DIATREME RESOURCES LIMITED — Capital/Financing Update 2018

Mar 12, 2018

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DIATREME RESOURCES LIMITED ABN: 33 061 267 061 Postal Address: P.O B o x 382 Co o rparoo QLD 4151 Re g istered Offi c e: Unit 8, 6 1 Holdswort h Street Co o rparoo QLD 4151 PH: + 61 (0)7 33 9 7 2222 or 3 3 97 2255 www.dia t reme.com.au manag e r@diatrem e .com.au

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ASX : DRX

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Company Announ c ement Off i ce Austral i an Securiti e s Exchan g e Level 4, 20 Bridge Street Sydne y NSW 200 0

13 Mar c h 2018

Re-release of Announcement on 2 March 2018 titled “TESTWORK CONFIRMS PROSPECTS FOR NEW SILICA AND MINE”

Diatre m e Resour c es Limited wishes to notify sha r eholders of the re-re l ease of th e above annou n cement on Cape Bed f ord initially released t o the market on the 2 M arch 2018.

The an n ounceme n t has been amended t o incorpor a te the follo w ing chan g es:

• ad d ition of furt h er relevan t JORC Ta b le 1 com m entary

• • ma t erial drill holes includ e d in the m etallurgical sampling have been further re f erenced an d highlighte d in accord a nce with A SX Listing Rule 5.7.2, by separat e annexur e and

• • the Competen t Person st a tement is n ow furthe r clarified a s to the pe rs on responsible for exploration re s ults and ta r gets.

Yours f a ithfully

Tuan D o Company Secreta r y

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2 March 2018

• Results from initial metallurgical testwork show Cape Bedford Silica/Heavy Minerals Project capable of producing high-quality glass-grade silica sand

• Plans for additional drilling to allow resource definition at project located near world’s biggest silica sand mine

Prospects for a new world-class silica sand mine in North Queensland have received a boost, with Diatreme Resources Limited (ASX:DRX) announcing today results from initial metallurgical testwork showing the project capable of producing high quality glass-grade silica sand.

Six bulk samples were wet tabled to simulate conventional washing and gravity separation typical of silica sand processing, with c. 80% recovery of a primary silica sand product ranging from 99.6 – 99.9% SiO2 with <0.02% Fe2O3 – easily meeting specifications for glass-grade silica sand.

Situated near the world’s largest silica sands mine, Cape Bedford is favourably positioned to access growing markets for silica sand in Asia. The silica sand market is seen reaching nearly US$10 billion in revenues by 2022, amid growth from both developed and emerging markets.

Diatreme’s CEO, Neil McIntyre, said: “Cape Bedford’s potential as a supplier of high quality silica sand has been reaffirmed by these latest results, with the prospects of generating valuable new jobs for the region and becoming a profitable near-term mining operation as an important part of our mineral sands portfolio.

“We are determined to further test its potential as quickly as possible through additional drilling, based on support from the traditional owners and regulatory approvals, as we work to unlock value for shareholders.”

Cape Bedford 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)**

MARKET METRICS

Silica sand is currently enjoying healthy growth, with a CAGR of nearly 8.7% in value terms from 2009 to 2016 and a market value of US$6.3 billion (source: IMARC Group). This has been fuelled by its applications across a range of industries, including glass making, foundry casting, water fibration, chemicals and metals, along with the hydraulic fracturing process. IMARC expects the demand for silica sand to exhibit a CAGR of 7.2% through to 2022, reaching revenues of US$9.6 billion.

As one of the major consumers of high purity silica, the global glass market has recently realised significant growth due to increased demand from the construction and automotive markets, along with expanding per capita income and technological advancements. Currently there are no direct substitutes for silica sand in the majority of its applications. As a result, the threat of competitor products remains low.

Meanwhile, construction sand is a major global industry, with an estimated 11 billion tonnes of sand mined for construction alone in 2010.

The primary structural component in a range of building and construction products, whole-grain silica is used in flooring compounds, roofing shingles, skid-resistant surfaces and other applications requiring packing density and flexural strength. Ground silica adds durability, anti-corrosion and weathering properties in caulks, epoxy-based compounds and sealants.

