Diatreme Resources Limited · ASX:DRX
Diatreme Resources — Mining 2016 Resources Convention
42 slides from Diatreme Resources's conference presentation, August 2016
Slide 1: Mining 2016 Resources Convention
Brisbane - August 2016 Mining 2016 Resources Convention GOLDEN MINERALS
Slide 2: Disclaimer
DISCLAIMER This presentation contains certain forward-looking statements and forecasts which include without limitation, expectations regarding future performance, exploration, mineral resources, the financial position of Diatreme Resources Limited (the “Company”), industry growth or other trend pro
Slide 3: Presentation Outline
PRESENTATION OUTLINE • Diatreme Resources Investment overview • Cyclone Zircon Project Delivering a high-zircon mine • Tick Hill Gold Project Capitalising on rising gold price • Strong project pipeline Cape Bedford & more • Conclusion Golden growth ahead 3
Slide 4: Diatreme – Investment Overview
DIATREME – INVESTMENT OVERVIEW • GOLD: Tick Hill Gold Project, Qld: Short-term cash flow potential from tailings reprocessing operation, benefitting from A$1,700/oz gold price • ZIRCON: Cyclone Zircon Project, WA: Supply shortage predicted “within 3 years” with zircon price forecast by Beer & Co. to
Slide 5: Skin in the Game
SKIN IN THE GAME DRX— Capital Structure Directors Position Shares on Issue 877 Million William Wang Chairman Options on Issue (Unlisted) 8.0 Million Andrew Tsang Non Executive Director Share Price (16th Aug 2016) A$0.018 Daniel Zhuang Non Executive Director Market Capitalisation (as at 16th Aug 2016
Slide 6: Experienced Team
EXPERIENCED TEAM • Experienced management team focused on streamlining operations with focus on flagship Cyclone Zircon Project: Neil McIntyre – CEO, 25yrs experience in banking, finance, resources Ian Reudavey – Chief Geologist, 25yrs in exploration & mining, 15yrs mineral sands Phil McMurtri
Slide 7: Australia-Focused
AUSTRALIA-FOCUSED Mineral Sands Cape Bedford Metals Tick Hill Clermont Grays Hill Cyclone 7 7
Slide 8: Mineral Sands Development – Eucla Basin
MINERAL SANDS DEVELOPMENT – EUCLA BASIN 8
Slide 9: Diatreme's Flagship: Cyclone Project, WA
DIATREME’S FLAGSHIP: CYCLONE PROJECT, WA 9
Slide 10: Cyclone Project Fundamentals
CYCLONE PROJECT FUNDAMENTALS • JORC Resource: 211Mt @ 2.3% HM (Cyclone + Cyclone Extended) • JORC Reserve: 138Mt @ 2.6% HM containing 1 Mt Zircon • Beach Strandline Deposit of Tertiary age Thick, multiple strands - broad mining widths (~400m) and 1:1 strip ratio Low slimes (4.5% -53µm) Low oversize
Slide 11: Cyclone Project Fundamentals
CYCLONE PROJECT FUNDAMENTALS • Conventional mining, processing and tails management Use of proven techniques in a similar setting to Iluka JA operation. • Sufficient reserves to support extensive mine life Currently 14 years at 10Mt pa Strand mineralisation gives options for high grading Substantial
Slide 12: Cyclone Resource – High Zircon Content
CYCLONE RESOURCE – HIGH ZIRCON CONTENT Graph sourced from SFX 12
Slide 13: Cyclone Project – Zircon Dominant
CYCLONE PROJECT – ZIRCON DOMINANT 13
Slide 14: Cyclone Mining Lease & Site Layout
CYCLONE MINING LEASE & SITE LAYOUT Mining Lease M69/141 was granted Nov 2014 for the Cyclone Ore Reserve (red) and the operational activities that will occur around it. These activities include wet concentrating, tailings disposal, HMC stockpiles, offices, workshops, infrastructure and services. Cyc
Slide 15: Cyclone Resource – Plan View
