Diatreme Resources Limited · ASX:DRX
Diatreme Resources — Investor Presentation (November 2019)
53 slides from Diatreme Resources's investor presentation, Nov 12, 2019
Slide 1: Company Presentation – November 2019
For personal use only Diatreme Resources – ASX:DRX Company Presentation – November 2019 High-grade silica sands project located adjacent to the world’s largest silica sand mine SLIDE | 1
Slide 2: Disclaimer
DISCLAIMER For personal use only Additional Information This presentation contains certain forward-looking statements and forecasts which include without limitation, expectations regarding future performance, exploration, mineral resources, This presentation should also be read in conjunction with t
Slide 3: Diatreme – At a Glance
DIATREME – AT A GLANCE For personal use only • ASX-listed silica & mineral sands development Cape Flattery Silica Sands Mine company • Flagship project – Galalar Silica Project in QLD • Short-term pathway identified to cashflow via low capex project, targeting production by early 2021 Galalar Silica
Slide 4: Galalar Silica Project – Positive Scoping Study Results
GALALAR SILICA PROJECT – For personal use only POSITIVE SCOPING STUDY RESULTS • Pre-tax NPV $231m, IRR 150% and estimated capital payback within 8 mths • Estimated development capex $24.4m, opex $42m based on trucking product for transhipment outside Cooktown • Product price estimate US$75/t (A$107)
Slide 5: Corporate Snapshot
CORPORATE SNAPSHOT For personal use only Capital Structure ASX: DRX Shares on Issue 1,464 million Board of Directors Position Options on Issue (Listed 60.8m, Unlisted 50m) 110.8 million Gregory Starr Non‐Executive Chairman Performance Rights (Unlisted) 5.8 million William Wang Non‐Executive Director
Slide 6: Experienced Board
EXPERIENCED BOARD For personal use only • Mr Gregory Starr – Chairman (non-executive director) - Extensive 25 yrs plus senior management experience in minerals exploration, managing operating mines, asset acquisitions/divestments and project finance • Mr Cheng (William) Wang (non-executive director)
Slide 7: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM For personal use only • Mr Neil McIntyre – CEO, 25 yrs experience in banking, finance, resources - 4 years as Diatreme CEO and 3 years as non-executive director - Led Cyclone de-risking, traditional owner negotiations, permitting and approvals process - Ex-MD Pacific Capi
Slide 8: Galalar Silica Sands Project
For personal use only GALALAR SILICA SANDS PROJECT
Slide 9: Silica, Construction Sand
SILICA, CONSTRUCTION SAND For personal use only Silica sand is primarily quartz broken down over time Construction sand is a major global industry, with more into fine granules. Main end uses glass industry, than 15Bt of sand mined for construction in 2017. Main foundry, hydraulic fracturing, filtra
Slide 10: Silica in Demand
SILICA IN DEMAND For personal use only • IMARC* forecasts CAGR of 7.2% p.a. through to 2022, reaching US$9.6B revenues • Increasing demand from automotive, construction industries • No direct substitutes in majority of applications * Refer DRX announcement, 30 November 2017 SLIDE | 10
Slide 11: Silica Markets
SILICA MARKETS For personal use only • IMARC expects high growth in demand from North America, Latin America & Western Europe due to increasing hydraulic fracturing • Increasing demand also from emerging markets such as China and India from foundry and construction industries Source: Analyst Reports
Slide 12: Solar Panel Market
SOLAR PANEL MARKET For personal use only • Solar panel PV glass market forecast to reach US$48.2 billion by 2025, with a CAGR of 34.7% (source: Bizwit Research & Consulting) • Asia-Pacific expected to be the fastest growing region for solar PV glass market • Galalar project confirmed capable of supp
Slide 13: Galalar – In Good Company