Growing Asian markets for construction sand include Singapore, with other Asian emerging markets also showing growth, including India and Vietnam. For further information on the silica sand market, refer to Diatreme’s ASX announcement dated 30 November 2017.

EXPLORATION OVERVIEW – CAPE BEDFORD

The Cape Bedford EPM17795 is located approximately 200km north of Cairns in North Queensland, and covers 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 region of north Queensland is dominated by an extensive Quaternary sand mass and dune field that stretches inland from the present coast for approximately 10km and

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extends 5 0 km from n o rth to sou t h.

Historical exploration has focu s ed on the Cape Flat t ery area, w ithin the M ining Lea s es of CF S M, but reconnais s ance expl o ration has been carri e d out over the entire d une field i n the late 1960's and a gain in the early 1 980's. Thi s explorati o n confirm e d the pres e nce of bo t h silica sa n d and he a vy mineral sands, and Diatr e me intend s to build o n the existi n g data an d initially target those a reas (e.g. Nob Point ) where prospecti v e silica sa n d dunes h a ve been id e ntified an d access is readily ava i lable.

The comp a ny execut e d a Cond u ct and Co m pensatio n Agreeme n t (CCA) in January 2 0 17, and a C ultural Heritage A greement (CHA) in J u ne 2017 w ith the tra d itional ow n ers, the Hopevale C o ngress. T h e CCA allows ac c ess for gr o und distur b ing explo r ation activity and ensures the tr a ditional o w ners shar e in the potential e conomic b e nefits of t h is new pr o ject, while the CHA sets out the protocol f o r cultural h eritage issues. C u ltural herit a ge surveys for the fi r st propos e d exploration progra m were un d ertaken in August and subs e quent expl o ration acc e ss grante d in September 2017.

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Reconnaissance Exploration – September 2017

Following the process defined by the CHA, Diatreme assisted with a Cultural Heritage survey in August 2017 over the proposed reconnaissance exploration area in the Nob Point to Elim Beach area in the southern part of EPM17795. A reconnaissance exploration program was subsequently approved, and Diatreme commenced exploration in September 2017 utilising a Company-owned and operated air-core drilling rig. Reconnaissance drilling was planned alongside established roads and tracks, with line clearing and reconnaissance drilling also planned over a dune system in the southern part of the EPM.

During September, 29 holes were drilled along Elim Road and a related beach access track, for a total of 606m with an average hole depth of 21m. The logged geology was reasonably consistent in defining large areas of fine grained quartz sand, but sand colour was variable, with a variety of coloured sands particularly apparent towards Elim Beach. Results from the drilling were presented in the ASX announcement dated 30 November 2017.

Reconnaissance Exploration – October 2017

During October, 26 holes were drilled along cleared access tracks over a dune complex near Nob Point, for a total of 670m with an average hole depth of 26m. The logged geology was reasonably consistent in defining large areas of fine grained quartz sand, but sand colour was variable throughout the drilled area of the dune system, suggesting a complex depositional (and erosional) history for the dune complex.

Several large zones of white, fine grained quartz sand extending over 400m in length along the dune ridges were evident from surface down to 30m depth, with extensive cream coloured sands also logged. This suggests that most of the area drilled represents a body of sand with sufficient size that may allow large scale silica sand extraction for commercial purposes. Results from the drilling were presented in the December 2017 Quarterly Activities Report released to the ASX on 31 January 2018.

Bulk Sample Metallurgical Testwork

Subsequently, bulk samples of approximately 100kg each from six separate drill holes (CB037, CB038, CB047, CB048, CB053, CB054) were submitted for preliminary metallurgical testwork to assess the potential to generate a high-quality silica sand product from the white quartz sands intersected from the October drilling program.

The testwork confirmed the potential of the area drilled at Nob Point to generate a high-quality silica sand product suitable for glass making, with a range of 99.61 - 99.87% SiO2 sand with <0.02% Fe2O3 and 0.04 - 0.06% Al2O3 produced as a primary silica sand product from the testwork, with an average 80% recovery to product.

The secondary silica sand product also displayed high grade silica sand characteristics, with a range of 99.3 - 99.5% SiO2 with <0.04% Fe2O3 and 0.06 - 0.15% Al2O3 produced. Blending of these two streams could generate a glass-grade silica sand product with 97-98% recovery of feed to product.

