HFR – Highfield Resources Limited
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1. On what date did HFR first become aware that Yankuang Energy and Beijing Energy had elected not to proceed with the Proposed US$300m Raising?
As per paragraph A of the Letter, on 24 September 2024, Yankuang Energy and Beijing Energy entered into binding agreements with Highfield in relation to the US$220m Raising. Separately (and as referenced in the quotation from HFR’s 13 May 2025 announcement in paragraph G of the Letter), Qinghai Salt Lake Industry Co., Ltd. entered into a non-binding letter of intent for cooperation for a proposed US$300 million equity subscription.
Accordingly (and as clearly described in the Company’s announcements and contrary to paragraph J of the Letter), the Proposed US$300m Raising did not involve Yankuang Energy or Beijing Energy and, as such Highfield has not been advised by Yankuang Energy or Beijing Energy that they have elected not to
proceed with the Proposed US$300 million Raising.
For completeness, Highfield has:
(a) not been advised by Yankuang Energy or Beijing Energy that they have elected not to proceed with the US$220m Raising; and
(b) been advised by Qinghai Salt Lake that it would not proceed with the Proposed US$300m Raising. Qinghai Salt Lake informed the Company of this on the afternoon of 15 August 2025 (European time). The next available opportunity to inform the market was prior to market open on 18 August 2025, when the Company released its announcement. As stated in that announcement, the Implementation Agreement with Yankuang Energy and the associated Equity Subscription Agreement with Beijing Energy (each relating to the US$220m Raising) remains binding and in place.
2. Please provide an update as to the current status of the ‘Implementation Agreement’ originally disclosed in the 24 September 2024 announcement and referred to again by HFR in the 18 August 2025 announcement.
The Implementation Agreement with Yankuang Energy, as originally disclosed on 24 September 2024, remains legally binding and in force. As stated in the Company’s 18 August 2025 announcement, the Implementation Agreement has not been terminated by either party, although, given that the expiry date for satisfaction of its conditions precedent (as extended) has passed, it is terminable at any time by either party in accordance with its terms. Highfield is in discussions with Yankuang Energy to determine what, if any, steps can be taken to progress the transaction as soon as possible. Once these discussions are finalised, the Company will make an ASX announcement.
3. Given that the Convertible Notes have matured following the election of Yankuang Energy and Beijing Energy not to proceed with the Proposed US$300m Raising, how does HFR intend to repay/settle or otherwise discharge its obligations in relation to the Convertible
Notes?
As noted above, the Company has not been advised by Yankuang Energy or Beijing Energy that they have elected not to proceed with the US$220m Raising and the Implementation Agreement remains on foot.
The Company is currently in discussions with the Convertible Noteholders and has obtained a formal standstill confirming that the Convertible Noteholders will not enforce the Company’s obligation to redeem the Convertible Notes until, subject to certain conditions, 31 October 2025 (or such later date as the parties agree). See the Company’s announcement lodged with ASX on 11 September 2025. The Standstill will give the Company time to consider a range of alternatives for dealing with the obligations under the Convertible Notes, including amendments to, equitisation of, or a partial settlement
of the Convertible Notes, to ensure this matter is dealt with in a manner which preserves shareholder value. The Company is currently in discussions with the Convertible Noteholders regarding these alternatives. Once these discussions are finalised, the Company will make an ASX announcement.
4. Has HFR received any correspondence from the Convertible Note holders since the maturity of the Convertible Notes? If so, please provide a summary of the correspondence received to date.
Yes. Upon the maturation of the Convertible Notes, Convertible Noteholders associated with EMR Capital (being the largest and controlling Convertible Notes), informed the Company that they did not intend to take immediate enforcement action in relation to the Convertible Notes and related security and that they reserved all of their rights under and in connection with the Convertible Notes while they continue to engage constructively with Highfield on the Company’s future plans and funding options.
Further, as noted above, the Company and the EMR Noteholders have entered into the Standstill, pursuant to which they (as the controlling Convertible Noteholders) have agreed not enforce the Company’s obligation to redeem the Convertible Notes until the conclusion of the Standstill. The Company is also currently in discussions with the Convertible Noteholders regarding the alternativesfor dealing with the obligations under the Convertible Notes. Once these discussions are finalised, the Company will make an ASX announcement.
