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Highfield Signs Contract for Construction of the Declines at Muga Potash Project

Highfield Resources Limited ASX:HFR 5 mins read

 

HIGHLIGHTS

  • The construction contract for the declines and underground mining infrastructure has been signed with the Portuguese/Spanish joint venture, EPOS-TUNELAN

  • The contract value is aligned to the estimated construction cost of the declines included in the Updated Muga Feasibility Study of 7 November 2023 (refer ASX announcement, “Updated Muga Feasibility Study”)
    • The value of the decline contract is €48 million which represents 11% of the phase 1 Capex of €449 million and just under a third of the total planned contract-construction budget

  • Works are expected to commence in H1 2024 upon completion of funding and Final Investment Decision

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Commenting on the contract with EPOS-TUNELAN, Highfield CEO, Ignacio Salazar, said:

“With progress being made on the remaining funding, we are signing the contract for the construction of the two declines and underground mining infrastructure. Our team has delivered another major milestone that is key to allow us to start the construction of the main facilities at Muga.

We are working hard to finalise the Civil Works and Urbanization contract. And with that, we are well prepared to start construction and build Muga to deliver a new and robust source of a critical fertilizer located strategically in the middle of the western European market.”

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Highfield Resources (ASX: HFR) (Highfield or the Company) is pleased to announce the award of the contract for the construction of the declines and underground mining infrastructure at the Muga-Vipasca Potash Project (Muga or the Project) to the joint-venture formed by mining specialist contractors EPOS-Empresa Portuguesa de Obras Subterráneas S.A. and TUNELAN-Obras Subterráneas S.A. (EPOS-TUNELAN).

 

Declines and Underground Mining Infrastructure Contract

The contracting strategy for the Muga-Vipasca Potash Project will employ an owner-managed project delivery model that envisages the construction of the declines and the underground mining infrastructure to be undertaken by a specialist mining contractor and the civil works by a general contractor. Following a rigorous tender process, Highfield has signed a contract for the construction of the declines and underground mining infrastructure with the EPOS-TUNELAN joint venture.

EPOS and TUNELAN submitted a joint offer. The combination of these two companies will take advantage of the synergies created by EPOS’ extensive experience in multiple mining and underground construction projects in different projects in Europe and the Americas along with TUNELAN’s local knowledge of Spanish construction regulations as well as its extensive practical working experience with equipment (eg. Roadheaders), similar to that which will be used in Muga.

The EPOS-TUNELAN lump-sum based contract value (€48 million) is in line with the estimated capital cost included in the Feasibility Study published on 7 November 2023 (refer ASX, “Updated Muga Feasibility Study”). A Final Investment Decision needs to be reached by Highfield and funding completed as a condition precedent to initiate any payment under this contract.

The scope of the contract covers:

  • the construction of two parallel declines, each 2.6km long, with a cross section of 32m 2 and a 15% slope to access the mineralization at a depth of 350 metres;
  • the construction of crosscuts that connect the parallel declines and a bypass gallery for the mine’s main fans;
  • the construction of the declines’ pumping stations, which will be used to collect and pump out any water that could infiltrate into the declines;
  • the construction of the surface facilities to treat the fresh and saline water collected in the declines during construction;
  • the construction of the underground mining infrastructures which include 2 km of underground drifts within the potash deposit to access the production panels, and where the principal conveyor belts will be located;
  • the ore transfer room, where ore is transferred via conveyor belts from the various mining areas to the main decline conveyor belt, hauling the ore directly to the process plant;
  • the electrical room, from where the electrical network will be connected to the mine;
  • the backfill transfer room, where the backfilling material is distributed to the different conveyor belts and transported to the different mining areas; and
  • other facilities such as the water tank room, from where the brine water network will be distributed to the mine.

(refer Figure 3 for a diagram of the underground infrastructure)

Figure 1 – Photo showing mine gate

Figure 2 – Map showing location of the Declines and Infrastructure

Figure 3 – Underground Infrastructure

 

The design and engineering of the declines and underground infrastructure was developed by international engineering company Systra-Subterra, which specialises in underground projects. Systra–Subterra will provide technical support and supervision during the construction of the declines and underground infrastructure at Muga.

The duration of the construction agreed with EPOS-TUNELAN covers 26 months and is consistent with the overall schedule of the Project. Highfield and EPOS-TUNELAN will work together in recruiting the construction teams, paying particular focus on hiring local personnel.

Excavation methodology

Both declines will be excavated using trackless mobile equipment. Three roadheaders and one conventional excavator in combination with a boom jumbo and two bolters will be utilised for excavation, face drilling and rockbolting. While four 30-tonne low profile mining haul trucks and one 14-tonne load-haul-dump loader will be used to transport material to surface. The development excavation will be supported by sprayed concrete and rockbolts. The thickness of sprayed concrete and bolt spacing have been determined by the geological surveys developed by the drilling undertaken and will be confirmed during construction with specific scheduled horizontal drilling.

Once the bottom of the declines is reached, the main conveyor belt will be installed in the eastern decline, which will allow the continuation of the excavation works for the infrastructure by hauling the material directly to the surface.

Highfield and EPOS-TUNELAN are negotiating the purchase of equipment which is suitable not only for the declines’ construction but for mining as well, especially road headers, trucks, loader and bolters, among others.

 

About EPOS-TUNELAN

Established in 1921, EPOS is a Portuguese mining company, part of the construction group Teixeira Duarte, with an operating income of € 904 million and 9,500 employees in 22 countries. Recent EPOS mining works include AngloGold Ashanti (Cuiabá Mine in Brazil), Lunding Mining (Somincor, Neves Corvo mine in Portugal), Sandfire (Matsa Aguas teñidas mine in Spain) and Minas de Alentejo (Aljustrel mine in Portugal). In addition to mining, EPOS operates in all areas of underground work, both in tunnels and in other types of infrastructures, with multiple constructions works developed for roads, railway, hydraulic, and hydroelectric projects.

Tunelan Obras Subterráneas, S.A. specializes in the construction of tunnels and underground civil works. Tunelan is part of the construction company Altuna y Uria, S.A., one of the leading companies in the sector in the north of Spain and is recognized for its track record in the field of large public works.

About SYSTRA-SUBTERRA

Subterra is one of the main engineering companies specializing in underground works in Spain and Latin America. In Spain they participated in the engineering and technical assistance of mines like Cabanasas and Las Cruces. In Latin America they have worked on mines like Los Bronces and Chuquicamata in Chile, Quebradona in Colombia and Quellaveco and Antamina in Peru. SYSTRA, which is the parent company of Subterra, had a turnover of €902 million in 2022.

 

-ENDS-

This announcement has been authorised for release by the Directors of Highfield Resources Limited.

 

For more information, contact:

Elvis Jurcevic
Investor Relations – Australia
+61 408 268 271
ej@highfieldresources.com.au

Ignacio Salazar
Chief Executive Officer
+34 948 050 577
ignacio.salazar@highfieldresources.com.au

Olivier Vadillo
Investor Relations – Global
+34 609 811 257
olivier.vadillo@highfieldresources.com.au

 

 

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