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DIATREME RESOURCES LIMITED — Capital/Financing Update 2019
Nov 28, 2019
64787_rns_2019-11-28_799b6f2a-5939-49c8-a1b3-b01995955243.pdf
Capital/Financing Update
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ASX ANNOUNCEMENT
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29 November 2 0 19
Galalar testing shows potential for product upgrade
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Bench‐scale metallurgical testwork in China indicates Galalar Silica Project’s silica sand product’s amenability for further upgrade to “ultra‐low iron” (sub 50ppm Fe203) in addition to “low iron” (sub 100ppm Fe203) silica product
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All samples tested generated products that exceed specifications for photovoltaic (solar panel) glass production, with two samples exceeding specification for higher value photothermal glass(sub 50ppm Fe203) production suitable for specialist uses
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Results show potential for further increase in value of Galalar project with higher value product mix
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Mineral Resource being further reviewed to determine proportion of product capable of achieving suitable grade for higher value photothermal quality sand
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Positive results follow recent MOU’s for “low iron” photovoltaic grade silica offtake signed with private Chinese companies, amid growing demand for silica sand from Asia’s expanding solar panel market.
Emerging silica s ands explorer and de v eloper, Dia t reme Reso u rces Limite d (ASX:DRX ) announce d today a f u rther boo s t for its Galalar Silica P r oject in No r th Queensl a nd, with o v erseas (Chi n a) bench‐sc a le process testing indi c ating the p otential to f urther upgrade the pla n ned silica p r oduct to at t ract ultra‐p r emium pric e s.
The recently released scoping study (r e fer ASX rel e ase dated 9 Septemb e r 2019) co n firmed the Galalar project’s pot e ntial to pro d uce a high p urity, low i r on (sub 10 0 ppm Fe203) silica product suitable f o r use as di r ect feed material in the manufact u re of photo v oltaic panels (solar panels), generally referred to in China a s “photovoltaic grade” silica.
Foll o wing mark e t feedback, and the si l ica’s natur a l inherent a menability to upgrading, testing w as conduct e d to det e rmine the p otential fo r the produ c tion of a h i gher grade, higher val u e product t hrough use of a proprietary envi r onmentally friendly, or g anic hot acid leach (pic k ling) process.
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The targeted silica product is high pur i ty, “ultra‐l o w iron” (sub 50ppm F e 203) suitable for furth e r specialist uses incl u ding ultra‐thin electro n ics, compu t er and mo b ile phone s creens; a p r oduct gen e rally referr e d to in Chi n a as “ph o tothermal g rade” silica. The value o f this speci a lty “ultra‐l o w” iron sili c a product i s significantl y higher than the “lo w iron” prod u ct, with ma r ket feedback indicating a significant pricing pre m ium per to n ne of prod u ct.
Testwork process
Diat r eme engag e d an indus t ry recognis e d company called Qinf e ng Mining C o. Ltd (QM C L), which o w ns a proprietary “en v ironmentall y friendly” h ot acid lea c h (pickling) process, to complete p r ocessing te s twork, incl u ding the pi c kling process, on sam p les from th e Galalar pr o ject.
Bas e d in China’s Jiangxi Pro v ince, QMCL is well con n ected with s ilica suppli e rs and spec i alist glass producers and has desi g ned and in s talled silica product up g rade plant s in a numb e r of major g lass manuf a cturing an d silica proc e ssing plan t s in China.
Foll o wing a revi e w of the dr i ll sample d a tabase, QM C L requeste d four samples of two kilograms each from thre e drill holes at varying depths co n tained within the Galalar project’s Mineral Re s ource area . The samples were sel e cted fro m different z o nes of the resource tha t have a suit a ble chemic a l analysis f o r upgrading using the pickling process.
