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.

Introduction

High-purity silica sand has become an increasingly strategic resource due to its usage in photovoltaic panels and other high-tech applications.

Similarly, increasing demand from Asia’s infrastructure and automotive sectors for mineral sands has added to the positive outlook for Diatreme's Galalar project (part of the Cape Bedford EPM), which is favourably positioned to access these growing markets.

Significantly, Diatreme is working in genuine partnership with the traditional owners, Hopevale Congress (12.5% project interest), to ensure the community receives the full benefits from the project's potential.

A Pre-Feasibility Study released in November 2021 has 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 Definitive Feasibility Study to be delivered in 2022 will support a final investment decision for the project, expected in the second quarter of 2022.

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.

Diatreme has signed two MOU agreements for offtake from the project, including with China's Wan Zhong Investment Group, a Hong-Kong based group that supplies major glass manufacturers in China, and with Fengsha Group, China's largest processor and supplier of photovoltaic (solar) and specialty high end silica sand. 

Both agreements may be scaled to reflect targeted production output and are subject to detailed negotiations and binding agreements.

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, capable of attracting premium prices. Significantly, testwork has demonstrated the Galalar silica sand product can be upgraded to "ultra-low iron" (sub 50ppm Fe2O3), attracting even higher prices.

In December 2019, Diatreme lodged a Mining Lease Application (MLA) for the project encompassing an area of 523 ha, including all of the identified Mineral Resource. This was followed by the lodgement in February 2020 of an application to undertake a voluntary Environmental Impact Statement (EIS).

In April 2020, an independent economic study by Cummings Economics showed the Galalar project's potential to deliver significant benefits to the Hope Vale/Cooktown region:

* Approx. $23-$24 million expenditure in construction phase and up to $42m in operation

* Total employment including flow-on effects of around 110 (equivalent full-time positions)

* Hope Vale households to see income gain of up to 68%

* Government royalties of around $1.5m and over $10m in company tax

* Operation to become Hope Vale's largest employer outside Hope Vale Aboriginal Shire Council.

Diatreme's logistics solution is for shipping from a purpose-built barge ramp at Nob Point (3.6km from mine site), with transhipping occurring within the Cape Flattery designated port area. The Company is seeking Queensland Government approval for this solution, which would minimise community impacts.

Subject to regulatory approval, financing and offtake agreements, construction could begin as early as 2022, with the project expected to supply Asia's fast-growing solar PV market. 

PROJECT SUMMARY

  • One of the largest high purity silica exploration land packages in Australia, covering an area of 542 sq km in Queensland’s Eastern Cape York region, around 200km north of Cairns
  • 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
  • Closest proximity high-grade undeveloped project to the world’s largest silica markets in China, Japan, South Korea and Taiwan
  • High-grade silica used in glass manufacture, foundry casting, electronics, ceramics and construction – industries in demand and growing in developing Asia, with the market expected to expand at a compound annual growth rate of 7.2% through to 2022, reaching revenues of US$9.6 billion (source: IMARC Group)
  • The global solar PV glass market is seen growing to US$48.2 billion by 2025, up from US$3.3 billion in 2016, amid strong demand from the Asia-Pacific region (source: Bizwit Research & Consulting)
  • Estimated post-tax NPV of $358m and IRR of 66%; potential to deliver around 110 new jobs for the Hope Vale/Cooktown region.

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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.

Exploration Overview

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.

Table 1: Tenement Schedule

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.

In 2022, Diatreme is focussing exploration activities within the Cape flattery sand dune systems to quantify the extensive observed sand dune systems and expand the known resources at Si 2 North.

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.

Galalar Resource

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 Silia Project: 2021 Resource Outline

 

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.

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

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

In 2021, a Pre-Feasibility Study (PFS) was completed detailing an increase in scale and improvements on the 2019 Scoping Study. It delivered a substantial upside to the initial forecast on returns for the project, including an estimated post-tax net present value (NPV) of AUD $358 million and net revenue of A$2.5 billion.

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

 

 

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.

Regional Geology

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 Si 2 North 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.

 

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.

