Diatreme Resources Limited · ASX:DRX
Diatreme Resources — Investor Presentation (March 2019)
41 slides from Diatreme Resources's investor presentation, Mar 25, 2019
Slide 1: High-grade silica sands project adjacent to world's largest silica sand mine
For personal use only Diatreme Resources – ASX:DRX Company Presentation – March 2019 High-grade silica sands project located adjacent to the world’s largest silica sand mine PAGE | 1
Slide 2: Disclaimer
DISCLAIMER For personal use only 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 gro
Slide 3: Diatreme – At a Glance
DIATREME – AT A GLANCE For personal use only Cape Flattery Silica Sands Mine • ASX-listed silica sands development company • Flagship project – Galalar Silica Project in QLD • Short-term pathway identified to cashflow via low capex project, targeting production by 2020 Galalar Silica Project • Infer
Slide 4: In Good Company
IN GOOD COMPANY……. For personal use only Cape Flattery Silica Sands Mine • Diatreme Resource’s 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 Galalar Silica Project Chemical industries EPM 1
Slide 5: Corporate Snapshot
CORPORATE SNAPSHOT For personal use only Capital Structure ASX: DRX Board of Directors Position Shares on Issue 1,330 Million Gregory Starr Non‐Executive Chairman Options on Issue (Listed 60.8m, unlisted 6m) 66.8 Million William Wang Non Executive Director Share Price (15th March 2019) A$0.014 Danie
Slide 6: Experienced Board
EXPERIENCED BOARD For personal use only • Mr Gregory Starr – Chairman (non-executive director) - Extensive 25yrs 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 PAGE | 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: Galalar Silica Project
GALALAR SILICA PROJECT For personal use only • High-grade silica sand/heavy mineral sands, located Cape Flattery Silica near world’s largest silica sand mine Sands Mine • Maiden Inferred Resource Aug. 2018, expanded March 2019 – Nob Point resource – 26.4Mt @ > 99% silica Galalar Silica • Bulk sample
Slide 13: Project Ownership – Traditional Owners
PROJECT OWNERSHIP – TRADITIONAL OWNERS 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
Slide 14: Multiple Exploration Targets
MULTIPLE EXPLORATION TARGETS For personal use only • Two potential major resource extension targets identified north west of existing proposed ML area at Elim Road North and Elim Road South Cape Flattery Silica Sands Mine • Further identified regional targets to be graded following current sampling
Slide 15: 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 PAGE | 15
Slide 16: Conceptual Logistics
CONCEPTUAL LOGISTICS For personal use only • Existing road network close to proposed mining Galalar Silica Project operations. Will require some upgrading • Direct road access to Cooktown Slide to be discussed • Use of existing barge ramp facility – subject to upgrading Check use of name ‘galalar’ <
Slide 17: Upcoming Milestones Driving Shareholder Value
UPCOMING MILESTONES DRIVING SHAREHOLDER VALUE For personal use only • Drill Programmes Commence • Further Regional Exploration • Further Resource • Further bulk testing & Upgrades • PFS Results Q2 product definition • Internal commercial Q3/Q4 • NAIF Assessments • Early Offtake Agreements Q1 • Envir
Slide 18: 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 19: 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 received • All primary project approvals in place - Mining Lease, TO Agreements, Environmental Approvals • JORC Res
Slide 20: 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 William Wang , Director 07 33972222 or 0412146036 williamwang@fortunecorp.com.au Unit 8, 61 Holdsworth Street Coorparoo QLD 4151
Slide 21: Appendix: Cyclone Zircon Project
APPENDIX For personal use only CYCLONE ZIRCON PROJECT
Slide 22: 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 1.1Mt produced globally or leucoxene. 7.25Mt of titanium feedstocks in 2014. It is primarily used to produce were produced in 2014 for pigments in cer
Slide 23: Zircon Uses
ZIRCON USES For personal use only • Most valuable heavy mineral with current prices US$1,580/t (up from US$1,030 a year ago) • Approx. 1.1m tonnes produced globally in 2014 • Used primarily in production of ceramic tiles • Other applications include refractories, foundry casting • Speciality applica
Slide 24: Titanium Uses
TITANIUM USES For personal use only • Around 7m tpa global market • Used primarily in pigments • Demand increasing due to China’s higher environmental standards and technological advancements • Rutile prices up 20% on H1 2017 & 14% increase in H2 2018 PAGE | 24
Slide 25: Zircon in Demand
ZIRCON IN DEMAND For personal use only • Increasing demand driven by urbanisation and global growth • Supply constrained with depleting supply and grade/assemblage decline • Lack of new high-grade projects with challenges including technical issues, costs and sovereign risk • TZMI predicts structura
Slide 26: Project Overview
PROJECT OVERVIEW For personal use only JORC Mineral Resource • 211 million tonnes • 2.3% valuable heavy mineral (VHM) JORC Ore Reserve • 138 million tonnes • 2.6% heavy mineral High Zircon mineral assemblage • 30% of VHM is zircon • 80,000t zircon per year (first 3 years) One of only 3 significant z
Slide 27: 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 28: Proposed Mining Method
PROPOSED MINING METHOD For personal use only PAGE | 28
Slide 29: 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 30: 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 31: 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 Q1/2/3 - 2019 Construction & Development 2019/20 Mining & Production Q 1/2 - 2021 PAGE | 31
Slide 32: 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 33: 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 34: ENFI DFS – Snapshot Numbers
ENFI DFS - SNAPSHOT NUMBERS 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 Financ
Slide 35: ENFI BFS Report – Key Summary Results & Recommendations
ENFI BFS REPORT – KEY SUMMARY 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
Slide 36: Cyclone Zircon Resource – Oblique View
CYCLONE ZIRCON RESOURCE – OBLIQUE VIEW For personal use only PAGE | 36
Slide 37: Cyclone Resource – Typical Cross Section
CYCLONE RESOURCE – TYPICAL CROSS SECTION For personal use only West Strand Pit ‐ 700m wide East Strand Pit ‐ 360m wide Overburden ‐ 20m Overburden ‐ 14m Ore ‐ 15m Ore ‐ 24m Beach Resource 5 x vertical exaggeration Nearshore Resource 1m vertical = 5m horizontal PAGE | 37
Slide 38: Sale of Tick Hill
SALE OF TICK HILL For personal use only Tick Hill, Qld Now sold to Berkut Minerals Ltd (ASX:BMT) Tick Hill, Qld Gold Consideration at sale – 7,211,539 listed Berkut shares valued at $565,000 3 Granted Mining Leases Plus immediate replacement of lodged tenement bonds $337,000 (cash back to DRX), Shar
Slide 39: Resource Statement – Silica Sands
RESOURCE STATEMENT – SILICA SANDS For personal use only Galalar Silica Project Inferred Mineral Resource Resource Area Average Thickness Silica Sand (Mm3) (Mm2) (m) Density (t/m3) Silica Sand (Mt) Total 16.5 0.99 16.7 1.6 26.40 Notes: It is anticipated that due to the nature of the assessment all of
Slide 40: Resource Statement – Mineral Sands
RESOURCE STATEMENT – MINERAL SANDS For personal use only 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 0.0
Slide 41: Competent Persons
COMPETENT PERSONS 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 Mineral Resources at the Cyclone and Galalar Sili
Diatreme Resources — Investor Presentation (March 2019) on 6ix