The f our as‐drill e d silica san d samples w e re analyse d by independent labora t ory ALS in T ownsville, A ustralia usi n g the stan d ard exploration sample assay m e thod. The relevant c h emical co m ponents o f interest for high end glass pro d uction are shown in the table belo w :
ALS TOWNSVILLE CHEMICAL ANALYSIS OF “RAW” DRILL HOLE SAMPLES
| DR ILL HOLE |
CB047A | CB04 7A |
CB 107 |
C B108 |
|---|---|---|---|---|
| SAMP LE NUMBER |
D2794 | D27 95 |
D2 716 |
D 2885 |
| S iO2(%) |
99.89 | 99. 80 |
98 .97 |
9 9.35 |
| Fe 2O3(%) |
0.03 | 0.0 2 |
0 .04 |
0.03 |
| T iO2(%) |
0.02 | 0.0 2 |
0 .07 |
0.04 |
| Al 2O3(%) |
0.01 | 0.0 1 |
0 .16 |
0.04 |
QM C L used the s e samples t o prepare t h ree sample s of one kilogram each for processi n g testwork. The two sa m ples fro m CB047A w e re combine d into one c o mposite sa m ple and CB107 and CB 1 08 were ke p t as separa t e samples.
All s a mples wer e processed u sing the sa m e procedu r e which inv o lved:
- Initial w a shing using fresh water to remove f ine particle s and organi c material;
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- Gravity s eparation b y processin g three time s on a spiral s luice to re m ove heavy m ineral particles; 3. Magnetic separatio n processing, twice at 1. 3 tesla and o n ce at 1.5 tesla; 4. Processi n g in a pro p rietary hot a cid leach ( p ickling) pro c ess using i n dustrial oxalic acid and additives for one hou r at 100 deg r ees Celsius; 5. Neutrali s ing the pro d uct using s o dium hydr o xide for 30 m inutes the n washing the product with fresh wa t er.
All t h ree sample s were repo r ted to have achieved 8 0 % or higher product yield from the d rill sample w eight thro u gh processing to final product w eight.
QM C L used an independen t Chinese la b oratory, F o shan Cera m ics Researc h Institute T esting Co. L td (FCRITC L ), for che m ical analysis of the product sampl e s. The che m ical analysi s of the pro d uct sample s is provide d in the foll o wing tabl e :
FCRITCL CHEMICAL ANALYSIS OF THE PRODUCTS
| SAMPL E ID |
CB047A | CB107 | CB108 |
|---|---|---|---|
| SiO2(% ) |
99.92 | 99.82 | 99.91 |
| Fe2O3 (ppm) |
43.76 | 86.57 | 38.27 |
| TiO2(p pm) |
76.96 | 276.56 | 125.67 |
| Al2O3( ppm) |
124.34 | 524.25 | 132.41 |
| ZrO2(p pm) |
5.07 | 12.11 | 8.26 |
FCRITCL also co m pleted a p a rticle size a n alysis for C B 047A and C B107 to all o w QMCL to finalise an a ssessment o f the pro d uct suitabili t y for specialist glass ap p lications.
QM C L assessed t he suitability of the thr e e product s a mples for high end glas s applicatio n s and deter m ined that:
• “The te s t results f o r sample C B 047A prov e s the silic a product f u lly complie s with the requiremen t s for pho t ovoltaic gla s s and phot o thermal gla s s”;
• “The tes t results for CB107 prov e s the silica p roduct co m plies with t h e requirem e nts for pho t ovoltaic gla s s”; • “The te s t results fo r sample CB108 proves the silica p r oduct basi c ally compli e s with the requiremen t s for pho t ovoltaic gla s s and phot o thermal gla s s”.
Note: These results are from limited sampling designed as a first step to determine suitability of the silica product for further beneficiation to a higher value product.
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Next steps
Foll o wing the s u ccessful in d ications fr o m this init i al small‐sc a le testing, a nd the sig n ificant pot e ntial for f u rther imp r ovements i n the projec t ’s economics, Diatreme w ill undertake further a c tivities incl u ding:
1) Develop i ng a great e r understanding with the technology provid e r of the criteria for s electing su i table feedstock amen a ble to upgr a ding to the high value p hototherm a l grade pro d uct;
2) Determi n ation of w h at percent a ge within G alalar’s tar g eted minin g area of ex p ortable product is ame n able to f u rther product upgradin g ;
3) Further b ulk sampli n g and large r scale testi n g, including assessmen t by indepe n dent labora t ories, to confirm repr o ducibility of results;
4) Entering into furthe r discussion s with China‐based processing com p anies to ex a mine a joi n t venture, tolling arra n gement or product price differenti a l on its exp o rted produ c t to fully unlock the val u e potential f or the Com p any.