CYCLONE RESOURCE – PLAN VIEW M69/141 • Large scale deposit • Mineralisation along 10km strike • Two beach strandline systems 1.7km wide 10km long R69/1 15
Slide 16: Cyclone Resource – Oblique View
CYCLONE RESOURCE – OBLIQUE VIEW 0.9km wide West Strand East Strand 7km long 10km long 2.3km wide 16
Slide 17: Cyclone Resource – Typical Ore Section
CYCLONE RESOURCE – TYPICAL ORE SECTION East Strand Pit - 360m wide West Strand Pit - 700m wide Overburden - 20m Overburden - 14m Ore - 15m Ore - 24m Beach Resource Nearshore Resource 5 x vertical exaggeration 1m vertical = 5m horizontal 17
Slide 18: Cyclone Mining Proposal
CYCLONE MINING PROPOSAL Strip Ratio 1:1 Mining Rate 1,300 tonnes per hour 2 x 650tph dozer traps Mine Production 19 tonnes / hour HMC production Heavy Mineral Concentrate (HMC) 144,000 t/a @ 96% HM Road transport by truck 240km - 100 tonne loads to Forrest rail siding Transport - Rail 1,100km – 3,00
Slide 19: Cyclone MSP Products from HMC
CYCLONE MSP PRODUCTS FROM HMC AVERAGE ANNUAL MSP PRODUCTION and PRODUCT QUALITY Zircon – 65,000 tonnes HiTi87 – 10,000 tonnes HiTi67 – 46,000 tonnes 19
Slide 20: Proposed Mining Methods
PROPOSED MINING METHODS HMC Stockpiles Lo CYCLONE DEPOSIT Initial TSF Topsoil __Overburden Dozer Trap Slurry Pipeline
Slide 21: Transport Options
TRANSPORT OPTIONS HMC loaded into containers at Cyclone. 33 tonne per container. 240 kilometre truck transport by road CYCLONE 1,100 kilometre rail transport from Cyclone to Forrest rail siding in from Forrest siding to Port Pirie Road Rail 100 tonne loads. in 3,000 tonne loads Forrest Perth Esperan
Slide 22: Cyclone Project Milestones
CYCLONE PROJECT MILESTONES ACTIVITY SCHEDULE Pre-Feasibility Study Completed - March 2012 Definitive Feasibility Study (most permits) Q4 2016 – Q1 2017 Project Financing Q2 2017 Construction & Development Q3 2017 Mining & Production Q3 2018 22
Slide 23: Cyclone Project Enhancement Study
CYCLONE PROJECT ENHANCEMENT STUDY • Study completed in May 2016 by Sedgman Limited (a leading mineral sands consultancy) • Independent confirmation of project financials and feasibility • Based on JORC Ore Reserve of 138Mt @ 2.6% HM • * CAPEX of $A161 million and annual average OPEX of $A72 million
Slide 24: Cyclone Project Builds Momentum
CYCLONE PROJECT BUILDS MOMENTUM Water Supply - Extensive groundwater aquifer discovered and test bore completed close to the mine. Bore flow estimated at 40 litres/second. Native Title and Mining Agreement – Agreement executed with the Native Title Holders on 15 November 2014 Mining Lease (ML6
Slide 25: Zircon Supply Deficit Forecast
ZIRCON SUPPLY DEFICIT FORECAST “Zircon from existing producers declining due to depletion and decline in grade and assemblage… Absent new investment there is a zircon supply challenge within 3 years” (Iluka Resources, February 2016) 25
Slide 26: Mineral Sands Demand Increasing
MINERAL SANDS DEMAND INCREASING * Urbanisation set to increase demand for mineral sands, including zircon: WORLD BANK REPORT, JANUARY 2015 • Almost 200 million people moved to urban areas in East Asia from 2000-10 • Overall proportion of urbanites rose from 29% to 36% - but less than 1% of region’s
Slide 27: Mineral Sands Pricing Outlook
MINERAL SANDS PRICING OUTLOOK Industry forecaster TZMI says conditions now “tighter than at any time since 2012” for titanium pigment (TiO2) Analysts Beer & Co expect zircon price to reach US$1,500/t by 2018, rutile US$1,200, with benefit of weak AUD UK market researcher Artikol expects global
Slide 28: Diatreme's Project Pipeline
DIATREME’S PROJECT PIPELINE 28