Sizing of the primary silica sand product shows it to dominantly comprise 150 – 250um material (~50%), although samples CB047 and CB048 were slightly coarser grained.

The testwork flowsheet comprised:

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	Wet Sha king Table				Prim ary silica sa nd
	Concentrate
	Wet Sha king Table				Seco ndary silica sand
			Concentrate
			Sample		% weigh recovery t *			SiO2 %		Al2O3 %		Fe2O3 %		T iO2 %
			CB037		86			99.67		0.04		0.01		0 .02
			CB038		69			99.78		0.06		0.02		0 .03
			CB047		79			99.66		0.04		0.01		0 .02
			CB048		83			99.87		0.04		0.01		0 .02
			CB053		84			99.61		0.05		0.01		0 .02
			CB054		84			99.64		0.05		0.01		0 .02
					Prima rela ry Silica Sa tive to primaryw nd testwor et table feed k*
			Sample		% weigh recovery t *			SiO2 %		Al2O3 %		Fe2O3 %		T iO2 %
			CB037		12			99.5		0.11		0.03		0 .07
			CB038		28			99.5		0.11		0.04		0 .07
			CB047		18			99.5		0.06		0.01		0 .03
			CB048		14			99.5		0.06		0.02		0 .05
			CB053		15			99.3		0.12		0.03		0 .07
			CB054		15			99.3		0.15		0.04		0 .08
					Second rela ary Silica S tive to primaryw and testwo et table feed rk*
Size	CB037		CB03 8			CB047				CB04 8				CB053		CB054
µm	%	Cum%	%	C um%		%	Cum%			%	C um%			%	Cum%	%	Cu m%
1000	0.0	0.0	0.0	0.0		0.0	0.0			0.1	0.1			0.0	0.0	0.0	0 .0
850	0.1	0.1	0.1	0.1		0.1	0.1			0.1	0.2			0.1	0.1	0.1	0 .1
600	1.5	1.6	0.9	1.0		4.6	4.7			1.7	1.9			1.0	1.1	1.7	1 .8
425	5.7	7.3	3.9	4.9		21.5	26.2			8.8	1 0.7			5.4	6.5	6.3	8 .1
300	14. 9	22.1	12.7	17.6		34.3	60.6			20.4	3 1.1		15.3		21.9	16.3	2 4.4
250	12. 9	35.0	13.1	30.6		15.1	75.7			13.7	4 4.8		14.2		36.1	15.2	3 9.7
150	53. 5	88.5	60.4	91.0		21.4	97.2			44.7	8 9.6		52.2		88.3	49.3	8 9.0
125	6.9	95.4	5.8	96.8		1.0	98.2			5.8	9 5.4		6.9		95.2	6.1	9 5.1
90	2.9	98.3	2.0	98.7		0.6	98.8			2.8	9 8.2		3.7		98.9	2.9	9 8.0
45	1.6	99.9	1.3	1 00.0		1.1	99.9			1.6	9 9.8		1.1		100.0	1.9	9 9.9
0	0.1	100.0	0.0	1 00.0		0.1	100.0			0.2	1 00.0		0.0		100.0	0.1	10 0.0
				Primary Si lica Sand s izing (%							reta ined)

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Sample	Bulk	Sample	OS	Slimes	HM %	ZrO2% In HM	TiO2% In HM
	kg	kg	%	%
CB037(3-21m)	95	0.52	0.3	2.5	0.19	4.2	24.8
CB038 (3-21m)	92	0.50	0.1	1.4	0.32	7.0	32.4
CB047(3-27m)	133	0.50	0.0	2.1	0.06	1.7	14.5
CB048 (3-27m)	121	0.51	0.0	2.0	0.18	5.1	30.6
CB053 (3-21m)	96	0.51	0.0	2.2	0.16	3.9	24.7
CB054(3-12m)	60	0.50	0.1	3.1	0.18	4.1	22.7
	Head feed characterisation testwork

Sample	% weight recovery*	ZrO2% In HM	TiO2% In HM
CB037	0.12	6.7	32.5
CB038	0.25	9.8	39.9
CB047	0.03	4.4	23.1
CB048	0.10	6.5	35.9
CB053	0.12	8.3	35.3
CB054	0.13	10.3	38.3
Secondary Concentrate HLS HM testwork *relative to primary wet table feed

The head feed characterisation work shows that the raw sand material has very low levels of oversize and fines, as is typical of coastal aeolian sand dunes. Heavy mineral content is also quite low, but does contain a significant proportion of zircon and titanium minerals such that if any concentrations of HM are present within the dune mass they would have the potential to generate a valuable by-product HM concentrate.