Si 2 North Resource

A maiden Inferred Mineral Resource was established in January 2022 within the Cape Flattery target area of  Si 2 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.

Project Updates and Fact Sheets

Friday, January 1, 2021

Project Update 2 - January 2021

Tuesday, September 1, 2020

Project Update 1 - September 2020

Keep up to date with all the latest news for Diatreme's Galalar Silica Project. Join our mailing list and keep an eye on this page for further developments!

FAQs

Frequently Asked Questions

What are the draft Terms of Reference (TOR)?


The draft TOR outline the requirements and scope of technical studies that must be undertaken by Diatreme Resources as part of the EIS for the GSSP. These include environmental studies as well as assessing implications on social and economic values. 

The GSSP has not been approved. Approval of the Project (including the granting of a mining lease by the Queensland Government) will be dependent on the outcomes of the EIS process.

 

What is the current public submission period related to the EIS?


The EIS has not yet been prepared, though a number of technical studies have commenced. The draft TOR for the EIS are currently available for public review and comment from 27 July 2020 to 14 September 2020.      

If there are additional or specific issues that the community wants addressed in the draft TOR, the current public comment period is aimed at seeking this feedback. The formal submission process is being managed by the Queensland Department of Environment and Science (DES) with details here.

Submissions on the draft TOR should be made to the Department directly as the entity managing the EIS process.

 

Why are public submissions being sought?


The purpose of this step in the EIS process is to make affected and interested persons aware of the GSSP proposal and to invite the public to review and provide submissions on the draft TOR, which outline what topics and issues the EIS must cover and contain.

However, this is only the first stage of a broader stakeholder engagement programme on the draft EIS that will be occurring in parallel with the preparation of the document. 

The public will have the opportunity to make a submission on the actual draft EIS document once it is prepared (this is expected in mid-2021). 

 

Why did only some people receive notices in the mail about the submission period on the TOR?


The public notice about the GSSP TOR appeared in The Australian newspaper on 25 July, 2020 as a newspaper circulating nationally. 

At this early stage of the EIS process, the focus of local consultation is required for ‘affected’ and ‘interested’ persons as defined by the Environmental Protection Act 1994 under which the EIS is being developed.

Given the location of the proposed GSSP at Cape Bedford, in addition to notifying the two local government entities as ‘affected’ persons (Hope Vale Aboriginal Shire Council and Cooktown Shire Council), the Project team identified all properties along the road route from the proposed mine at Cape Bedford to the boat ramp at Marton in Cooktown. 

Letters containing a copy of the notice were mailed out to these residents as potentially ‘interested persons’. Copies of the notice were also sent to regional stakeholder groups and bodies identified by the Queensland Government representing conservation, fishing, tourism, and indigenous interests in the region.

Notwithstanding this process, anyone can download the initial documentation about the GSSP and make a submission if they so choose and interested parties are encouraged to contact Diatreme directly on either manager@diatreme.com.au or via the Project 1800 512 189 number for more information.

 

What is the involvement of Traditional Owners in the Galalar Project?


Under a partnership with Diatreme Resources, Hope Vale Congress (RNTBC) on behalf of affected native title holders will hold a 12.5% stake in the Project, ensuring that the economic benefits flow directly to the region’s Traditional Owners for their long term benefit if the Project is approved.

It is acknowledged that the land where the proposed mine is situated has significance to First Nation peoples and a key focus of the EIS will be on identifying and understanding Aboriginal cultural heritage values and associations with the land and adjoining waters.

 

What is the difference between the exploration permit area and the mine site?


Diatreme Resources holds an Exploration Permit for Minerals (EPM) issued by the Queensland Government covering a large area of approximately 542 square kilometre (54,200 ha) near and adjacent to Cape Bedford.

The area that is proposed for mining that is the subject of the EIS will be a much smaller and defined area of 535 hectares within the EPM area near Nob Point. This represents only about 1% of the EPM area.

 

What effect will the mine have on adjacent land, sea and waterways?


The EIS process will involve comprehensive environmental studies to determine the extent to which the proposed mining and associated export operation effect the environmental values of the land, sea and waterways. 

