Diatreme’s flagship project, the Cyclone Zircon Project in Western Australia’s Eucla Basin is considered the largest undeveloped high-grade zircon project in the Basin.

Introduction

Discovered in 2007, the project is located along the Barton shoreline within the Wanna Lakes area of the northern Eucla Basin, 25 kilometres from Western Australia’s state border with South Australia and 220km north of the transcontinental railway.

The Cyclone deposit occurs within adjoining tenements M69/141 (Cyclone), held by wholly owned subsidiary, Lost Sands Pty Ltd and R69/1, (Cyclone Extended), held by Diatreme Resources.

Following the acquisition of the Cyclone Extended Heavy Mineral Resource, Cyclone’s JORC Mineral Resource (Measured and Indicated) has been estimated at comprising 211 million tonnes at 2.3% heavy minerals (HM) (1% cut-off grade), containing 4.8 million tonnes HM (refer ASX announcement 9 April 2015). This includes a Measured Resource of 156Mt at 2.4% HM and an Indicated Resource of 55Mt at 1.8% HM (both at 1% HM cut-off grade).

In November 2014, Western Australia’s Department of Mines and Petroleum granted a Mining Lease for the project (ML69/141), which followed the signing of a Project Agreement with the traditional owners, the Pila Nguru Spinifex People. In January 2017, the project received final ministerial consent, allowing for the development of a mineral sands mine and associated infrastructure.

In January 2018, Diatreme signed Cooperation and Consulting Services agreements with leading mining services company China ENFI Engineering Corporation (ENFI), for the completion of Cyclone’s definitive feasibility study (DFS). ENFI, which is backed by one of the world’s largest mining groups, China Minmetals, also agreed to use its network within China’s state-owned enterprise and banking sectors to assist in sourcing potential project investors, offtakers and project debt funding.

Exploration

As the Cyclone mineralisation occurs within a preserved Tertiary (ca 35 Ma) beach shoreline environment overlain by a thin unit of red Quaternary aeolian dune sands, all exploration has been completed using NQ Air Core drilling. The Cyclone Deposit was discovered by DRX in 2007, with a widely spaced resource delineation program subsequently completed. A small program of check drilling was carried out in 2008 which highlighted that lower grade mineralisation in the weathered profile was not recognised during the 2007 drilling program. A follow-up drilling and sampling program was completed in 2009 to provide complete coverage across the mineralisation. Infill drilling was carried out in December 2010, focussing on the proposed start-up area.

Additional infill drilling was carried out in 2011 in conjunction with drilling for bulk sample collection. Several small programs were completed in the second half of 2011 for infill and edge definition purposes, including southern extensions of the nearshore resource. A final program of infill drilling was completed in 2012 for edge definition of strand mineralisation and further bulk sample collection.
A total of 1,379 holes for 55,834m of drilling have now been completed over the Cyclone Deposit within DRX tenure.
The majority of Cyclone has been drilled at 50m hole spacing and drill lines are generally 150m apart with some lines spaced at 300-500m.
All drill holes are vertical and all samples collected at 1.5m intervals. The majority of samples were collected through rotary splitter with some whole samples collected and used in bulk sample test work. The grade of heavy minerals for each sample was initially estimated by panning and visual estimation.
All samples were submitted to Regional Exploration Management Pty Ltd preparation laboratory for sample preparation, drying, wet sieving at 2mm and 53 micron and later to Diamantina Laboratories for heavy mineral separation by TBE (2.92 2.96 sg). Mineralogical assemblage determined by QEMSCAN® (with routine XRF confirmation) overselected sample composite intervals and incorporated in to the geological database.