Selected drill samples were also submitted to a specialist laboratory to commence a series of tests to determine the characteristics of the Nob Point dune sand and assess its potential for use as a construction sand. To date only sizing data has been reported, and this confirmed that the sand would be suitable as a fine-grained aggregate for concrete, provided that other physical and chemical characteristics are in specification. Further testwork is pending.

Exploration Target

Based upon the results from reconnaissance drilling and the initial metallurgical testwork, an Exploration Target for potential high-grade silica sand has been generated for the Nob Point dune area of 15 million to 20 million tonnes of high quality silica sand.

The potential quality and grade of this Exploration Target is conceptual in nature. There has been insufficient exploration to estimate a Mineral Resource; it is uncertain if further exploration will result in the estimation of a Mineral Resource.

The Exploration Target includes two interconnected dune ridges within the broad dune structure between the Nob Point access road to the SW and the Deep Creek lowlands and swamp to the NE. The potential volume is estimated by extrapolating the base RL of the pale sands (or logged water table) observed in reconnaissance drilling, SW and NE to intersect the edge of the dune mass. Extrapolation of a practical batter slope NW and SE between drill holes along the ridge lines that define the limit of the white and cream coloured sand mass provide the strike extent of the target.

The estimate assumes that between 60% and 90% of the dune sand is mineable and an in-situ bulk density of 1.6t/m[3] is used to calculate tonnage. A target grade of 99% SiO2 is considered appropriate as drill samples assayed to date exceed this value, and metallurgical testwork has demonstrated an increase in grade using conventional processes. The area is readily accessible from existing roads, and in close proximity to a potential barge / ship loading site.

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__ EPM17795
Exploration Target
● DRX drill collar
2.5m contours
Road
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Silica Sand Exploration Target over Nob Point dune system

Proposed Exploration Drilling – Southern Area

Planning for the next stage of exploration drilling in the southern EPM area is underway, with a vegetation survey partially completed in January 2018 to assess the presence of a threatened vegetation species within the NW extension of the Nob Point dunes drilled in October. A second target area is currently being surveyed, but given the timeline for the vegetation survey reporting and subsequent applications for vegetation clearing, no further drilling is likely until after the tropical wet season (second quarter 2018).

Compilation of the reconnaissance data together with a high-resolution satellite image (and related topographic data processing) that was acquired in September 2017 helped facilitate detailed planning for the next stages of exploration.

A combination of infill drilling and further reconnaissance drilling is proposed for the Nob Point dune area drilled in October 2017, to provide further data for geological interpretation and confirmation of the continuity of the white sand mass. This drilling is planned to allow a mineral resource estimate to be compiled for part of the Nob Point dune system.

Proposed Exploration Drilling - Regional

During 2018, Diatreme intends to carry out regional reconnaissance drilling over accessible areas of the EPM. This proposed exploration will be subject to appropriate (cultural heritage) approvals being obtained from Hopevale Congress to proceed with exploration activity.

Diatreme has identified numerous areas of interest for both silica sands and mineral sands exploration, and will work with Hopevale Congress and government departments to gain any necessary approvals for the exploration program to be further expanded.

Diatreme’s CEO Mr McIntyre added: “Cape Bedford could prove a highly valuable addition to our project pipeline as we progress our exploration activities. Our flagship Cyclone Zircon Project in Western Australia remains our primary focus and is currently progressing through final definitive feasibility studies towards mine establishment. Recent industry forecasts point to an improving pricing environment for mineral sands, and amid constrained supply, our projects are perfectly placed to capitalise for shareholders’ benefit.”

For further information, please contact:

Neil McIntyre, CEO

Competent Person Statement

The information in this report, insofar as it relates to Exploration Results and Exploration Target is based on information compiled by Mr Ian Reudavey, who is a full-time employee of Diatreme Resources Limited and a Member of the Australian Institute of Geoscientists. Mr Reudavey has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2012 Edition of ‘The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Reudavey consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.