5. Does HFR consider that its financial condition is sufficient to warrant the continued quotation of its securities and continued listing as required under Listing Rule 12.2?
Yes. While the Company acknowledges the recent maturity of the Convertible Notes, its cash positionand the decision by Qinghai Salt Lake not to proceed, Highfield notes that:
(a) the Implementation Agreement with Yankuang Energy remains binding and in place. While it is terminable at any time by either party in accordance with its terms, Highfield continues to engage with Yankuang Energy regarding next steps to try to bring the transaction to a conclusion;
(b) while those discussions (and discussions on alternative transactions should the Original Transaction not proceed) continue, it is focussed on prudently managing working capital and minimising expenses across the Group to ensure that it is working towards the best outcome possible for creditors, investors and other stakeholders. In particular, the Company notes that all payments are tightly managed, generally requiring Board approval;
(c) it has the support of its critical creditors and stakeholders, including the Noteholders and other secured creditors;
(d) simultaneous with the progression of discussions with Yankuang Energy, it continues to pursue and source alternative options to deal with obligations under the Convertible Notes and ongoing funding needs (including alternative transactions should the Original Transaction not proceed); and
(e) the Company has terminated its Senior Secured Project Finance Facility following the exit of the remaining lenders, thereby ensuring no further commitment fees accrue. See the Company’s announcement lodged with ASX on 11 September 2025. While the Company’s financial statements for six months ended 30 June 2025 include an emphasis of matter in regard to a material uncertainty relating to going concern, for the above reasons, the Directors consider that they have reasonable grounds to believe that HFR is presently able to pay its debts as and when they become due and payable.
6. If the answer to question 5 is “yes”, please explain the basis for this conclusion, commenting specifically on the following:
(a) The maturity of the Convertible Notes;
As noted above, the Company has the benefit of the Standstill with the Noteholders and further support from other key creditors. The Company is in discussions with the Convertible Noteholders regarding the alternatives for dealing with the obligations under the Convertible Notes. Consistent with the representations of the EMR Noteholders, the Convertible Noteholders continue to engage constructively with Highfield on the Company’s future plans and funding options.
(b) The decision by Yankuang Energy and Beijing Energy not to proceed with the Proposed US$300 million Raising;
As noted above, this is not correct.
(c) The current status of the Original Transaction disclosed by HFR on 24 September 2024; and
As noted above, the Implementation Agreement (which governs the terms of the Original Transaction) remains legally binding and in force. As stated in the Company’s 18 August 2025 announcement, the Implementation Agreement has not been terminated by either party, although, given that the expiry date for satisfaction of its conditions precedent (as extended) has passed, it is terminable at any time by either party in accordance with its terms. Highfield continues to engage with Yankuang Energy regarding next steps.
(d) The going concern disclosures in HFR’s Annual Report.
The Board remains satisfied that, with the Implementation Agreement in place and financing discussions (including alternative transactions should the Original Transaction not proceed) ongoing, there are reasonable grounds to believe the Company will be able to meet its obligations.
7. If the answer to question 5 is “no”, please explain what steps HFR has taken or proposes to take, to warrant the continued quotation of its securities and its continued listing pursuant to Listing Rule 12.2?
Not applicable.
8. Do HFR’s directors consider there are reasonable grounds to believe that HFR will be able to pay its debts as and when they become due and payable? In answering this question, please explain the basis for the directors’ conclusion.
The Directors consider that they have reasonable grounds to believe that HFR is presently able to pay its debts as and when they become due and payable, given:
(a) that the Implementation Agreement with Yankuang Energy remains binding and in place. While it is terminable at any time by either party in accordance with its terms, Highfield continues to engage with Yankuang Energy regarding next step.
(b) the Company has the benefit of the Standstill and is in discussions with the Convertible Noteholders regarding the alternatives for dealing with the obligations under the Convertible Notes and ongoing funding needs (including alternative transactions should the Original Transaction not proceed). Consistent with the representations of the EMR Noteholders, the Convertible Note holders continue to engage constructively with Highfield on the Company’s future plans and funding options; and
(c) management has taken steps to preserve cash and reduce operating expenditure.
9. Please confirm that HFR is in compliance with the Listing Rules, and in particular Listing Rule 3.1.
The Company confirms it is in compliance with the ASX Listing Rules, including Listing Rule 3.1.
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