Diat r eme will u p date the m arket as these further sample tes t s are undertaken and as discussions progress with pot e ntial China‐ b ased proce s sors.
Sign i ficantly, th e Galalar scoping study t h at showed the potenti a l for high r e turns (esti m ated pre‐ta x nominal NPV of $23 1 million, IR R of 150% a nd estimat e d capital p a yback within eight mo n ths) was b a sed on sales of photovoltaic silic a sand prod u ct only (ref e r ASX anno u ncement d a ted 9[th] Sept e mber 2019).
Diat r eme is als o reviewing the project ’ s Mineral R esource to determine t he possibl e extent of s and suitab l e for upg r ading to ph o tothermal q uality, which has the p o tential to si g nificantly i m prove the p roject’s val u e.
The latest resul t s follow Diatreme’s sig n ing of MO U with priva t e Chinese companies W an Zhong I n vestment G roup (ref e r ASX anno u ncement 1 9 September 2019) and Fengsha G r oup (refer A SX announ c ement 16 July 2019) f o r the pot e ntial supply of photovol t aic grade si l ica sand (sub 100ppm F e 2[O] 3[) from t] [h] e project.
Inve s tor interes t in the Ga l alar projec t has also s t rengthene d , as seen w ith the se c uring of a new corner s tone inve s tor, the fa m ily office o f noted small‐cap resour c es investor Brian Flann e ry, together with the s u pport of existing and new shareh o lders in th e recent $3. 6 3 million p l acement (b e fore costs) aimed at further progr e ssing the p r oject (ref e r ASX anno u ncement 6 N ovember 2019).
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Wel c oming the l atest product results, D iatreme’s C E O, Neil Mc I ntyre said they could p r ovide a fur t her boost to the Galalar project’s economics.
“Th e scoping st u dy results s h owed the p otential for a highly val u able projec t capable of generating s trong retur n s for all s t akeholders, including the traditiona l owners, H o pevale Con g ress,” Mr McIntyre said .
“Th e se latest re s ults have o nly further i ncreased o u r confiden c e in Galalar’s ability to supply pre m ium produ c ts to Asia ’ s fast‐growing solar pa n el market and other speciality glas s applicatio n s, amid risi n g demand f or such products and China’s nee d for secure a nd reliable suppliers.”
Mr M cIntyre ad d ed: “Galalar is rapidly b ecoming a n extremely attractive project whic h is attracti n g strong in t erest fro m potential p roject part n ers. Following these la t est potenti a l improve m ents, we lo o k forward t o advancin g this proj e ct as quickly as possible, through next step p ermitting a n d approvals processes , to deliver further val u e for shareholders.”
Neil McIntyre Greg Starr Chief Executive O fficer Chairman Cont a ct – Mr Neil McIntyre ‐ Ph – 0 7 33972222 Web s ite ‐ diatreme. c om.au E‐ma i l ‐ manager@ d iatreme.com. a u
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Galal a r Exploratio n Tenement and Resour c e Area
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Competent Person Statements ‐ Silica
The information i n this report t hat relates t o Exploration Results and E xploration Targets from t h e Cape Bedf o rd Project is based on i n formation reviewed and c ompiled by M r. Neil Mac k enzie‐Forbes, a Compete n t Person wh o is a Memb e r of the Aus t ralian Insti t ute of Geos c ientists. Mr. Mackenzie‐Forbes is a director of Se b rof Projects Pty Ltd (a c o nsultant ge o logist to Dia t reme Resources Limite d ). Mr. Mack e nzie‐Forbes h as sufficient experience w hich is relev a nt to the st y le of mineralisation and t y pe of dep o sit under consideration and to the activity being und e rtaken to q u alify as a Co m petent Pers o n as defined in the 2012 Edition of t h e ‘Australasi a n Code for Reporting of Exploration Results, Min e ral Resources and Ore R e serves’. Mr. Mackenzie‐ F orbes cons e nts to the in c lusion in the report of the matters bas e d on his info r mation in th e form and context in whic h it appears.