Table 1: Drill Hole collar and assay information

Hole_ID	East	North	RL	From	To	Int.	SiO2	Al2O3	Fe2O3	TiO2
	UTM Zone55L GDA			m	m	m	%	%	%	%
CB035	315190	8305889	46	0	24	24	98.97	0.14	0.10	0.12
CB037	315213	8306114	33	3	21	18	99.37	0.07	0.04	0.08
CB038	315118	8306286	35	3	24	21	99.08	0.10	0.08	0.16
CB047	315002	8306977	37	3	30	27	99.41	0.05	0.02	0.05
CB048	315130	8306829	35	0	27	27	99.21	0.06	0.04	0.09
CB050	314554	8307180	44	0	33	33	99.32	0.07	0.05	0.09
CB052	314707	8306824	31	0	21	21	99.26	0.07	0.04	0.10
CB053	314820	8306666	33	0	24	24	99.26	0.09	0.05	0.10
CB054	314904	8306507	29	0	12	12	99.50	0.05	0.03	0.07

Table 2: Drill Hole collar and logged silica sand intervals

	Hole_ID	East	North	RL	From	To	Int.	Summary Log
		UTM Zone55L GDA			m	m	m
	CB034	315295	8305744	15	0	7.5	7.5	White sand
	CB035	315190	8305889	46	0	12	12	White sand
					12	25	13	Cream sand
	CB036	315204	8306004	35	0	4	4	Yellow sand(overburden)
					4	21	17	White sand
	CB037	315213	8306114	33	0	5	5	Greysand
					5	21	16	White sand
	CB038	315118	8306286	35	0	4	4	Greysand
					4	9	5	Cream sand
					9	21	12	White sand
					21	27	6	Cream sand
	CB039	315036	8306465	42	0	7.5	7.5	Light brown sand(overburden)
					7.5	22	14.5	White sand
	CB040	315011	8306592	44	0	9	9	Light brown sand(overburden)
					9	18	9	Cream sand
					18	33	15	White sand, water table at 33m
	CB041	315089	8306624	46	0	6	6	Light brown sand(overburden)
					6	21	15	Cream sand
					21	36	15	White sand, water table at 34m
	CB047	315002	8306977	37	0	5	5	Greysand
					5	30	25	White sand, water table at 27m
	CB048	315130	8306829	35	0	6	6	Greysand
					6	28	22	White sand, water table at 27m
	CB049	315235	8306696	34	0	3	3	Greysand
					3	10	7	White sand
	CB050	314554	8307180	44	0	22	22	White sand
					22	33	11	Cream sand, water table at 27m
	CB051	314623	8306997	35	0	24	24	White sand, water table at 21m
	CB052	314707	8306824	31	0	21	21	White sand, water table at 20m
	CB053	314820	8306666	33	0	24	24	White sand, water table at 20m
	CB054	314904	8306507	29	0	14	14	White sand
	CB055	315024	8306383	34	0	3	3	Greysand
					3	13.5	10.5	Cream sand

Table 3: Bulk sample information

Hole_ID	East	North	RL	From	To	Int.	SiO2	Al2O3	Fe2O3	TiO2
	UTM Zone55L GDA			m	m	m	%	%	%	%
CB037A	315213	8306114	33	6	21	15	99.42	0.06	0.04	0.08
CB038A	315118	8306286	35	3	21	18	99.15	0.09	0.07	0.12
CB047A	315002	8306977	37	3	27	24	99.47	0.05	0.02	0.04
CB048A	315130	8306829	35	3	27	24	99.24	0.06	0.04	0.09
CB053A	314820	8306666	33	3	21	18	99.34	0.07	0.04	0.09
CB054A	314904	8306507	29	3	12	9	99.51	0.05	0.04	0.07

