Snippets from a London broker forwarded by TC this morning ..
Dear All,
Please see my thoughts on Highfield’s share price reaction to the recent news article below. Having read the translation of the transcript of the Navarran Government session, I am confident in saying that the article is misleading and erroneous AND there is
no new news regarding permitting.
The article completely misrepresents the tone of the Q&A. The questioning revolved around job creation. There are a lot of people in Navarra who want to get jobs at Muga (Highfields development project). The questioning came from local politicians looking to understand to how people should apply for jobs and how many jobs will be created by the mine so that they could inform their constituents.
The article mentions a “proposal to initiate a process” of public consultation. Importantly, any such consultation falls OUTSIDE of the legislative requirement for the approval of a mine in Spain. It cannot be forced upon the Company as part of the permitting process nor can it delay the permitting process (in fact, it would be illegal to force the Company to do it… ). Highfield is working with the Navarran Government to help them be seen to be creating jobs in the region and we are the way for them to do that.
Key: HFR have already completed their consultation process and submitted their EIS. The consultation process passed through smoothly and the EIS provided answers to all of the environmental issues raised in the article (seismic, u/g water pollution, water draw and salt tailings).
Regarding when people should expect the mine to start: The newspaper picked two quotes, out of context, and that has been taken as the crux of the story. Minister Elizalde was responding to the following question: “what exactly are the steps that the Muga Mine of Geoalcali must follow … and how long would it take, in the best case, if the project is approved when can it be expected to start”
The Minister responded that she doesn’t have a definitive answer as to when the project will commence as the approvals is with the central Government in Madrid and, in particular, with the environmental department MAGRAMA.
This is because she is not involved in the process so would have no reason to know about the timing.
Comment: HFR is in the final part of waiting for permits. The market is predisposed to negativity on Spanish permitting and any article that casts doubt will have a magnified impact on the share price. This remains a world class project in a region that desperately needs jobs and there is no substantive reason that it should not be developed. Rather than rely on erroneous articles, please consider the fundamentals of the projects permitting path and take a view on value at this level. The company is now trading on 0.3x NAV on the cusp of permitting with c$90m cash and scope for bank finance to be approved shortly. Muga has a place at the bottom end of the cost curve in any Potash market so this is a major buying opportunity.
For an example of one of the many positive articles in the Spanish press regarding Muga/Highfield, please see this article:
http://sociedadcivilnavarra.com/unas-gafas-para-el-gobierno-foral-por-favor/. President Barkos discusses securing employment for future generations and compares Highfield’s Muga Mine to the largest employer in the region of Navarra, Volkswagen.
(20min delay)