The information i n this report t h at relates to Silica Mineral Resources i s based on inf o rmation co m piled by Bric e Mutton fro m Ausr o cks Pty Ltd w ho has significant experie n ce in Indust r ial Minerals and Quarry Resource asses s ments. Brice Mutton has suffi c ient experie n ce which is r e levant to th e style of min e ralisation an d type of dep o sit under co n sideration a n d to the acti v ity for w hich he is un d ertaking to q ualify as a C o mpetent Per s on as define d in the 2012 edition of th e Australasian Code for Rep o rting of Expl o ration Results, Mineral Re s ources and O re Reserves ( The JORC Co d e). Brice M u tton consent s to the inclu s ion in th e report on t h e matters ba s ed on their i n formation i n the form an d context in w hich it appea r s.
The information i n this report t h at relates to processing o f samples fro m the Galalar Silica Project is based on i n formation prov i ded by Qinfeng Mining Co . Ltd (QMCL), a Chinese te c hnology pro v ider, and reviewed by Mr. Craig Brown, a Competent Pers o n who is a M ember of the Australasian Institute of M ining and M e tallurgy. Mr. Brown is a d i rector of Resources Engin e ering & M a nagement P t y Ltd (consul t ant metallur g ist to Diatre m e Resources Limited). M r Brown has s u fficient experience which is rele v ant to the st y le of mineral i sation and type of deposit under consideration and t o the activity being undert a ken to quali f y as a Com p etent Perso n as defined i n the 2012 Edition of the ‘ A ustralasian Code for Repo r ting of Explo r ation Result s , Mineral Resources and Or e Reserves’. M r. Brown co n sents to the inclusion in t h e report of t h e matters b a sed on his in f ormation in t he form and context i n which it appears.
Forward looking statements: T his document may contai n forward loo k ing stateme n ts. Forward l ooking state m ents are oft e n, but n ot always, id e ntified by th e use of words such as “se e k”, “indicate ” , “target”, “ a nticipate”, “ fo recast”, “believe”, “plan” , “esti m ate”, “expe c t” and “inte n d” and state m ents that a n event or res u lt “may”, “will”, “should”, “could” or “ m ight” occur o r be achi e ved and oth e r similar exp r essions. Indi c ations of, and interpretations on, futur e expected e x ploration results or techni c al outc o mes, produ c tion, earning s , financial position and pe r formance ar e also forwar d ‐looking stat e ments. The forward‐looking stat e ments in this presentation are based o n current inte r pretations, e x pectations, e stimates, as s umptions, fo r ecasts and proj e ctions about Diatreme, Di a treme’s proj e cts and asse t s and the in d ustry in whic h it operates a s well as other factors that man a gement beli e ves to be rel e vant and reasonable in th e circumstan c es at the dat e that such st a tements are made. The forw a rd‐looking s t atements ar e subject to t e chnical, busi n ess, econom i c, competitive, political a n d social uncertainties and cont i ngencies and may involve known and u n known risks and uncertai n ties. The forward‐looking statements m ay prove to b e inco r rect. Many known and unknown factors could cause actual event s or results to differ materi a lly from the estimated or anticipated event s or results expressed or i m plied by any f orward‐looking statemen t s. All forwar d ‐looking statements mad e in this p resentation a re qualified b y the foregoing cautionar y statements.