GALALAR - IN GOOD COMPANY For personal use only • Diatreme Resource’s Cape Bedford (Galalar Silica) Project surrounds Cape Flattery Silica Mines • Cape Flattery Silica Mines is a world-class producer of silica sand for the glass, foundry and chemical industries • Owned by Mitsubishi Corporation • Hi
Slide 14: Traditional Owners Partnership
TRADITIONAL OWNERS PARTNERSHIP For personal use only • Traditional owners (TO’s) – Hopevale Congress will hold a 12.50% “free carry” interest in the Galalar Silica Project • Traditional owners hold freehold and native title over entire tenement area • Initial community meetings held prior to any exp
Slide 15: Capex & Revenue Estimations
CAPEX & REVENUE ESTIMATIONS For personal use only • Mining infrastructure and associated plant items, wet processing plant, site preparation offices, construction and ancillary facilities plus contingency items (25% on capital, 10% on operating costs) - $24.4m • Operating costs including labour, min
Slide 16: Project Delivery Schedule
PROJECT DELIVERY SCHEDULE For personal use only SLIDE | 16
Slide 17: Project Close-up
PROJECT CLOSE-UP For personal use only • Bulk sample testwork confirms capable of producing premium-grade silica product for high-end glass, solar panel manufacturing East Nob Point Dune • Initial conceptual production est. 750,000 tpa then potentially ramping up to 1mtpa • Scoping study released Se
Slide 18: Galalar Cross Sections
GALALAR CROSS SECTIONS For personal use only A AA A BB B BB B AA SLIDE | 18
Slide 19: Regional Exploration Program
REGIONAL EXPLORATION PROGRAM For personal use only DRX has identified six parameters to prioritise silica sand target areas: 1. Geology – Preserved older dune systems with well-developed podzolisation and preservation of the A2 horizon 2. Sand Quality - Identification of >99% SiO2 sand 3. Size – Exp
Slide 20: Multiple Exploration Targets
MULTIPLE EXPLORATION TARGETS For personal use only • Regional exploration program has identified potential resource extensions at Elim Road North and Elim Road South, with high SiO2 results > 99% • Potential heavy minerals discovery at Gubbins Range, with significant TiO2 levels (up to 1.17%) • Furt
Slide 21: Regional Targets Size & Locations
Ave Resource Surface Dune Priority Description Target Area Height REGIONAL TARGETS SIZE & 6,000m x (m) Range (Mt) For personal use only Elim Road High North of Elim Road, very large forest 40 100 - 1000 LOCATIONS North covered dune system along western edge of the dune field. 3,000m Elim Road High S
Slide 22: Elim Road North & South
ELIM ROAD NORTH & SOUTH For personal use only • Established stationary dune system(s) mapped and interpreted to have well developed podzolic profiles containing high purity silica sands • NW extension of the Nob Point resource area at Galalar and could potentially contain significant volumes of sili
Slide 23: Conceptual Mining Operation
CONCEPTUAL MINING OPERATION For personal use only • Mining area: 1,700m x 900m (lease ~2sq km) • Site offices and amenities within mining lease • Processing plant located within mining lease • Dry mining operation above water table • No chemicals in processing, gravity and water only • Benign produc
Slide 24: Conceptual Logistics
CONCEPTUAL LOGISTICS For personal use only • Existing road network close to proposed mining operations, with direct road access to Cooktown • Use of existing barge ramp facility in Cooktown – subject to upgrading • Simple truck (<63km one way) and barge transhipping operations 20km • Tranship bulk p
Slide 25: Galalar Project Logistics Plan
Galalar Project Logistics Plan Hope. Vale Font Galalar Mine Ss te \ . a Legend Barge ramp & compound Barge route (9km) Mining area outline (130ha) Proposed Mining Lease Application (200ha) Trucx Route (63km) geooktown
Slide 26: Barge Loading – Silica Exports
BARGE LOADING – SILICA EXPORTS For personal use only • Barge loading will occur day and night when a ship is being loaded • Estimate one ship every second week to start • 3-4 days to load a ship with 10-15,000 tonnes • Two barges may be required • Shipments up to 35,000 tonnes are possible using thi
