Backing, time, partners and process combine for Diatreme

Diatreme Resources (ASX: DRX) is standing junior miner conventions on their head. Diatreme CEO Neil McIntyre addressed the Queensland Exploration Council’s investment showcase this week, saying getting a mining licence meant as much about having a social licence as any other standards. CEO Diatreme Resources Neil McIntyre The company had entered into a 12.5 per cent equity split in the southern project with the traditional owner group based in Hope Vale, Mr McIntyre said. Related: Positive scoping study for Diatreme silica plans It was the right thing to do, Mr McIntyre said. “… But also in terms of managing appropriate risk moving forward, we think traditional owners, given the sensitivity of development in the area, should be actively involved, have a stake in the success of the mine,” he said. “That if we can give them a stake in the mine, that gives them a strong reason for participation, cooperation and working together. “The key to it is working together. Getting mining projects permit in the proof is not an easy process. So if you can align with regional stakeholders, it makes the process much easier.” Diatreme Resources' tenements. Main image: Water boring at Galalar silica project The project fundamentals made Diatreme an outlier in junior miners, Mr McIntyre said. “We're in a really unusual position. We are very cash rich for a company of our size, so market cap around $85-$90 million, sitting on over $20 million in cash, and we have another $24 million coming in December from our joint venture partner. “Basically, we're fully funded for the next couple of years to implement the project. I think that's really unusual in the space we're in and it really de-risks dilution for shareholders. “It de-risks us having to go back on to capital markets in a time, which frankly is pretty tough to raise money. So we're removed from that. That we can concentrate 100 percent on delivering the project is the key." Diatreme has foundation partners including international industrial minerals supplier Sibelco and the Flannery family. It was the right time with the right commodity and right backing, Mr McIntyre said. “We've got key cornerstone support and they add a lot of weight and substance to our share register. “They also allow us unusual access to their expertise in silicon markets and their capital, so we haven't had to dip back to shareholders. “We've been able to sell a small slice of the project relatively to enable us to develop the project. So that strong support is really critical to us.” The raw high-purity silica product had a low iron content and was well positioned to supply the development of solar panels, where 70 per cent was the encompassing glass, which in this case, retained its operational characteristics for more than 20 years, Mr McIntyre said. The company is undertaking an EIS while having won ‘controlled action’ status under the Federal Government Environment Protection and Biodiversity Act 1999 (EPBC). It means the EIS would be delivered through the accredited Queensland process, allowing for a single document to address both state and federal requirements. The Northern Silica Project (NSP) is located about 35km north of Hope Vale and 14km west of Cape Flattery Port, where Diatreme has applied to Ports Norths for partial use of the wharf for ship loading. The government’s Queensland Critical Minerals Strategy has identified silica sand as a key critical mineral for the state and flags the potential the creation of a critical minerals hub around the Cape Flattery area to fast-track development of a mineral vital to the solar power industry. A recent scoping study evaluated the NSP over a 25-year mine life, based on a high-purity silica sand production target of 121Mt from the current 235Mt of mineral resources. The operation is expected to cost about $535 million to bring into full production, with a payback period of six years and pre-tax net present value (NPV) of $1.4 billion.

Backing, time, partners and process combine for Diatreme

Industry Queensland

Related News

Cambridge reveals Upper Haughton energy plans

Copper smelter back online after steam burn incident

QPM keen to capitalise on stronger gas position

Get access to breaking mining news, now.