Disclaimer: Diatr e me and its r e lated bodies corporate, a n y of their dir e ctors, officers, employees , agents or contractors do n ot mak e any represe n tation or warranty (eithe r express or i m plied) as to t he accuracy, correctness, c ompleteness, adequacy, relia b ility or likeli h ood of fulfil m ent of any forward‐lookin g statement, o r any events or results ex p ressed or implied in any forw a rd looking s t atement, except to the ex t ent required by law. Diat r eme and its r e lated bodie s corporate a n d each of th e ir resp e ctive directors, officers, e m ployees, ag e nts and contractors disclaims, to the m a ximum exte n t permitted b y law, all lia b ility and r esponsibility for any direc t or indirect l o ss or damag e which may b e suffered b y any person (including because of fault o r negligence or oth e rwise) throu g h use or reli a nce on anyt h ing containe d in or omitte d from this p r esentation. O ther than as requ i red by law a n d the ASX Listing Rules, Di a treme disclaims any duty to update forward looking statements to reflect new developments.
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JORC Code, 2012 Edition – Table 1 Report – Galalar Silica Project Indicated and Updated Inferred Resource Estimate.
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 range from 1m-3m down hole intervals of air-core |
| techniques | specific specialised industry standard measurement tools appropriate | drill cuttings collected from cyclone mounted rotary splitter, |
| to the minerals under investigation, such as down hole gamma | approximately 3-4kg (representing approximately 20% of drill material | |
| sondes, or handheld XRF instruments, etc). These examples should | returned via the cyclone is sampled). | |
| not be taken as limiting the broad meaning of sampling. | •Sample was submitted to commercial laboratory for drying, splitting (if | |
| • Include reference to measures taken to ensure sample representivity | required), pulverization in tungsten carbide bowl, and XRF analysis. | |
| and the appropriate calibration of any measurement tools or systems | •Sampling techniques are mineral sands “industry standard” for dry | |
| used. | beach sands with low levels of induration and slime. | |
| • Aspects of the determination of mineralisation that are Material to the | •As the targeted mineralization is silica sand, geological logging of the | |
| Public Report. | drill material is a primary method for identifying mineralization | |
| • In cases where ‘industry standard’ work has been done this would be | •Metallurgical samples are composited intervals of white and cream | |
| relatively simple (eg ‘reverse circulation drilling was used to obtain 1 | sands logged in drilling with collection of the entire volume of air-core | |
| m samples from which 3 kg was pulverised to produce a 30 g charge | drill cuttings from the cyclone in to large plastic samples bags. | |
| for fire assay’). In other cases more explanation may be required, | ||
| 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 utlising blade bit, initially 3m runs were |
| techniques | blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple | used for drilling campaigns in (September 2017, October 2017, April |
| or standard tube, depth of diamond tails, face-sampling bit or other | 2018 and June 2018) which was decreased to 1m increments the | |
| type, whether core is oriented and if so, by what method, etc). | most recent drilling campaign (November/December 2018). Within | |
| the resource estimate there is 75 drillholes of which (1m increment 30 | ||
| holes, 3m increment 45 holes). | ||
| •Holes were terminated in a clay layer or when the water table was | ||
| intersected. | ||
| Drill sample | • Method of recording and assessing core and chip sample recoveries | •Visual assessment and logging of sample recovery and sample |
| recovery | and results assessed. | quality. |
| • Measures taken to maximise sample recovery and ensure | •Reaming of hole and clearance of drill string after every 3m rod. | |
| representative nature of the samples. | •Sample chute cleaned between samples and regular cleaning of | |
| • Whether a relationship exists between sample recovery andgrade | cyclone toprevent sample contamination. |
1
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| and whether sample bias may have occurred due to preferential | •No sample bias occurred between sample recovery and grade. | |
| 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 |
| geotechnically logged to a level of detail to support appropriate | sample in chip trays to allow subsequent re-interpretation of data if | |
| Mineral Resource estimation, mining studies and metallurgical | required. | |
| studies. | •The total hole is logged initially at 3m intervals which was decreased | |
