Diatreme Resources Limited · ASX:DRX
Diatreme Resources — Investor Presentation (August 2018)
47 slides from Diatreme Resources's investor presentation, Sep 4, 2018
Slide 1: Ready to Get Racing – Company Presentation
READY TO GET RACING For personal use only Company Presentation Diatreme Resources (ASX:DRX) August 2018 SLIDE | 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: Why Invest in Diatreme?
WHY INVEST IN DIATREME? For personal use only • SILICA: Cape Bedford Silica/Heavy Mineral Sands Project, Qld - Maiden Inferred Resource – 21m tonnes high-quality silica sand > 99% - Adjacent to world’s largest silica sand mine at Cape Flattery & 2km from loading facility - Low capex with quick pathw
Slide 4: Diatreme – At a Glance
DIATREME – AT A GLANCE For personal use only Mineral /Silica • ASX-listed, mineral sands/silica sand development Sands company Metals • Short-term pathway to cashflow via low capex Cape Bedford project, targeting production by 2020 • Flagship Cyclone Zircon Project de-risked with Cyclone DFS due soo
Slide 5: Corporate Snapshot
CORPORATE SNAPSHOT For personal use only Capital Structure Directors Position Shares on Issue 1.09 Billion Gregory Starr Non‐Executive Chairman Options on Issue (Unlisted) 8.0 Million William Wang Non Executive Director Share Price (27 August 2018) A$0.024 Andrew Tsang Non Executive Director Market
Slide 6: ASX Performance
ASX PERFORMANCE For personal use only Share price $ 0.032 China ENFI 0.028 agreements re Cyclone 0.024 0.020 0.016 0.012 0.008 0.004 0.000 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2017 2018 SLIDE | 6
Slide 7: Attractively Valued vs Peers
ATTRACTIVELY VALUED VS PEERS For personal use only Relevant ASX market capitalisations as at 24 August 2018 SLIDE | 7
Slide 8: 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 9: 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 10: Cape Bedford Silica/Heavy Mineral Sands Project
For personal use only CAPE BEDFORD SILICA/HEAVY MINERAL SANDS PROJECT
Slide 11: 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 12: 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 | 12
Slide 13: 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 SLIDE | 13
Slide 14: Cape Bedford Project - Summary
CAPE BEDFORD PROJECT - SUMMARY For personal use only • High-grade silica sand/heavy mineral sands, located near world’s biggest silica sand mine & 2km from potential loading facility • Maiden Inferred Resource Aug. 2018 – Nob Point Prospect – 21.6Mt @ > 99% silica • Bulk sample testwork shows high 8
Slide 15: Concept Operation
CONCEPT OPERATION For personal use only • Mining a simple operation 20km to Hope Vale with spiral separator to remove heavy minerals Mining operations area (0.19%) 20Mt mining area • Product to be trucked via 1.5km haul road to trucking compound and barge ramp Office, workshop & amenities • Delivere
Slide 16: Pathway to Cashflow
PATHWAY TO CASHFLOW For personal use only Upcoming milestones include: • Completion of commercial and permitting studies • Environmental and regulatory approvals, including Mining Lease Application and EIS • Nob Point resource to be developed as long-life operation, allowing exploration to expand no
Slide 17: Cyclone World-Class Zircon Project
For personal use only CYCLONE WORLD-CLASS ZIRCON PROJECT
Slide 18: 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 19: 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 20: 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 SLIDE | 20
Slide 21: 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 22: Project Overview
PROJECT OVERVIEW For personal use only JORC Mineral Resource • 203 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 23: Cyclone vs Peers
CYCLONE VS PEERS For personal use only Source: Sheffield Resources, August 2018 SLIDE | 23
Slide 24: 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 25: Proposed Mining Method
PROPOSED MINING METHOD For personal use only SLIDE | 25
Slide 26: 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 Pirie 100 tonne loads. Road in 3,000 tonne lo