Slide 29: Exploration Overview
EXPLORATION OVERVIEW • Consolidation of exploration tenure – currently 6 exploration properties, 4 ML and 1 RL, down from 29 (incl. 13 applications) in March 2014 • Mineral sands exploration tenure comprises Cyclone (WA), Cape Bedford (Qld) and Yeppoon (Qld) • Focus on progressing Cyclone developmen
Slide 30: Tick Hill, QLD
TICK HILL, QLD Tick Hill, QLD Gold 3 Granted ML’s Tick Hill Size: 3.9 sq. km 30
Slide 31: Tick Hill, QLD
TICK HILL, QLD Tick Hill Gold Mine (circa 1993) looking easterly Produced 500,000 oz. gold from 700,000 tonnes of ore at 22.6g/t Au 31
Slide 32: Tick Hill – Potential for Near-Term Cash Flow
TICK HILL – POTENTIAL FOR NEAR-TERM CASH FLOW • High grade historic gold production, 513,333 ounces of gold at a recovered grade of 22.6 g/t gold • JV in place with Superior Resources Ltd, “surface” gold 50/50 JV, below ground $750k earn in for 50%. • Excellent exploration target – offset / repetiti
Slide 33: Cape Bedford, QLD
CAPE BEDFORD, QLD Cape Bedford, QLD Cape Bedford Silica Sand, Heavy Mineral Sands EPM Grant June 2016 Size: 554 sq. km 33
Slide 34: Cape Bedford, QLD
CAPE BEDFORD, QLD Lookout Pt Large sand dune system with known silica sand and mineral sand occurrences over an area 50km x 15km in dunes up to 100m high. Historical exploration indicates HM mineralised horizons in sand mass High grade silica in previous drilling samples. Samples indicate areas with
Slide 35: Cape Bedford Demand Outlook
CAPE BEDFORD DEMAND OUTLOOK Meeting quality demands: Whiteness (a strong indicator of purity) and sizing of silica sand meets the demands of the glass and foundry industries Large Asian market demand: Particularly in China, Japan, Korea and Taiwan Proximity to existing producer: Tenement adjac
Slide 36: Cape Bedford, QLD
CAPE BEDFORD, QLD 36
Slide 37: Cape Bedford, QLD
CAPE BEDFORD, QLD Mineralisation on the current beach shedding from the dunes 37
Slide 38: Cape Bedford, QLD
CAPE BEDFORD, QLD Major dune field with high grade silica sand overlying heavy mineral sand potential 38
Slide 39: DRX Recent Significant Announcements
DRX RECENT SIGNIFICANT ANNOUNCEMENTS Dec 2015: Cyclone Ore Reserve increased by 47%, mine life lengthened to 14 years following incorporation of acquired Cyclone Extended resource. Jan 2016: Cyclone Project substantially de-risked, with award of Mining Lease, agreement with Traditional Owners an
Slide 40: Diatreme: Delivering Value
DIATREME: DELIVERING VALUE • Experienced management/board with ‘skin in the game’ • Highly prospective tenement portfolio in mineral sands, gold & more • Cyclone Zircon Project: Flagship project advancing through approvals and DFS in world-class zircon province; de-risking process virtually complete
Slide 41: Appendix 1: Cyclone Project Resource & Reserve Estimate
APPENDIX 1 Cyclone Project Resource & Reserve Estimate MINERAL RESOURCE Head Grade HM Resource Material HM HM Slime OS Zircon cut-off Zircon Rutile Leuc HiTi Alt Ilm Si TiOx Category Mt % Mt % % Kt % % % % % % % MEASURED 1.0 156 2.4 3.79 4.2 5.1 0.69 0.08 0.17 0.52 0.26 0.55 1,070 INDICATED 1.0 55 1
Slide 42: Appendix 2: Tick Hill Tailings Resource Estimate
APPENDIX 2 Tick Hill Tailings Resource Estimate Au Material Material Material Au Au Au Category Location cut-off Volume Density ‘000 t g/t kg t oz g/t ‘000 m3 INDICATED West Paddock 0.5 245 1.4 345 0.80 275 8,800 INDICATED East Paddock 0.5 205 1.4 285 1.42 405 13,000 INDICATED TOTAL 0.5 450 1.4 630
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