HIGHFIELD RESOURCES - UPDATED ORE RESERVE ESTIMATE FOR THE MUGA-VIPASCA POTASH PROJECT, MINING AND GEOLOGICAL CHARACTERISTICS RECONFIRMED

HFR.AX

Highfield Resources (ASX: HFR) ('Highfield' or 'the Company') is pleased to announce the results of an independent technical review undertaken by SRK Consulting (UK) Limited ('SRK') of the updated Ore Reserve estimate ('ORE') and Exploration Target prepared for its flagship Muga-Vipasca Potash Project ('Muga' or the 'Project').

HIGHLIGHTS

The updated ORE (which has an effective date 31 October 2021) is 104.3 Mt at a mean grade of

10.2% K2O and comprises: Proved Reserve of 45.3 Mt at 10.5% K2O and Probable Reserve of 58.9 Mt at 10.0% K2O.

The updated ORE is changed from the previously reported estimate (which was valid as at 31

Updated Ore Reserve estimate for the Muga Project

The Proved and Probable Ore Reserve have been derived from the Measured and Indicated Mineral Resource of 237.3 Mt at 12.0% Potassium Oxide ('K2O', potash) as previously reported and which is valid as at 31 August 2020. The revised mine plan, used as the basis for the ORE, was developed by Highfield with technical mine planning support from IGAN during 2021, based on panel rib pillar design guidance developed by SRK in 2019. The updated Ore Reserve of 104.3 Mt of potash is modestly different from the 108.7 Mt of potash estimated in the last Reserve statement with effective date 31 December 2018. The audited Ore Reserve Statement has been reported in accordance with the terminology and guidelines of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves ('JORC Code'). The Ore Reserve is presented in terms of plant feed and inclusive of losses and dilution incurred during mining and is a sub-set of, and not additive to, the most recent Mineral Resource estimate from which it was derived

COMPETENT PERSONS STATEMENT FOR MUGA ORE RESERVES AND MUGA MINERAL RESOURCES

This update was prepared by Mr. Ignacio Salazar Director of Highfield Resources. The information in this update that relates to Ore Reserves is based on information prepared under the direction of Dr Mike Armitage, a Corporate Consultant with SRK Consulting (UK) Limited. Dr. Mike Armitage CEng, CGeol. is the Competent Person who assumes overall professional responsibility for the reported Ore Reserve. The information related with the review of the Life of Mine ('LOM') has been prepared by Mr Chris Bray, who is a full-time employee of and Principal Consultant (Mining) at SRK. The information in this update that relates to Mineral Resources is based on information prepared by Ms Anna Fardell, a Senior Consultant at SRK Consulting (UK) Limited. Dr Mike Armitage is a Member the Institute of Materials, Metals and Mining ('IMMM') which is a 'Recognised Overseas Professional Organisation' ('ROPO') included in a list promulgated by the Australian Stock Exchange ('ASX') from time to time. Dr. Mike Armitage has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Dr. Mike Armitage consents to the inclusion in this update of the matters based on this information in the form and context in which it appears. Mr Chris Bray BEng, MAusIMM (CP) is taking responsibility for the review of the LOM plan, as reported by the Company. Mr Bray is a full-time employee and Principal Consultant (Mining) at SRK. He is a Member of and Chartered Professional in the Australasian Institute of Mining and Metallurgy. He is a Mining Engineer with 24 years' experience in the mining and metals industry, including operational experience in underground mines as well as mine planning and review experience on underground potash, salt, lithium and borate projects, and as such qualifies as a CP as defined in the JORC Code. He has also been involved in the reporting of Ore Reserves on various properties internationally for over 10 years.

Ms Anna Fardell is a Senior Resource Geologist employed by SRK, and has over five years' experience in estimating and reporting Mineral Resources relevant to the style of mineralisation and type of deposit described herein. Ms Fardell is a registered member of the Australian Institute of Geoscientists (6555) and considered a Competent Person (CP) under the definitions and standards described in the JORC Code 2012. Ms Fardell takes responsibility for the Mineral Resource Statement and Exploration Target presented here. Ms Anna Fardell consents to the inclusion in this update of the matters based on their information in the form and context in which it appears

Mining method approach

The revised mine plan, used as the basis for the Ore Reserve estimate, was developed by Highfield with technical mine planning support from IGAN and based on panel rib pillar guidance by SRK (following the methodology and modifying factors based on the Muga Project Update statement of 22 January 2019). The mineable tonnes are comprised of approximately 66% from the shallow dipping seams and 34% from the inclined seams.

The potash seams are also constrained by a minimum mining height of 2 metres which is consistent with the planned mining equipment. The shallow dipping seams utilise a set of two parallel roadways as the main development access, one for fresh air intake and access and the other for exhaust ventilation and both with conveyor belt materials handling system.

The mining method approach is a typical Room and Pillar ('R&P') panel layout. The room width is specified at 8 metres and the height and pillar size is determined by the total combined seam thickness, geotechnical constraints due to depth below surface and/or any equipment limitations. The more steeply inclined potash seams in the NW of the deposit required an alternative mining approach to the R&P panel layout used for the shallow dipping seams, to minimise dilution and maximise extraction, taking into consideration the geotechnical constraints and equipment limitations. An adaptation of the existing R&P method was considered for developing a practically achievable inclination for the roadways and mining rooms while maintaining the same production targets and utilising the same excavation, material handling and backfill approach.

The mine design includes a primary twin decline access at a maximum apparent dip of 15%. The revised mine plan also incorporates the requirements of the environmental and mining approval process, particularly related to subsidence controls and exclusion zones around towns, infrastructure and objects of significant cultural importance.

Exploration Target

In addition to the updated ORE, the Company has also produced an updated Exploration Target which encompasses both the Vipasca Licence area and the Muga Sur Licence area and which has also been reviewed by SRK. The Vipasca Exploration Target has been assumed to contain all five horizons while the Muga Sur Exploration Target has been assumed to contain only the PB, PA and P0 horizons only. The presence of the potentially economic potash has not been confirmed in these areas, but they comprise projected lateral extensions to the current Muga-Vipasca model that are either untested by drilling or contain historical data that is considered unreliable. The Exploration Target is based on the same data as the most recently reported Mineral Resource. The tonnages were calculated by delineating the target areas for each horizon, by applying a thickness for each horizon based on the nearest drilling intersection and by assuming a density of 2.13 g/cm3 (the average density for the existing model). Three target areas were delineated for Vipasca and one for Muga Sur. The tonnage ranges were then derived by applying +/-25% thresholds to the calculations. The grade ranges were derived by projecting those in the existing block model estimates in the adjacent Vipasca and Muga licence areas

The Exploration Target so derived for the Vipasca areas (West Vipasca, Northwest Vipasca and South Vipasca respectively) is between 80 and 130 Mt with a mean grade of between 8 and 10% K2O and for Muga Sur is between 0.5 and 1 Mt with a mean grade of between 8 and 12% K2O. The Company has drilling programmes in place to further explore these and the costs for this have been included in the updated LOM Plan. The Muga Sur area is planned to be drilled in 2022 and 2023 while the Vipasca areas are planned to be drilled in between Year 4 and 7 in the LOM Plan. It should be noted that these estimates are conceptual in nature, that there has been insufficient exploration to estimate a Mineral Resource for these areas and that it is uncertain if further exploration of these areas will result in the estimation of a Mineral Resource.

Contact:

Ignacio Salazar

Tel: +34 948 050 577

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