Slide 27: Offtake MOU – Fengsha Group
OFFTAKE MOU – FENGSHA GROUP For personal use only • MOU signed in July 2019 with privately owned Fengsha Group, China’s largest processor and supplier of photovoltaic (solar) and speciality high end silica sand • DRX to supply up to 500,000 tpa of photovoltaic grade silica sand • Potential for addit
Slide 28: Fengsha Facilities, China
FENGSHA FACILITIES, CHINA For personal use only Fengsha Group facilities, China; left to right: Chemical pickling vats; MSP; TFT line SLIDE | 28
Slide 29: Offtake MOU – Wan Zhong Investment Group
OFFTAKE MOU – WAN ZHONG INVESTMENT GROUP For personal use only • 2nd MOU signed in September 2019 with privately owned Wan Zhong Investment Group, a supplier to major glass makers in China requiring solar-grade silica and other specialty products • Potential supply of up to 500,000 tpa of photovolta
Slide 30: Mining Methodology – Silica Product
MINING METHODOLOGY – SILICA PRODUCT For personal use only • Clearing ahead of mining area using bulldozer to stockpile surface vegetation and surface soil • Front end loader excavates sand and loads sand directly into a hopper-feeder unit • The hopper-feeder unit will screen out rubbish and transfer
Slide 31: Processing & Rehabilitation
PROCESSING & REHABILITATION For personal use only PROCESSING The wet plant processing includes: - a trommel which receives run of mine sand and spray water will screen out trash and coarse particles larger than 1mm - the sand that passes through the trommel screen will fall into a slurry feed bin wh
Slide 32: Conceptual Processing
CONCEPTUAL PROCESSING For personal use only Simple and established processing techniques No chemicals or dust Amenable to low CAPEX Amenable to low OPEX SLIDE | 32
Slide 33: Upcoming Milestones Driving Shareholder Value
UPCOMING MILESTONES DRIVING SHAREHOLDER VALUE For personal use only • Further Regional Resource • Finalise Bankable Feasibility Q4 Identification • TO Mining Agreement Negotiations Advance Q1 • Galalar mineable resource definition Q2/Q3 Studies • Finalise Project Funding • Final Plant design and • E
Slide 34: Investment Opportunity
For personal use only INVESTMENT OPPORTUNITY • Near-term silica sand production opportunity at Galalar Silica Project, with low capex and opex • Silica sands exposure next to the world’s largest silica sands project • DRX expects further company value re- ratings from project positive news flow • Ad
Slide 35: Additionally – Maximum Value for Cyclone
For personal use only ADDITIONALLY - MAXIMUM VALUE FOR CYLONE • Blackbird Partners appointed to support progression of the Cyclone Zircon Project and ensure maximum shareholder benefit • All primary project approvals in place - Mining Lease, TO Agreements, Environmental Approvals • JORC Resource: 21
Slide 36: Appendix – Cyclone Zircon Project
APPENDIX For personal use only CYCLONE ZIRCON PROJECT
Slide 37: Heavy Mineral Sands
HEAVY MINERAL SANDS For personal use only Zircon is an opaque, hard wearing, inert Titanium dioxide is mined as ilmenite, rutile mineral, with around 1.2Mt produced globally or leucoxene. 7.4Mt of titanium feedstocks in 2018. It is primarily used to produce were produced in 2018 for pigments in cera
Slide 38: Zircon Uses
ZIRCON USES For personal use only • Most valuable heavy mineral with current prices US$1,505/t (up 11% from US$1,351 for FY18*) • Approx. 1.2m tonnes produced globally in 2018 • Used primarily in production of ceramic tiles • Other applications include refractories, foundry casting • Speciality appl
Slide 39: Titanium Uses
TITANIUM USES For personal use only • Around 7.4m tpa global market (2018) • Used primarily in pigments • Demand increasing due to China’s higher environmental standards and technological advancements • Rutile price averaged US$1,152/t Q3 2019, up 21% from FY2018 price* *Source: Iluka Resources, 31
Slide 40: Mining Lease & Layout
