DIATREME RESOURCES LIMITED — Call Transcript 2012

Mar 4, 2012

ASX:DRX

ASX ANNOUNCEMENT

5 March 2012

COMPANY UPDATE – VIDEO INTERVIEW WITH EXECUTIVE CHAIRMAN AND CEO TONY FAWDON

PROGRESSING THE CYCLONE ZIRCON PROJECT

Diatreme Resources is an Australian based diversified mineral explorer with significant projects in heavy mineral sands, copper, base metals and gold.

The Company owns the world class Cyclone Zircon Deposit in Western Australia, situated within the recognised Eucla Basin province , along with extensive areas of underexplored ground prospective for heavy mineral sands.

The Board and senior personnel exhibit wide experience, ranging through the exploration and development phases of resource management.

Executive Chairman and CEO, Tony Fawdon, outlines the progress being achieved in moving the Cyclone Zircon Project forward in 2012. The interview can be viewed at this link.

A transcript of the interview follows:link

Australian Securities Exchange

Codes: DRX and DRXO

Securities

Ordinary shares (DRX): 354,597,423 Listed 15c options (30/09/13)(DRXO): 88,650,039

Board of Directors Executive:

Please direct enquiries to:

Tony Fawdon Executive Chairman/CEO Ph: 07 3832 5666

David Hall Executive Director - Operations Ph: 07 3832 5666 Email: manager@diatreme.com.au

Tony Fawdon - Chairman/CEO David Hall - Operations Non-executive : George White Andrew Tsang William Wang Neil McIntyre

Joint Company Secretaries: Leni Stanley Tuan Do

Key Projects:

• Eucla Basin Cyclone Zircon Project

• Clermont Copper Project

• Anabama Copper Project

• Gilbert River Base Metals Project

Diatreme Resources Contact:

Tony Fawdon Executive Chairman/CEO Phone: +61 7 3832 5666 Fax: +61 7 3832 5300

Share Registry:

Link Market Services Level 15, ANZ Building 324 Queen Street, Brisbane, Q4000

DIATREME RESOURCES LIMITED ABN 33 061 267 061

Level 2, 87 Wickham Terrace, Spring Hill, Qld, 4000 PO Box 10288 Brisbane Adelaide Street Qld 4000 Telephone : +61 7 3832 5666 Facsimile : +61 7 3832 5300

Page 1 of 3

manager@diatreme.com.au www.diatreme.com.au

DIATREME RESOURCES LIMITED

==> picture [18 x 21] intentionally omitted <==

Transcription of Finance News Network Interview with Diatreme Resources Limited (ASX:DRX) Executive Chairman and CEO, Tony Fawdon

Clive Tompkins : Hello Clive Tompkins reporting for the Finance News Network. Joining me from diversified minerals explorer and developer Diatreme Resources is Executive Chairman and CEO, Tony Fawdon.

Tony welcome to FNN. Can you start by introducing the Company?

Tony Fawdon : Yes the Company’s been around since about ’93 and went through several hoops as an explorer for gold and minerals. The Company was put into a dot bomb and disappeared forever, and the subsidiary was called Diatreme. And we went on after we had a vote by the shareholders, there were 2,000 of them and they put us back on the board, and away we went again with new projects. And we were looking at that time for diamonds, later on we were looking for mineral sands and that’s where we’ve ended up.

Clive Tompkins : Thanks Tony. So what’s your share price and market cap?

Tony Fawdon : Okay the market cap at this time is about $30 million our later share price is about 7.5 – 8c

Clive Tompkins : Now to your zircon project in the Eucla Basin of WA. What does it contain and what stage is the project?

Tony Fawdon : OK, we’ve come very near to the end of a pre-feasibility. We have a reserve there of 97 million tonnes at a rate of 2.5 per cent heavy minerals, of which 0.79 per cent is zircon and the rest is titanium. It actually makes it the highest grade zircon deposit in Western Australia and it’s one of the highest grades in the world, after Jacinth-Ambrosia which of course is with Iluka. At this time, we’ve got to a point where we’re about to start the definitive feasibility. And this will lead us in about a year’s time, hopefully to find that we’re going ahead, to mine and start to finance the operation.

Clive Tompkins : Thanks Tony, now your pre-feasibility study is due for release in early March. What have you learnt during the study?

Tony Fawdon : We learnt that number one that the project is off the shelf, in terms of the technologies needed. There’s nothing frightening there in terms of the metallurgy, which is very good indeed. The usual spirals, we don’t even need high speed WHIMS or anything like that. We can just use ordinary wet shaker tables and the recovery is about 98 per cent of the concentrates. When we take it through to the mineral separation plant, we get a recovery of the zircon, at about 85 per cent zircon, which is pretty good.

