galalar silica project

Located near the world’s largest silica sand mine in North Queensland, Diatreme’s Galalar Silica Project is capable of producing premium-quality silica for the fast-growing Asian solar panel market.

One of the largest high purity silica exploration land packages in Australia, the Galalar Silica Sand Project (GSSP) covers an area of 542 sq km in Queensland’s Eastern Cape York region, around 200km north of Cairns.

The Cape Bedford EPM17795 covers a large Quaternary sand dune field, part of which is currently being mined by Mitsubishi Corporation subsidiary, Cape Flattery Silica Mines Pty Ltd and is the world’s largest silica sand mining operation.

A 2021 Pre-Feasibility Study (see below) showed the value of the project, with an estimated post-tax net present value (NPV) of A$358 million.

However, Diatreme is currently focused on its Northern Silica Project, with the GSSP remaining a key asset subject to future development.

2021 Pre-Feasibility Study:

A Pre-Feasibility Study released in November 2021 highlighted the project's potential to generate strong returns for all stakeholders:

• Post-tax net present value (NPV) of A$358 million
• IRR (internal rate of return) of 66%
• Life of mine net revenue of A$2.5 billion
• Low initial capex of A$60.1 million, with 1.4 year payback period; 23.5 year mine life
• Project to contribute more than A$800 million to local economy in wages, taxes and royalties

A Maiden Mineral Reserve estimate (JORC 2012) was announced in November 2021, comprising 32 million tonnes, sufficient for an estimated 18 years of initial operations (at 1.65 million tonne ore processed per annum). The total JORC Mineral Resource is estimated at 75.5 million tonnes.

Bulk testing results have confirmed the project's ability to produce a world-class silica sand product at 99.9% SiO2, meeting the requirements for high-end glass and solar panel manufacturing.


NSP Priority

The Galalar Silica Sand Project (GSSP) continues to remain a strategic and important silica asset of the Company. However, given the Northern Silica Project’s rapid advancement, its much larger scale (resource base) and close proximity to the Port of Cape Flattery clearly evidencing a clear low-cost export pathway, the development of the NSP to eventual mining activity has been given priority.

This further follows from the advancement of two key agreements and the release of the NSP Scoping Study:

• The Company’s signing of a Memorandum of Understanding (MOU) with government-owned corporation Far North Queensland Ports Corporation (Ports North), the relevant port authority for the Port of Cape Flattery, concerning planned silica exports from Diatreme’s Northern Silica Project (NSP) (refer ASX announcement 18 August 2022).

• The recent execution of a tripartite entry deed (refer ASX release 14 June 2023 ) between Diatreme, Ports North and Cape Flattery Silica mines (wholly owned by Mitsubishi Corporation) which provides for access to Ports land and marine facilities for the purposes of undertaking relevant studies to advance environmental approvals and more detailed commercial understandings.

• The NSP Scoping Study (refer ASX announcement 14 June 2023) outlined a project with the potential for robust returns, long mine life (large resource) and significant scale (3-5 Mtpa production target). These agreements will allow Diatreme to advance the NSP with a high degree of certainty of positive outcomes (successful project delivery) for the establishment of mining activity and product export through use of the Port of Cape Flattery.

As a consequence, the GSSP EIS process has been put on hold. Recommencing this process will be reviewed after the NSP has been granted its primary permitting and approvals and commenced export activities.

The Company believes this approach to be the most prudent in terms of allocation of its management and fiscal resources to ensure both the best commercial outcomes, but also the most certainty in achieving delivery of required permitting to facilitate development and eventual exports.

Diatreme has also undertaken detailed discussions with the local community and the relevant State and Federal regulatory agencies to ensure this revised permitting pathway can be prioritised and understood.

The project area comprises four granted exploration permits for minerals (EPMs) and collectively they cover most of the Cape Flattery / Cape Bedford sand dune field.

exploration overview

Diatreme’s tenements are located approximately 200km north of Cairns in Far North Queensland, covering the extent of a large Quaternary sand dune field, part of which is currently being mined by Cape Flattery Silica Mines Pty Ltd (CFSM), a wholly owned subsidiary of Mitsubishi Corporation. Cape Flattery has operated since 1967 and is the world's largest silica sand mining operation.

The Cape Bedford / Cape Flattery dune field is dominated by an extensive Quaternary sand mass and dune field that stretches inland from the present coast for approximately 10km and extends 50km from north to south.

The focus of Diatreme’s exploration is to identify potential resources of high purity silica sand that have the potential to be mined and upgraded to high value silica products for use in high end glass manufacture and new economy products.