| • Whether logging is qualitative or quantitative in nature. Core (or | to 1m; logging includes qualitative descriptions of colour, grain size, | |
| costean, channel, etc) photography. | sorting, induration and estimates of HM, slimes and oversize utlising | |
| • The total length and percentage of the relevant intersections logged. | panning. | |
| •Logging has been captured through field drill log sheets and | ||
| transferred through to an excel spreadsheet with daily update of field | ||
| database and regular update of master database. | ||
| Sub-sampling | • If core, whether cut or sawn and whether quarter, half or all core |
•Drilling samples rotary split on site (Approximately 20% subsample), |
| techniques | taken. | resulting in approximately 3 – 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 |
| preparation | whether sampled wet or dry. | submission to the laboratory, with surplus retained as a reference |
| • For all sample types, the nature, quality and appropriateness of the | sample. | |
| sample preparation technique. | •Sample size (3kg - 4kg) is considered appropriate for the grain size of | |
| • Quality control procedures adopted for all sub-sampling stages to | material, average grain size (87% material by weight between | |
| maximise representivity of samples. | 0.125mm and 0.5mm). | |
| • 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 |
| assay data | laboratory procedures used and whether the technique is considered | dried, weighed and split. |
| and | partial or total. | •Analysis was undertaken by ALS Brisbane utilising a Tungsten |
| laboratory | • For geophysical tools, spectrometers, handheld XRF instruments, etc, | Carbide pulverization, ME-XRF26 (whole rock by Fusion/XRF) and |
| tests | the parameters used in determining the analysis including instrument | ME-GRA05 (H2O/LOI by TGA furnace). |
| make and model, reading times, calibrations factors applied and their | •Samples were assayed for SiO2and a range of heavy and other | |
| derivation, etc. | elements. | |
| • Nature of quality control procedures adopted (eg standards, blanks, | •Analysis undertaken determined by a sample code which correlates | |
| duplicates, external laboratory checks) and whether acceptable levels | to drill logs to ensure no sample bias. |
|
| of accuracy (ie lack of bias) and precision have been established. | •Metallurgical samples were submitted to IHC Robbins for |
|
| characterization testwork (screening, de-sliming, sizing, HLS and | ||
| XRF analysis) and wet-tabling (two stage). | ||
| •Testingundertaken by QinfengMiningCo Ltd(QMCL)in China,on |
2
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| selected samples, followed their established commercial practice, and | ||
| were reported to a format provided by Diatreme for review and | ||
| interpretation. | ||
| Verification of | • The verification of significant intersections by either independent or |
•Significant intersections validated against geological logging and local |
| sampling and | alternative company personnel. | geology/ geological model. |
| assaying | • The use of twinned holes. | •12 holes were twinned with sampling and logging undertaken in 1m |
| • Documentation of primary data, data entry procedures, data | increments which were used to validate the 3m sample and drill | |
| verification, data storage (physical and electronic) protocols. | increments that have been previously completed. | |
| • Discuss any adjustment to assay data. | •All data captured and stored in both hard copy and electronic format. | |
| •No assay data had to be adjusted. | ||
| 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 |
| data points | down-hole surveys), trenches, mine workings and other locations | for X, Y. |
| used in Mineral Resource estimation. | •UTM coordinates, Zone 55L, GDA94 datum. | |
| • Specification of the grid system used. | •Contract registered surveyor from Veris Ltd used a differential GPS to | |
| • Quality and adequacy of topographic control. | pick up drillhole Easting, Northing and Elevation values for holes | |
| within the resource area. | ||
| •Topographic surface generated from processing Stereo WorldView -3 | ||
| satellite imagery and DGPS control points, collar RL’s leveled against | ||
| this surface to ensure consistency in the database. | ||
| Data spacing | • Data spacing for reporting of Exploration Results. | •Drill lines were completed at approximately 100m spacing along the |
| and | • Whether the data spacing and distribution is sufficient to establish the | prepared access tracks, with holes drilled at approximately 75m along |
| distribution | degree of geological and grade continuity appropriate for the Mineral | the lines. |
| Resource and Ore Reserve estimation procedure(s) and | •Drill spacing, and distribution is sufficient to allow valid interpretation | |
| classifications applied. | of geological and grade continuity for an Inferred Mineral Resource | |
