DIATREME RESOURCES LIMITED — AGM Information 2019

May 29, 2019

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30 M ay 2019

CHAIRMAN’S ADDRESS Presented to Annual General Meeting of Shareholders Thursday 30 May 2019

Go o d afternoo n

.

Thank you aga i n sharehol d ers and g u ests for y o ur attenda n ce at toda y ’s Annual G eneral M e eting. The Board, manag e ment and I greatly ap p reciate yo u r support.

Diatreme’s ne w tagline ad o pted this y ear is “Au s tralian san d s, univers a l demand. ” With that t heme in min d , I would li k e to com m ent on our key silica a nd mineral sands proj e cts, toget h er with oth e r recent mo v es by your Company t o increase value for s h areholder s as we tap this univer s al deman d .

Cyclone: Nearing Final Outcome

Cyc l one is rapi d ly drawing towards a significant o utcome for shareholders. This i s thanks to a number o f key milestones achieved o ver the pa s t year as w e advance this zircon - rich projec t towards d e velopmen t

In J a nuary 201 8 , Diatrem e received s ignificant i n vestor an d media att e ntion, follo w ing our si g ning of agr e ements co n cerning C y clone with China EN F I Engineer i ng Corpor a tion (ENFI ) .

The s e agreem e nts comprised a cooperation agr e ement, in which ENFI, part of th e leading China Min m etals Gro u p, agreed to access i t s networks within Chi n a to assist in sourcin g investors, offtakers a n d deb t funding. A second, c o nsulting s e rvices agr e ement concerned the remaining d efinitive feasibility study (DF S ) aspects to be com p leted by E N FI. The next miles t one for Cy c lone was N ovember’ s announce m ent of a positive DF S . The resu l ts showed an esti m ated net p resent val u e of $113 m illion, an i n ternal rate of return o f 27% and c apital pay b ack in few e r tha n three yea r s. Capital c osts were s lashed to $ 135m, a significant reduction on the previo u s estimate of $16 1 m.

Bas e d on the study result s , ENFI for m ally reco m mended that Cyclone’s develop m ent and construction b und e rtaken “as soon as p o ssible.”

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Wit h such bac k ing, Diatre m e has subsequently s ought to u n lock value by engagi n g with pot e ntial dev e lopment p a rtners. A s tructured process is c u rrently un d erway with multiple p a rties enga g ed.

Giv e n the stro n g interest i n Cyclone, w e anticip a te concluding an agre e ment over the next few months that will realise significant value for s h areholder s . The timin g for Cyclo n e is excell e nt, given h igh minera l san d s prices a n d an emer g ing struct u ral supply d eficit.

Galalar: Premium Silica in Demand

Whi l e Cyclone nears its ul t imate outc o me, our G alalar Silic a Project in North Que e nsland is b ecoming mor e and mor e attractive.

Loc a ted aroun d 200km n o rth of Cair n s and near the world’ s largest op e rating sili c a mine, Galalar has bee n proven c a pable of d e livering a p remium pr o duct to fa s t-growing A sian mark e ts, such a s for high-e n d glass and sola r panels.

The global silic a sand ma r ket is seen reaching nearly US$10 billion in a nnual rev e nues by 2 0 22, with a co m pound ann u al averag e growth ra t e of 7.2%. Meanwhile , the solar P V glass m a rket is for e cast to reach US $ 48.2 billion by 2025, u p from just US$3.3 bil l ion in 201 6 , amid rising demand f rom the A s ia-Pacific regi o n.

The project wa s rapidly a d vanced du r ing 2018, w ith a maid e n Inferred Resource a nnounced last Augus t for the Nob Point Prospec t (subsequ e ntly renamed Galalar ) . This follo w ed the sig n ing of agr e ements wi t h Hopevale Con g ress, whic h will ensur e that the t r aditional o w ners shar e in the pro j ect’s econ o mic benefi t s, bec o ming gen u ine partne r s.

The next test f o r Galalar w as whethe r it could pr o duce a w o rld-class silica produc t at 99.9% S iO2, cap a ble of attr a cting premium prices. Fortunatel y , testwork results hav e confirme d this, with a n excellent rec o very rate o f 88%.