*grade derived from averaging drill sample assays

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JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation		Commentary
Sampling	• Nature and quality of sampling (eg cut channels, random chips, or	•	Drilling samples are 3m down hole intervals of air-core drill cuttings collected
techniques	specific specialised industry standard measurement tools appropriate		from cyclone mounted rotary splitter, approximately 3-4kg (representing ~20%)
	to the minerals under investigation, such as down hole gamma		of drill material returned via the cyclone is sampled.
	sondes, or handheld XRF instruments, etc.). These examples should	•	Sample was submitted to commercial laboratory for drying, splitting (if
	not be taken as limiting the broad meaning of sampling.		required), pulverisation in a tungsten carbide bowl, and XRF analysis
	• Include reference to measures taken to ensure sample representivity	•	Sampling techniques are mineral sands “industry standard’ for dry beach sands
	and the appropriate calibration of any measurement tools or systems		with low levels of induration and slime.
	used.	•	As the targeted mineralisation is silica sand, geological logging of the drill
	• Aspects of the determination of mineralisation that are Material to the		material is a primary method for identifying mineralisation
	Public Report.	•	Metallurgical samples are composited intervals of white and cream sands
	• In cases where ‘industry standard’ work has been done this would be		logged in drilling with collection of the entire volume of air-core drill cuttings
	relatively simple (eg ‘reverse circulation drilling was used to obtain 1		from the cyclone in to large plastic sample bags.
	m samples from which 3 kg was pulverised to produce a 30 g charge	•	A twinned hole was drilled to collect the bulk sample from the logged interval of
	for fire assay’). In other cases more explanation may be required,		interest.
	such as where there is coarse gold that has inherent sampling
	problems. Unusual commodities or mineralisation types (eg
	submarine nodules) may warrant disclosure of detailed information.
Drilling	• Drill type (eg core, reverse circulation, open-hole hammer, rotary air	•	Vertical NQ air-core drilling utilizing blade bit, 3m drill runs
techniques	blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple
	or standard tube, depth of diamond tails, face-sampling bit or other
	_type, whether core is oriented and ifso, by what method, etc). _
Drill sample	• Method of recording and assessing core and chip sample recoveries	•	Visual assessment and logging of sample recovery and sample quality
recovery	and results assessed.	•	Reaming of hole and clearance of drill string after every 3m drill rod
	• Measures taken to maximise sample recovery and ensure	•	Sample chute cleaned between samples and regular cleaning of cyclone to
	representative nature of the samples.		prevent sample contamination
	• Whether a relationship exists between sample recovery and grade	•	No relationship is evident between sample recovery and grade
	and whether sample bias may have occurred due to preferential
	loss/gainof fine/coarse material.
Logging	• Whether core and chip samples have been geologically and	•	Geological logging of the total hole by field geologist, with retention of sample in
	geotechnically logged to a level of detail to support appropriate		chip trays to allow subsequent re-interpretation of data if required.
	Mineral Resource estimation, mining studies and metallurgical	•	The total hole is logged; logging includes colour, grain size, sorting, induration
	studies.		and estimates of HM, slimes and oversize utilizing panning.
	• Whether logging is qualitative or quantitative in nature. Core (or	•	Logging is captured in Micromine data tables, with daily update of field database
	costean, channel, etc) photography.		and regular update of master database.
	• The total length and percentage of the relevant intersections logged.