Diatreme executed a Conduct and Compensation Agreement (CCA) in January 2017, and a Cultural Heritage Agreements (CHA) with the traditional owners, Hopevale Congress. The CCA allows access for ground disturbing exploration activity and ensures the traditional owners share in the potential economic benefits of this new project, while the CHA sets out the protocol for cultural heritage issues.

Cultural heritage surveys for the first proposed exploration program were undertaken in August 2017 and subsequent surveys and monitoring have been ongoing for all exploration activities subsequently.

In 2018, Diatreme identified high purity silica sand resources after initial activities at the Nob Point target area. Subsequent exploration programs have expanded the resource area and extended the mineralisation northward along the Galalar dune system.

Regional exploration commenced in 2019 with helicopter sampling program to confirm sand quality across the dune system and to help prioritise targets generated from desktop studies. A first pass hand augering and vacuum drilling commencing within the high priority Silica Targets 1 & 2 at Cape Flattery commencing in 2021.

Following vacuum drilling at the northern end of Silica Target 2 dune system, a Maiden resource of 53 Mt was delineated in late 2021.


Table 1: Tenement Schedule

Diatreme reported a maiden Inferred Resource of 21.6 Mt of high purity silica sand, estimated in August 2018. The resource has been subsequently upgraded following additional air-core drilling, vacuum drilling and processing studies. The current combined resource is an estimated 75.5 Mt @ 99.18 % SiO2.

galalar resource

Galalar Silica Project: 2021 Resource Outline

Galalar Silica Project: measured resources

Measured Mineral Resources are located in Galalar west, Main and East.
Indicated Mineral Resources are located in Galalar West, Main, east, North and Extended.
Inferred Mineral Resources are located in Galalar North and Extended.

A small proportion of Mineral Resource is located outside the Mining Lease Application area within EPM 27265. Mineral Resource extends below the water table in areas of Galalar east but the depths and extents are untested.

In 2019 a Scoping Study was completed, outlining the potential economics of the Galalar project resulting in the application of a Mining Lease.

As a component of the 2021 PFS, an initial mineral reserve for the Galalar project was estimated at 32.5Mt.

Galalar Silica Project – Resource Update (as at 19 September 2021)

si2 north resource

A maiden Inferred Mineral Resource was established in January 2022 within the Cape Flattery target area of Si2 North. 

The initial resource comprises 53.2 million tonnes @ 99.32% SiO2. This high-purity silica sand, subject to further mineralogical testing, should be suitable for high-end glass manufacturing.

The project potentially seeks to exploit processed high quality “low iron” silica sand for photovoltaic applications (solar panels), and “ultra-low iron” silica sand for potential photothermal grade applications (ultra-thin electronics, computer and mobile phone screens).

The basis for this Maiden Mineral Resource Estimate comprises a vacuum drilling campaign carried out by Diatreme in November 2021, including accompanying field work. This Maiden Mineral Resource Estimate has been undertaken in accordance with JORC 2012 by carrying out comprehensive geostatistical evaluation by independent resource consultant Ausrocks Pty Ltd.

Diatreme identified Exploration Targets within the wider EPM 17795 totalling 210 million to 2.1 billion tonnes of silica (ASX announcements DRX 25/3/19, 11/4/19, 20/6/19). Within the northern section of the EPM 17795, Diatreme has high-graded four primary targets with an exploration target ranging from 40-160 million tonnes of silica.

The Cape Flattery region occupies the northern half of the extensive Cape Bedford to Cafe Flattery dune field complex. The region extends from McIvor River in the south, to Point Lookout in the north, and well to the west of Cape Flattery itself.

A swampy floodplain occupied by the McIvor and Morgan Rivers separates the Cape Flattery dunes form the Cape Bedford dune field. The Cape Flattery Dune System is made up numerous sand dune systems of varying age, with younger more active dunes remobilising and covering older dune systems. The Mitsubishi owned Cape Flattery Silica Mine (CFSM) and MLM (Mining Leases) are proximal to the Cape itself, and the balance of the dune field is within Diatreme Resources’ EPM 17795.

There are numerous dune systems within the greater regional sand dune system. The largest accumulation defined by the 40m RL contour is the S1/S2 dune system, which spans 80 to 100 sq km and is combination of dune systems and morphologies.

The system is directly downwind of the open bay north of Cape Bedford and likely resultant from Pleistocene dune formation. Sand quality varies from 98% to >99% SiO2. The area is covered by a variety of vegetation types.

The S1/S2 Dune System has been nominally/temporarily subdivided into Si Targets 1 & 2 representing the southwestern and northeastern halves.

In addition to the Northern Silica Project, Diatreme has identified a number of significant silica sand Exploration Target Areas throughout the wider EPMs. The northern part of the EPM abuts the CFSM.

regional geology