Clive Tompkins : And will this be an open pit operation?

Tony Fawdon : Yes it’s 1.1:1 stripping ratio, so there’s going to be about 106 million tonnes of overburden and about 100 million tonnes of actual ore. The overburden is approximately 17 metres thick and the ore is about 15 metres thick.

Clive Tompkins : So Tony, what are your costs and where will this put the project relative to other producers?

Tony Fawdon : The CAPEX of the operation is going to be about $230 million. This will include a mineral separation plant in China and a deep-sea port, and also the hot acid leach plant as well. If we’d have built the whole lot in Australia, the whole operation would be in excess of $300 million. So that’s a great saving, plus we can sell the product in China at a premium.

Revenue is going to be about $160 million a year with about $70 million to $80 million costs. So this is going to be a very robust operation, we’re going to be looking at the moment, at a net after tax profit of about $88 million as calculated from the resource. This might change once we finish the pre-feasibility.

Clive Tompkins : So what’s the next step - Board approval to move to a definitive feasibility study?

Tony Fawdon : Right, we will probably finish the pre-feasibility in about three weeks’ time, then the Board will come together to make a decision on the definitive feasibility. The definitive feasibility is going to cost round about $12 million, that’s including running the company through for about a year.

Clive Tompkins : And based on a positive outcome to the DFS, when do you anticipate first production?

Page 2 of 3

DIATREME RESOURCES LIMITED

==> picture [18 x 21] intentionally omitted <==

Tony Fawdon : The first production will most likely come in about the middle of 2014 and steady-state mining, will be probably 2015. It’s going to take the rest of the year to finish the definitive feasibility and then of course, we’re going to the financing of the operation.

Clive Tompkins : Now you have a number of other projects in Queensland and South Australia covering mineral sands, copper and gold. What’s taking place?

Tony Fawdon : OK we have been exploring for some time and located a whole porphyry copper belt in central Queensland, at our project at Clermont. There are literally hundreds of copper and gold workings in the particular area; no-one was able to hang these together. But we found it (Porphyry system) in very subdued geology in the middle of the area, and these porphyries have the capability of producing mines of 50 million up to 2 billion tonnes. So we now find copper, gold and silver, and molybdenite over a wide ranging area approximately about 10 kilometres long by about three kilometres wide.

So we put it out for JV, we realized that the cost of doing the exploration and bringing this on, at the same time as trying to do Cyclone is too heavy for a small company. So we’ve approached several majors and at the moment we have two majors who are considering doing a joint venture with us. And one of them is very close to coming to do a deal, so we should know more about that in the next three weeks.

Clive Tompkins : On to corporate matters. Who’s been funding the Company to date and are you looking at JV partners, offtake agreements etc. to fund the zircon project?

Tony Fawdon : It’s been funded mainly from the shareholders; we have a major shareholder in Andrew Tsang who’s an industrialist from southeast China, Fujian. And a number of Chinese in Hong Kong and other parts of southern China, we also have advisors in Phillips Capital, who is Intersuisse and now Austock. And these people have been raising capital for us for a number of years, so we’ve had a very strong support from all these groups including the current shareholders. So from that perspective, we really haven’t had to scratch too hard to get funding for our operations.

With Cyclone we’ve been talking for quite some considerable years with BaoTi Group, who are a major player, a Chinese player from central China from a place called Baoji, west of Xi’an, the old capital. And these people are one of the biggest producers of titanium end products and also zircon end products.

Now we’ve had a very good relationship in swapping data information and they’ve been very, very helpful. They are waiting for several things to happen, like for example, the discovery of water, which we are now going to be drilling immediately under the mine site. We’re expecting to see there some aquifers which are well known within the Officer Basin, so we don’t see too many problems there. Once we’re through that process, then I think the Chinese will come on board but failing that, we already have quite a few other major parties who are end users themselves and processors.

Clive Tompkins : Last question. What’s the priority for the next six months?

Tony Fawdon : Obviously our priority is to get the definitive study underway and move this process as fast as possible. We’ve heard lots of exploration mining companies’ whingeing about compliance, well it’s real, and we have to push it very, very hard. I have to say we’re dealing with the WA Government and the WA Government is streets ahead of anything in the eastern States. So that’s going to be a big plus in moving forward. They want production here.

Clive Tompkins : Tony Fawdon thanks for the introduction and congratulations on progress so far.

Tony Fawdon : Thank you very much indeed.

Ends

Page 3 of 3