Criteria	JORC Code explanation		Commentary
Sub-sampling	• If core, whether cut or sawn and whether quarter, half or all core	•	Drilling samples rotary split on site (approx. 80:20), resulting in approximately 3
techniques	taken.		– 4kg of dry sample
and sample	• If non-core, whether riffled, tube sampled, rotary split, etc and	•	Sample was coned and quartered to generate a 1-2kg sample for submission to
preparation	whether sampled wet or dry.		the laboratory, with surplus retained as a reference sample.
	• For all sample types, the nature, quality and appropriateness of the	•	Sample size is considered appropriate for the material sampled
	sample preparation technique.
	• Quality control procedures adopted for all sub-sampling stages to
	maximise representivity of samples.
	• Measures taken to ensure that the sampling is representative of the
	in-situ material collected, including for instance results for field
	duplicate/second-half sampling.
	• Whether sample sizes are appropriate to the grain size of the material
	_being sampled. _
Quality of	• The nature, quality and appropriateness of the assaying and	•	Drilling samples were submitted to ALS Townsville, where they were dried,
assay data	laboratory procedures used and whether the technique is considered		weighed and split.
and	partial or total.	•	Analysis was undertaken by ALS Brisbane utilizing a Tungsten Carbide
laboratory	• For geophysical tools, spectrometers, handheld XRF instruments, etc,		pulverization, ME-XRF26 (whole rock by Fusion/XRF) and ME-GRA05
tests	the parameters used in determining the analysis including instrument		(H2O/LOI by TGA furnace)
	make and model, reading times, calibrations factors applied and their	•	Metallurgical samples were submitted to IHC Robbins for characterisation
	derivation, etc.		testwork (screening, de-sliming, sizing, HLS and XRF analysis) and wet-tabling
	• Nature of quality control procedures adopted (eg standards, blanks,		(two stage) to generate products for sizing and XRF analysis.
	duplicates, external laboratory checks) and whether acceptable levels
	_of accuracy (ie lack of bias) and precision have been established. _
Verification of	• The verification of significant intersections by either independent or	•	Significant intersections validated against geological logging and local geology /
sampling and	alternative company personnel.		geological model.
assaying	• The use of twinned holes.	•	Twinned holes were completed to generate material for bulk sampling and
	• Documentation of primary data, data entry procedures, data		metallurgical testwork. Geological logging is comparable, no direct assay
	verification, data storage (physical and electronic) protocols.		comparison has been made at this time.
	• Discuss any adjustment to assay data.	•	All data captured and stored in both hard copy and electronic format.
Location of	• Accuracy and quality of surveys used to locate drill holes (collar and	•	All holes initially located using handheld GPS with an accuracy of 5m for X,Y.
data points	down-hole surveys), trenches, mine workings and other locations	•	UTM coordinates, Zone 55L, GDA94 datum.
	used in Mineral Resource estimation.	•	Topographic surface generated from processing Stereo WorldView-3 satellite
	• Specification of the grid system used.		imagery and DGPS control points, collar RL’s levelled against this surface to
	• Quality and adequacy of topographic control.		ensure consistency in the database.
Data spacing	• Data spacing for reporting of Exploration Results.	•	Drill lines were completed at ~200m spacing along the prepared access tracks.
and	• Whether the data spacing and distribution is sufficient to establish the	•	Drill spacing and distribution is not sufficient to allow valid interpretation of
distribution	degree of geological and grade continuity appropriate for the Mineral		geological and grade continuity for Mineral Resource estimation
	Resource and Ore Reserve estimation procedure(s) and	•	No sample compositing (down hole) has been undertaken for XRF analysis of
	classifications applied.		drill samples. Down hole sample compositingwas undertaken togenerate a

Criteria	JORC Code explanation	Commentary
	• Whether sample compositing has been applied.	single bulk sample for holes CB037, CB038, CB047, CB048, CB053 and
		CB054.
Orientation of	• Whether the orientation of sampling achieves unbiased sampling of	•The dune field has ridges dominantly trending 320° - 330°.
data in	possible structures and the extent to which this is known, considering	•The drill access tracks typically run along or sub-parallel to dune ridges which
relation to	the deposit type.	suggests unbiased sampling, some cross dune tracks linking the ridges were
geological	• If the relationship between the drilling orientation and the orientation	also drilled.
structure	of key mineralised structures is considered to have introduced a
	sampling bias, this should be assessed and reported if material.
Sample	• The measures taken to ensure sample security.	•Sample collection and transport from the field was undertaken by company
security		personnel following company procedures.
		•Samples were delivered direct to ALS in Townsville.
Audits or	• The results of any audits or reviews of sampling techniques and data.	•There has been no audit or review of sampling techniques and data at this time.
reviews