Mining is expe c ted to be a relatively s imple oper a tion due t o the small amount of o verburden present, whi c h can be easily remo v ed.

In 2 0 19, Diatre m e has sig n ificantly a d vanced G a lalar by fur t her expan d ing the re s ource. In M arch, the Infe r red Resou r ce was up g raded by 2 2%, with an explorati o n target a n nounced i n the range of 210 million ton n es to 2.1 b i llion tonne s .

In April, region a l explorati o n results pointed to t h e potential for further r esource e x tensions, a t Elim Roa d Nor t h and Sou t h.

Mor e recently, o n May 14, a maiden Indicated R e source es t imate was announce d for Galala r , comprisi n g 21. 5 million tonnes of high-purity silic a (99%). T h e total esti m ated resource now c o mprises s o me 30.2 milli o n tonnes, w ith a new satellite deposit identi f ied, West N ob Point.

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The next steps for Galalar include th e release o f an initial s c oping study, which is anticipated by the end of t h e second q uarter. Thi s should al s o precipita t e the finali s ation of th e shipping p lan and c o nclusion o f offt a ke arrang e ments for t h is highly desirable pr o duct.

Tick Hill: Golden Upside

Deli v ering valu e from non - core asset s is crucial a nd Diatre m e’s progress with the Tick Hill G o ld Project has proven the case.

In April 2019, D iatreme concluded th e sale of Ti c k Hill to A S X-listed B e rkut Miner a ls (now C a rnaby Resources), w h ich has as s embled a p ortfolio of a ttractive gold assets a cross wes t ern and e a stern Aus t ralia.

Consideration f or the sale comprised some 7.2 m illion shar e s in Berku t , with Diat r eme holding a 7.5% sta k e in Berkut post-settlement. Berk u t also refu n ded $336,844 of environmental b onds dep o sited by Diatreme with the Queensland gover n ment.

At s e ttlement date, Diatre m e had gai n ed a nomi n al $375,0 0 0 on the v a lue of the s hares, an d further gains are l ikely with C arnaby ey e ing a num b er of gold and coppe r -gold targets. Board Strengthened Regeneration a nd revitali s ation is ke y to the suc c essful gro w th of any c ompany. A s part of this process, I was delighted to accept a n invitation t o become y our non-e x ecutive C h airman as o f May 2018.

Fortunately, fo r mer chair m an, Mr William Wang h as remain e d on the B oard as a N on-Execu t ive Directo r , and he continu e s to provi d e the benefit of his ex p erience w i th Diatrem e and his industry con n ections, particularly in C hina.

Las t Decembe r also saw the resignation of long - serving Non-Executiv e Director, M r Andrew Tsang and the C ompany t h anks him f or his valu a ble servic e since 200 9 .

Mar k et and ec o nomic turbulence has affected al l minerals e xplorers a n d develop e rs over th e past year and Diatreme i s no excep t ion.

Ho w ever, whil e we are of t he belief t h at we rem a in significantly undervalued, a n u mber of ke y mileston e lie ahead with the potenti a l to trigger a re-rating f or Diatrem e .

The s e include t he conclusion of the current proc e ss concer n ing Cyclo n e and a n e w scoping s tudy and offt a ke agreement for Gal a lar. Looking further a h ead, furth e r resource upgrades a nd the submission of a mining licence a re planne d for this p o tentially hi g hly profita b le silica sand project.

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Fin a lly, I would like to tha n k sharehol d ers, inclu d ing recent n ew invest o rs, for you r support o f our recent capital initiativ e s, particul a rly in diffic u lt market c o nditions. R ewarding y our confid e nce is our number on e prio r ity.

I also wish to t h ank our e m ployees, c o ntractors, suppliers, p artners an d all others connected with Diatreme for y o ur support.

Wit h Australian sands and universal d emand, th e possibiliti e s for Diatr e me are endless.

Yours sincerel y

Gre g ory B. Sta r r Non-Executive Chairman