Geology

The Cyclone Deposit is made up of a number of mineralised strand systems which are interpreted to represent Tertiary beach placer deposits with associated overlying dunal and underlying near shore deposits. Quaternary cover overlies the deposit, and a shallow weathering profile with calcrete and ferruginous induration has developed in the overburden material, with the mineralised sands being free flowing with very little induration (rock) and low slimes contents which are favourable to conventional mining techniques.
Mineralisation occurs within bimodal near-shore fine sands, higher grade beach strandlines, homogenous beach sands, and overlying aeolian dune sands. A schematic stratigraphic column for Cyclone is presented below.
The mineralisation displays a very high value mineral assemblage and is dominated by zircon (31% of the HM) and a range of weathered / altered titanium bearing minerals (42% of the HM), with HiTi (70 85% TiO2) being the most abundant. Siliceous Ti-oxides (>10% SiO2) make up around 22% of the HM, but levels of other "trash" (i.e. low value) HM are very low.

Mineral Resource

Cyclone’s Mineral Resource is estimated at 211 Mt at 2.3% HM, containing 4.8 Mt of HM (refer ASX announcement 9 April 2015). More than 75% of the resource is classified as Measured.

The estimate highlights the low levels of slimes (-53um) at 4.2% and oversize (>2mm) at 4.9% within the Cyclone mineralisation. Both characteristics are conducive to simple and efficient (i.e. low cost) mining, processing and tailing operations.

For the resource estimate, the mineralisation at Cyclone was modelled using three separate, but adjoining, geological domains "Beach", "Strand" and "Nearshore". Although these domains display some distinctive geological characteristics, they are expected to be extracted as a combined body of mineralisation.

Metallurgy

The Company's primary objectives in undertaking metallurgical testwork were to:

  1. Produce a very high-grade HM concentrate through a wet concentrator process (WCP).
  2. Maximise the recovery of zircon (the major valuable mineral component of the Cyclone Resource), and
  3. Develop process flowsheets to be used in engineering designs for the wet and dry HM processing plants (WCP and MSP).

Testwork on a seven-tonne bulk sample composited from drilling throughout the Cyclone Resource was conducted by CPG Resources - Mineral Technologies during 2011.

Key outcomes from the metallurgical testing included:

  • The wet concentrator testwork produced a high-grade HM concentrate (97.8% HM) utilising conventional mineral sand separation technology.
  • The estimated distribution of zircon from the bulk sample to the WCP HMC is 95.3%.
  • The estimated distribution of zircon from the HMC to the MSP final zircon product is 85.0%.
  • A mineral separation process was designed to produce zircon and two titanium products, HiTi87 (86.6% TiO2) and HiTi67 (67.3% TiO2).
  • The testwork identified that conventional "off the shelf" technology can be used in the mineral processing at Cyclone.

For further details, refer to the ASX announcement dated 30 January 2012.
Testwork on a 12-tonne bulk sample composited from drilling within the first two years of the proposed Cyclone mine path was conducted by CPG Resources - Mineral Technologies during 2012/13. This work generated results that generally confirmed the outcomes of the 2011 program, with minor variations and additions to the processing flowsheet undertaken to optimise the mineral product recovery and quality.

Ore Reserve

Diatreme Resources announced an Ore Reserve estimate for Cyclone in February 2012 following an extensive resource drilling program, metallurgical testwork and process flowsheet development by CPG Resources Mineral Technologies, open pit design, and capital and operating cost estimates completed as part of the Prefeasibility Study.
The Cyclone PFS pit design contained a Probable Ore Reserve of 97 million tonnes (Mt) at 2.5% HM, including 0.79% zircon, containing 2.4Mt HM, including 770kt of zircon. The Ore Reserve was sufficient for 9.7 years of operations at the planned 10Mtpa mining rate. With a life of mine strip ratio of 1.1:1, low clay content, and the free dig nature of the ore, a relatively low operating cash cost is anticipated.
With the acquisition of the Cyclone Extended deposit in early 2015 and the completion of revised mine design to incorporate this mineralisation in to the mine plan the Cyclone Ore Reserve is reported as 140 Mt at 2.5% HM, containing 3.5 Mt of HM (refer ASX announcement 14 December 2015).

The Ore Reserve is classified as Probable to reflect the preliminary nature of some parameters relating to mine planning and mineral processing.
The Ore Reserve represents a 75% conversion from the Mineral Resource estimate.

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