Slide 27: 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 28: Proposed Project Timeline
PROPOSED PROJECT TIMELINE For personal use only Milestone Date Pre-Feasibility Study March 2012 - Completed Bankable Feasibility Study Q3 2018 Project Financing Q3/4 2018 Construction & Development 2019 Mining & Production 2019-2020 SLIDE | 28
Slide 29: 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 30: 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 31: China ENFI Bankable Feasibility Study
CHINA ENFI BANKABLE FEASIBILITY STUDY For personal use only Diatreme and ENFI are under contract to work together to advance the Cyclone Project to an efficient and profitable mining operation using the combined expertise from both organisations. To assist Diatreme develop the Cyclone Project, ENFI
Slide 32: Cyclone Project Current Financials
CYCLONE PROJECT CURRENT FINANCIALS For personal use only CAPEX A$161 M Average Annual Sales Revenue A$130 M Average Annual Operating Costs A$73 M Average Annual Operating Cash Flow After Tax A$43 M Payback Period (Years) 2.3 IRR 30% NPV (8%) Base Case (Valuation) A$190 M Based on 2016 Sedgman Projec
Slide 33: Investment Opportunity
For personal use only INVESTMENT OPPORTUNITY • Near-term silica sand production at Cape Bedford, with low capex and opex • Cyclone Zircon Project de-risked with DFS pending; coming into production amid growing supply deficit and lack of high-grade supply • Further potential upside through non-core c
Slide 34: 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 Greg Starr, Chairman 07 33972222 or 0414906611 greg.starr@tearum.com.au Unit 8, 61 Holdsworth Street Coorparoo QLD 4151
Slide 35: Appendix
For personal use only SLIDE | 35 APPENDIX
Slide 36: Cyclone Zircon Resource – Oblique View
CYCLONE ZIRCON RESOURCE – OBLIQUE VIEW For personal use only SLIDE | 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 SLIDE | 37
Slide 38: Tick Hill Gold Project
For personal use only TICK HILL GOLD PROJECT
Slide 39: Location
LOCATION For personal use only Tick Hill, Qld Gold Tick Hill, Qld Gold 3 Granted Mining Leases 3 Granted Mining Leases Size: 3.9km2 Size: 3.9 sq. km SLIDE | 39
Slide 40: Project Operation (1993)
PROJECT OPERATION (1993) For personal use only • Produced 500,000 oz. gold from 700,000 tonnes of ore at 22.6g/t Au • Project vested into upcoming IPO by Carnaby Resources • DRX to receive 4.5% of Carnaby’s market cap on listing SLIDE | 40
Slide 41: Clermont Copper-Gold Project
For personal use only CLERMONT COPPER-GOLD PROJECT
Slide 42: Location
LOCATION For personal use only Clermont, QLD Gold, Copper Tick Hill, Qld Gold 3 Granted EPM’s 3 Granted Mining Leases Size: 524km2 Size: 3.9 sq. km SLIDE | 42
Slide 43: Exploration Targets
EXPLORATION TARGETS For personal use only • Project has attracted previous drilling from UK-listed Antofagasta PLC • Potential for further investor interest due to attractive AUD gold and copper prices SLIDE | 43
Slide 44: Competent Persons Statement
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 is based on information compile
Slide 45: Cyclone Project Resource & Reserve Estimate
APPENDIX 1 For personal use only Cyclone Project Resource & Reserve Estimate HM Head Grade Zircon Material HM HM Slime OS Category cut‐off Zircon Rutile Leuc HiTi Alt Ilm Si TiOx Kt Mt % Mt % % % % % % % % % CYCLONE MINERAL RESOURCE ESTIMATE MEASURED 1.0 156 2.4 3.81 4.2 5.0 0.69 0.07 0.16 0.58 0.30
Slide 46: Cape Bedford Inferred Mineral Resource
APPENDIX 2 For personal use only Cape Bedford Inferred Mineral Resource Resource Area Average Thickness Silica Sand (Mm3) (Mm2) (m) Density (t/m3) Silica Sand (Mt) Total 13.5 0.83 16.3 1.6 21.6 Notes: It is anticipated that due to the nature of the assessment all of the 99% silica sand volume will b
Slide 47: Tick Hill Tailings Resource Estimate
APPENDIX 3 For personal use only 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
Diatreme Resources — Investor Presentation (August 2018) on 6ix