| • Whether sample compositing has been applied. | and an Indicated Mineral Resource where specified. | |
| Orientation of | • Whether the orientation of sampling achieves unbiased sampling of | •The dune field has ridges dominantly trending 320º - 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 |
| relation to | the deposit type. | ridges which suggest unbiased sampling, some cross-dune tracks |
| geological | • If the relationship between the drilling orientation and the orientation | linking the ridges were also drilled. |
| structure | of key mineralised structures is considered to have introduced a | •Silica deposition occurs as windblown with angle of rest |
| sampling bias, this should be assessed and reported if material. | approximately 35º (Nob Point East). Drilling orientation is appropriate | |
| for the nature of deposition. | ||
| Sample | • The measures taken to ensure sample security. | •Sample collection and transport from the field was undertaken by |
| security | company personnel following company procedures. | |
| •Samples were put into plastic bags, which were labelled and put into | ||
| canvas sample bags and sealedprior to beingsent off to ALS |
3
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Townsville. | ||
| •Samples were delivered direct to ALS in Townsville. | ||
| Audits or | • The results of any audits or reviews of sampling techniques and data. | •The updated Inferred Resource Estimate is based on updated |
| reviews | geological and geochemical data which were used to validate and | |
| audit the original Inferred Resource Estimate. | ||
| •Reviews were conducted internally by Diatreme Ltd and third-party | ||
| consultants Ausrocks Pty Ltd. And they were found to be consistent. |
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 Galalar Silica Project occurs within EPM17795 in Queensland |
| tenement and | agreements or material issues with third parties such as joint |
and is held by Diatreme Resources Ltd. It should be noted that |
| land tenure | ventures, partnerships, overriding royalties, native title interests, | previously this project has been referred to as Cape Bedford Silica |
| status | historical sites, wilderness or national park and environmental | Project. The name of the project was changed to reflect the land |
| settings. | owner agreement with the Hopevale Congress Aboriginal Corporation | |
| • The security of the tenure held at the time of reporting along with any | in 2018. | |
| known impediments to obtaining a licence to operate in the area. | •The tenement is in good standing. | |
| •A compensation and conduct agreement along with a cultural | ||
| heritage agreement is in place with the landholder and native title | ||
| party (Hopevale Congress). | ||
| Exploration | • Acknowledgment and appraisal of exploration by other parties. | •Previous exploration has been carried out in the area during the |
| done by other | 1970’s by Ocean Mining and 1980’s by Breen Organisation. | |
| 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 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 attached to this JORC Table |
| Information | exploration results including a tabulation of the following information | 1, as required by the Table 3.1. |
| for 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 _ |
4
| Criteria | JORC Code explanation | Commentary | |
|---|---|---|---|
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, | •Downhole compositing of samples using weighed averages of | Silica |
| aggregation | maximum and/or minimum grade truncations (eg cutting of high | content and interval length to determine floor and ceiling of material | |
| methods | grades) and cut-off grades are usually Material and should be stated. | that exceeded 99% SiO2content. | |
| • Where aggregate intercepts incorporate short lengths of high grade | •No minimum or maximum grade truncations have been used. | ||
| results and longer lengths of low grade results, the procedure used | •The grade is highly consistent, and the aggregate intercepts use a | ||
| for such aggregation should be stated and some typical examples of | simple arithmetic average. | ||
| 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 | |
| between | Exploration Results. | majority sub-horizontal, some variability will be apparent on | dune |
| mineralisation | • If the geometry of the mineralisation with respect to the drill hole |
edges and faces. | |
| widths and | angle is known, its nature should be reported. | ||
| intercept lengths |
• If it is not known and only the down hole lengths are reported, there 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 |
| intercepts should be included for any significant discovery being | of the report. Representative cross-sections have been attached | ||
| reported These should include, but not be limited to a plan view of | within the main body of this report. | ||