It is planned that the mine site will have extensive buffer areas proposed to protect waterways, wetlands, and important vegetation communities.

The mining operation is not proposed to extend into or below the natural groundwater table and any indirect impacts on surface water and groundwater both within and adjacent to the mine site will be comprehensively assessed as part of the EIS.

The mining lease area is near the coast at Nob Point, but there is no mining activity on or around any beach or any tidal areas. The actual proposed mining activity takes place approximately half a kilometre from the beach area. All vegetation in this transition zone will be strictly protected.

The Project will be closely regulated by Government approval processes at the Commonwealth, State and local government level, which will require best practice environmental management approaches are undertaken.

 

What are the export options being considered?


The EIS intends to examine two options for export of the mined silica sand by sea.

One is through the establishment of a barge ramp close to the proposed mining operations at Nob Point, while the other is through expansion of the Marton boat ramp site on the Endeavour River in Cooktown. Diatreme’s preferred export option is via Nob Point (refer below).

Both options will involve barging the covered or containerised silica sand to a larger ocean-going vessel for transhipment through the designated shipping lanes of the Great Barrier Reef region. 

The EIS will examine several locations where the larger vessel could be anchored, including immediately offshore from the mine site as well as within or adjacent to existing port limits (at either the Port of Cape Flattery or the Port of Cooktown, which are both designated ports).

 

What is the preferred export option?


Diatreme’s preferred export option is through the establishment of a barge ramp at Nob Point. This will cause only a very small development footprint and will reduce levels of community disturbance compared to the Endeavour River trucking and barging option.

It is intended that the Nob Point barge ramp would also be designed for joint community use and could be utilised for reef monitoring and active reef maintenance programs

Transhipping can occur within the Cape Flattery designated port area to the north or immediately offshore from the mine site.

 

Are there human health risks from silicosis associated with the Project?


It is acknowledged that there may be community concern with the human health implications involving the stockpiling and transportation of silica sand. This is a matter that will be addressed and confirmed in the EIS. 

The silica sand, in its natural form as mined and during proposed transport over land and water as part of the GSSP, is inert sand with a typical particle size that does not represent a human health risk as dust or as air emissions. 

This is in contrast to silica dust (crystalline silica) which is more generally associated with further processes after mining, such cutting or grinding of manufactured quartz products and is harmful when inhaled into the lungs. This respirable quartz is approximately 100 times smaller than a typical grain of beach sand which Diatreme Resources is looking to mine and process at Galalar.   

 

Will the Project affect the use of Elim Beach and existing beach shacks?


No. At its closest point the proposed mine is over 3.5 km from Elim Beach, although the mine infrastructure area itself is about 7 km away. By road the distance is nearly 18 km (the turnoff from Beach Road to the proposed mine is about 10 km from Elim Beach). The operation will have no effect on any beach shacks at Elim Beach or the campground.

 

Will public access to the beach adjacent to Nob Point be affected?


The public road that goes from Hope Vale to the beach near the mine (to a point known locally as ‘The Church’) would remain open, even though it passes through the proposed ML. There would need to be appropriate safety measures and management to make sure that road users and mine traffic are not in conflict, but otherwise all existing rights to access the beach at this location are proposed to remain.

 

What are the benefits of the Project for the local community?


An independent economic study by Cummings Economics (excerpts on Diatreme website – ASX releases) estimates the Project has the potential to generate more than 110 equivalent full-time jobs including flow-on effects, becoming Hope Vale’s largest employer outside local government.

The Project is expected to inject around $24 million in the construction phase and up to $42 million in its operation, with the majority of expenditure to occur in the region.

Diatreme’s priority is on employing local community-based workers including traineeships and apprenticeships in a drive-in, drive-out operation, with the Company also putting priority on local suppliers.

 

How will the silica product be used?


The Project will produce a premium-quality silica sand, suitable for the fast-growing solar panel manufacturing industry and other high-tech applications. Demand for solar energy continues to increase, with the World Economic Forum estimating that the world will add 70,000 solar panels every hour in the period through to 2022.