MINING LEASE & LAYOUT For personal use only • 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 se
Slide 41: Proposed Mining Method
PROPOSED MINING METHOD For personal use only SLIDE | 41
Slide 42: Mineral Transport Details
MINERAL TRANSPORT DETAILS For personal use only 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 100 tonne loads. Road Adelaide in 3,000 tonne
Slide 43: Mining Proposal
MINING PROPOSAL For personal use only Mining & Logistics Strip Ratio 1:1 Mining Rate (Dry) 1,300 tonnes per hour – 2 x Dozer traps Wet Concentrator Plant Product 20 Tonnes / Hour HMC production 144,000 tpa @ 96% HM Concentrate Transport - Road 240km - 100 tonne loads to Forrest Transport - Rail 1,10
Slide 44: Proposed Project Timeline
PROPOSED PROJECT TIMELINE For personal use only Milestone Date Pre-Feasibility Study March 2012 - Completed Definitive Feasibility Study November 2018 - Completed Project Financing/Partner Entry 2019 Construction & Development 2019/20 Mining & Production Q 1/2 - 2021 SLIDE | 44
Slide 45: Products
PRODUCTS For personal use only AVERAGE ANNUAL PRODUCTION and PRODUCT QUALITY ZIRCON 65,000 tonnes ZrO2 % FE2O3 % SiO2 % Al2O3 % TiO2 % P2O5 % U+Th ppm CeO2 % 66.0 0.10 32.8 0.20 0.31 0.07 369 0.020 HiTi87 10,000 tonnes TiO2 % FE2O3 % SiO2 % Al2O3 % ZrO2 % MgO % MnO % CaO % CR2O3 % U+Th ppm 86.6 2.6
Slide 46: Project Fundamentals
PROJECT FUNDAMENTALS For personal use only • All primary project approvals in place Mining Lease, TO Agreements, Environmental Approvals. • Sufficient reserves to support a long mine life Currently 14 years at 10Mt pa Strand mineralisation gives options for high grading Substantial resource base to
Slide 47: ENFI DFS – Snapshot
ENFI DFS - SNAPSHOT For personal use only Financial Results & Data (AUD$) Net Present Value $113.3m Base DFS Assumptions Internal Rate of Return 27.2% Payback period (production years) 2.7 years USD:AUD Exchange Rate 0.735 Construction Capital (capex) $135.7m CNY:USD Exchange Rate 6.8 Financial Mode
Slide 48: ENFI DFS – Key Results & Recommendations
ENFI DFS – KEY RESULTS & RECOMMENDATIONS For personal use only • Positive after-tax financial results, including estimated net present value (NPV) of $113 million, internal rate of return (IRR) of 27% and capital payback (post-production) in 2.7 years • Capital cost slashed to $135m a significant re
Slide 49: Sale of Tick Hill
SALE OF TICK HILL For personal use only Tick Hill, Qld • Sold to Berkut Minerals (now Carnaby Tick Hill, Qld Resources – ASX:CNB) Gold • Consideration at sale – 7,211,539 listed 3 Granted Mining Leases shares valued at $565,000 • Plus immediate replacement of lodged Size: 3.9 sq. km tenement bonds $
Slide 50: Resource Statement – Mineral Sands
RESOURCE STATEMENT – MINERAL SANDS For personal use only Cyclone Project Resource & Reserve Estimate MINERAL RESOURCE ESTIMATE 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 3.81 4.2 5.1
Slide 51: Resource Statement – Silica Sand
RESOURCE STATEMENT – SILICA SAND For personal use only Galalar Silica Project Indicated/Inferred Mineral Resource 30.20Mt >99% Si02 Area Cut-off SiO2% SiO2% Grade Indicated (Mt) Inferred (Mt) Inferred & Indicated (Mt) East Nob Point 99% 99.26% 20.2 6.6 26.8 West Nob Point 99% 99.16% 1.3 2.1 3.4 Tota
Slide 52: Competent Persons Statement
COMPETENT PERSONS STATEMENT For personal use only STATEMENT IN ACCORDANCE WITH THE AUSTRALASIAN CODE FOR REPORTING OF EXPLORATION RESULTS, MINERAL RESOURCES AND ORE RESERVES (THE JORC CODE) The information in this report that relates to Exploration Results and Exploration Targets from the Cape The i
Slide 53: Diatreme Contact Details
DIATREME CONTACT DETAILS For personal use only Neil McIntyre, Chief Executive 07 33972222 or 0468 370 660 neil.mcintyre@diatreme.com.au Phil McMurtrie – Project Manager 07 33972222 or 0417715228 phil.mcmurtrie@diatreme.com.au Unit 8, 61 Holdsworth Street Coorparoo QLD 4151
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