DIATREME RESOURCES LIMITED — Capital/Financing Update 2011

Apr 5, 2011

DIATREME RESOURCES LIMITED

ABN: 33 061 267 061

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Postal Address: P.O Box 10288 Brisbane Adelaide Street QLD 4000 Registered Office: Level 2 87 Wickham Terrace Spring Hill QLD 4000 PH: +61 (0)7 3832 5666 FX: +61 (0)7 3832 5300 www.diatreme.com.au manager@diatreme.com.au

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ASX : DRX

Company Announcement Office Australian Securities Exchange Level 4, 20 Bridge Street Sydney NSW 2000

6 April 2011

CYCLONE ZIRCON PROJECT - BAOTI GROUP LIMITED

HIGHLIGHTS

• BaoTi Group Limited (BaoTi) have now completed a successful site visit to the Cyclone Deposit.

• BaoTi to complete due diligence in May 2011.

• Diatreme and BaoTi aim to finalize a binding Heads of Agreement by end of June 2011 (subject to successful due diligence).

• Project Agreement is aimed to be completed in December 2011, after Government approvals.

Diatreme Resources Limited (Diatreme) is pleased to announce that following a successful visit to the Cyclone Heavy Mineral Project in late March by a delegation from China, representing BaoTi, the parties to the August 2010 Memorandum of Understanding have agreed on a timetable to further the interests of BaoTi toward project participation.

The visit by BaoTi comprised:

• A review of Diatreme’s heavy mineral exploration data

• A review of Cyclone Scoping Study updated data

• Site visits to:

  • The bulk testing facilities and laboratories of Mineral Technologies’ at Carrara, Queensland.

  • Diatreme’s Ceduna depot to view procedures and data regimes within the Company’s pre-prep laboratory facilities.

  • The Cyclone Deposit to observe drilling and field procedures in action.

• A review of Australian rail and port infrastructure for future transport purposes.

The visit successfully answered all questions and concerns that BaoTi expressed and validated Cyclone Deposit as a significant zircon resource on a world scale.

In recent days, there has been a lot of media and broker interest and discussion on emerging shortages of zircon and high grade titanium products due to supply constraints.

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DIATREME RESOURCES LIMITED

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Shortages in zircon are predicted by industry analysts to extend for up to ten years, due to the fact that there are very few rich zircon deposits ready to come into production and new worldwide scale deposits are yet to be identified. Any new zircon rich deposits, once discovered, could take at least seven to ten years to be brought into production.

Zircon prices have doubled in the last 18 months to US$1450 per tonne and industry analysts are already predicting a zircon price in excess of US$2000 per tonne by the end of this year.

According to Goldman Sachs, zircon consumers in China have been forced to “destock” by sparse availability of material and are now operating on a “hand-to-mouth basis”.

Diatreme’s Cyclone Project sits in a very favourable position with its bounty of high grade zircon and high value titanium minerals. The deposit continues to shape up as a major zircon resource by world standards, with more potential heavy mineral targets in the area yet to be drilled.

Field work at Cyclone was recommenced in late March following delays caused to the Diatreme’s plans by recent adverse wet weather and flooding events in the project area.

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Anthony J Fawdon Executive Chairman/CEO

Company contact details: Tel : +61 7 3832 5666 Fax : +61 7 3832 5300 Email : manager@diatreme.com.au

About BaoTi

• The leading zircon and titanium fabrication company in China and presently dominates Chinese exports in zircon and titanium end user products, having an 80% market share.

• China’s biggest production, research and development base for titanium and its alloys, with its

• output of titanium mill products ranked second in the world.

• As a leader in technology and production and holding a significant domestic market share, it produces a wide variety of products made from titanium, zircon, tungsten, molybdenum and rare earth metals.

• Employs a workforce in excess of 7,000 personnel within its whole titanium industry chain which

• includes mining, smelting, rolling, downstream production and titanium equipment manufacturing.

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