way, an important element that the credit finance banks sort of give -- put a lot of merit. It's the line of work we've been working for the last -- since we were in Australia in November. Let me put it that way. We got a bit of credit out of that. And we're working on that -- on those lines. What do I mean by that? It's not that, well, in February, we wanted -- we thought it was this. Now in February, we thought something else. And then in March, we changed it. In May, we think it's something else. Now, we've been working. This is a process that has gone one after another, and it is moving in the right direction. Again, it is a bit more, a bit less. It's not only up to us, so we can be fair. We said that because the plan agreed with the other parties is to do it in this time frame. It doesn't meet that, obviously, we're under a lot more, well, I think we're all -- once you're at this stage interested to get to close as soon as possible, but probably we more than anybody else. But okay, that is what we've and something that has been consistent for the last 7 months. So it's not jumping from one place to another. It's as much or as little level of comfort, I can provide, which I think is quite a lot of reasons why, at the end of the day, we thought one thing is not to be, well, careful and mindful of disclosure obligations, one thing is not to say anything. We felt that we could transfer or communicate to the market that we're getting close in the process. And you cannot guarantee an outcome, but it's a reasonable expectations that we're on the right track.

But maybe just to clarify Derek, just in terms of all that close, as per the page that had -- was in relation to progress to date and next steps, we certainly hope to finalize. And the aim is, as Ignacio said, it's all about this end of this quarter to close negotiations, but approvals and implementing that depending on which structure could take longer -- will take longer.

Sure.

Yes. That's how it does actually -- all fingers crossed. Any other questions from anyone else in the room? You've another one Keith? Yes.

Yes, I've. I think you'd be disappointed and Pauline would also be disappointed if I didn't put the Board and ask them again, when you're looking at raising equity, that you do consider options available to small shareholders you might wish to give -- you might just wish to confirm that it is in your mind? I guess, you do have your reasons for so far never accommodating, but at least you could reassure me that it is on the table.

All options are on the table. Look, you often do see companies raise equity and have a free attaching option, 1 for 5 or whatever. If our brokers and advisers at the time, feel that if we do have to go to equity to the market, which I'm not saying that we do, there's alternatives that we don't have to go to the market. But if we do and our advisers inform us that we need to, then we'll take their advice. If we don't have to, we won't because it's diluted. But I agree with you, Keith, definitely.

But if you say that, the brokers, where they're coming from, perhaps not -- may not be where I'm coming from and the other small shareholders. They're driven by benefit for effort. And there's a hell of a lot of firing around with small option holdings. And so when you say you'd take their advice, yes, bear in mind that their advice is coming from a different place to what I and maybe other small shareholders are coming from.

Thank you, Keith. I bear that in mind. Any other questions? Are there any other questions online, Darcy?

No, there are no further questions.

And I don't think we really have any other questions online or -- okay. So look, that concludes the meeting. Ignacio and Olivier, thank you for the presentation and the questions. And Roger, thank you for dialing in. Thank you to the Chorus team for organizing and having Aguado, our CFO online, I didn't recognize him earlier. So thanks for attending. And everyone who's here, some very long steady shareholders in particular. Derek, thanks for coming along. And I know there's a lot of long-standing and suffering shareholders online. So we do appreciate your support. We're frustrated like you, we're trying to work -- get this thing funded in and as soon as we'll -- as soon as we do, we'll be certainly coming to market to announce that. So thanks for your attendance today, and we look forward to the communications in the future. Thanks, Darcy.

Thank you very much. Thanks, all.