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation		Commentary
Mineral	• Type, reference name/number, location and ownership including	•	The Cape Bedford Project occurs within EPM17795 in Queensland and is
tenement	agreements or material issues with third parties such as joint ventures,		held by Diatreme Resources.
and land	partnerships, overriding royalties, native title interests, historical sites,	•	The tenement is in good standing
tenure status	wilderness or national park and environmental settings.	•	A Compensation and Conduct Agreement, and a Cultural Heritage
	• The security of the tenure held at the time of reporting along with any		Agreement is in place with the landholder and native title party (Hopevale
	known impediments to obtaining a licence to operate in the area.		Congress)
Exploration	• Acknowledgment and appraisal of exploration by other parties.	•	Previous exploration has been carried out in the area during the 1970’s by
done by			Ocean Mining and 1980’s by Breen Organisation.
other parties		•	The historical exploration data is of limited use since it comprises shallow
			hand auger drilling and is typically not accurately located.
Geology	• Deposit type, geological setting and style of mineralisation.	•	The geology comprises variably re-worked aeolian sand dune deposits
			associated with a Quaternary age sand dune complex.
		•	Mineralisation occurs within aeolian dune sands.
Drill hole	• A summary of all information material to the understanding of the	•	A tabulation of the material drill holes is presented in the main body of this
Information	exploration results including a tabulation of the following information for		report.
	all Material drill holes:
	o easting and northing of the drill hole collar
	o elevation or RL (Reduced Level – elevation above sea level in
	metres) of the drill hole collar
	o dip and azimuth of the hole
	o down hole length and interception depth
	o hole length.
	• If the exclusion of this information is justified on the basis that the
	information is not Material and this exclusion does not detract from the
	understanding of the report, the Competent Person should clearly
	_explain why this is the case. _
Data	• In reporting Exploration Results, weighting averaging techniques,	•	The assay data presented for the silica sand is an arithmetic average of the
aggregation	maximum and/or minimum grade truncations (eg cutting of high grades)		3m individual sample results.
methods	and cut-off grades are usually Material and should be stated.	•	No minimum of maximum grade truncations have been used.
	• Where aggregate intercepts incorporate short lengths of high grade	•	The grade is relatively consistent and the aggregate intercepts use a simple
	results and longer lengths of low grade results, the procedure used for		arithmetic average.
	such aggregation should be stated and some typical examples of such
	aggregations should be shown in detail.
	• The assumptions used for any reporting of metal equivalent values
	_should be clearly stated. _
Relationship	• These relationships are particularly important in the reporting of	•	As the mineralisation is associated with aeolian dune sands the majority will

Criteria	JORC Code explanation	Commentary
between	Exploration Results.	be essentially horizontal, some variability will be apparent on dune edges and
mineralisatio	• If the geometry of the mineralisation with respect to the drill hole angle	faces.
n widths and	is known, its nature should be reported.	•All drilling is vertical; hence the drill intersection is essentially equivalent to the
intercept	• If it is not known and only the down hole lengths are reported, there	true width of mineralisation.
lengths	should be a clear statement to this effect (eg ‘down hole length, true
	_width not known’). _
Diagrams	• Appropriate maps and sections (with scales) and tabulations of	•A map of the drill collar locations is incorporated with the main body of the
	intercepts should be included for any significant discovery being	announcement. Representative cross-sections are not attached as there is
	reported These should include, but not be limited to a plan view of drill	insufficient drilling at this time to generate meaningful sections.
	_hole collar locations and appropriate sectional views. _
Balanced	• Where comprehensive reporting of all Exploration Results is not	•All exploration assay results have been reported at this time.
reporting	practicable, representative reporting of both low and high grades and/or
	widths should be practiced to avoid misleading reporting of Exploration
	_Results. _
Other	• Other exploration data, if meaningful and material, should be reported	•Geological observations are consistent with aeolian dune mineralisation
substantive	including (but not limited to): geological observations; geophysical	•No bulk density measurements have been undertaken
exploration	survey results; geochemical survey results; bulk samples – size and	•Abundant groundwater was intersected during drilling, as expected given the
data	method of treatment; metallurgical test results; bulk density,	dune complex is an aquifer and drilling was undertaken to considerable depth.
	groundwater, geotechnical and rock characteristics; potential	•The mineralisation is unconsolidated sand
	deleterious or contaminating substances.	•There are no known deleterious substances at this time.
		•Metallurgical test results from 6 bulk samples from 6 individual drill holes
		demonstrate that a high-quality glass grade silica sand product could be
		produced from the material using conventional wet separation techniques (i.e.
		washing and gravity separation)
Further work	• The nature and scale of planned further work (eg tests for lateral	•Additional drilling to test for lateral extensions of mineralisation are planned.
	extensions or depth extensions or large-scale step-out drilling).	•The areas of possible extensions are considered to be potentially politically
	• Diagrams clearly highlighting the areas of possible extensions,	and culturally sensitive, and not appropriate for publishing at this time.
	including the main geological interpretations and future drilling areas,
	provided this information is not commercially sensitive.