| _drill hole collar locations and appropriate sectional views. _ | |||
| Balanced | • Where comprehensive reporting of all Exploration Results is not | •All relevant exploration assay results have been reported. | |
| 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 |
| substantive | including (but not limited to): geological observations; geophysical | mineralisation. | |
| exploration | survey results; geochemical survey results; bulk samples – size and | •Groundwater was intersected during drilling at the base of holes, as | |
| data | method of treatment; metallurgical test results; bulk density, | expected given the dune complex is an aquifer and drilling was | |
| groundwater, geotechnical and rock characteristics; potential | undertaken to considerable depth. | ||
| deleterious or contaminating substances. | •The mineralisation is unconsolidated sand. | ||
| •IHC Robins completed a bulk (1.8t) laboratory sample to determine | |||
| viabilityofproduct through a one stage of Mineral Technologies |
5
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| MG12 spiral, which yielded 99.9% SiO2at 88% recovery. | ||
| •(CNBM) Bengbu Design & Research Institute for Glass Industry Co., | ||
| Ltd December 2018 completed bulk (0.35t) laboratory sample to | ||
| determine the viability of the product as high value glass product which resulted in 78% recovery of a >99% SiO2raw sample to 99.9% SiO2. |
||
| •There are no known deleterious substances. | ||
| •1100 %SiO2assays were completed on downhole composites over | ||
| various drilling programs. | ||
| •Qinfeng Mining Co Ltd (QMCL) have conducted initial small-scale | ||
| evaluations that demonstrated the suitability of some of the raw sand | ||
| to be processed by additional chemical treatment to produce an | ||
| upgraded, low iron, high value product. | ||
| Further work | • The nature and scale of planned further work (eg tests for lateral | •The areas of possible extensions are to the north and east of the |
| extensions or depth extensions or large-scale step-out drilling). | existing resource boundary which is constrained based on drilling | |
| • Diagrams clearly highlighting the areas of possible extensions, | data. Area’s to the west (west of Alligator Creek) have shown | |
| including the main geological interpretations and future drilling areas, | potential. | |
| provided this information is not commercially sensitive. | •Additional drillholes that have been detailed in the conclusion of the | |
| report should be completed as part of the next campaign of drilling. | ||
| •Scoping of areas of resource that may be suitable for production of | ||
| higher value products. |
Section 3 Estimation and Reporting of Mineral Resources
(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Database | • Measures taken to ensure that data has not been corrupted by, for | •The database was originally constructed by Diatreme Resources and |
| integrity | example, transcription or keying errors, between its initial collection | provided to Ausrocks in various file formats. Ausrocks reformatted |
| and its use for Mineral Resource estimation purposes. | these databases into appropriate file formats checking that assay | |
| • Data validation procedures used. | results matched the documents provided from the respective | |
| laboratories and the logs aligned with the chip tray samples. | ||
| Site visits | • Comment on any site visits undertaken by the Competent Person and | •No site visits have been undertaken by the Competent Person, but |
| the outcome of those visits. | Ausrocks Pty Ltd representative (Mining Engineer/SURPAC Modeller) | |
| • If no site visits have been undertaken indicate why this is the case. | has visited the site as a quality assurance/quality control exercise. | |
| •Each drillhole was logged, sampled, photographed and kept in chip | ||
| trays. Thephotographs and chiptrays were investigated bythe |
6
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| competent person to verify the previous logs. | ||
| Geological | • Confidence in (or conversely, the uncertainty of ) the geological | • The Indicated and Inferred Resource Estimate was calculated for a |
| interpretation | interpretation of the mineral deposit. | bulk mining operation where all material between two surfaces will be |
| • Nature of the data used and of any assumptions made. | extracted and processed. The current drill hole spacing with the | |
| • The effect, if any, of alternative interpretations on Mineral Resource | currently available analytical testing is sufficient to identify a large | |
| estimation. | volume of sand which could be processed to produce a high-grade | |
| • The use of geology in guiding and controlling Mineral Resource | silica sand product. | |
| estimation. | ||
| • _The factors affecting continuity both of grade and geology. _ | ||
| Dimensions | • The extent and variability of the Mineral Resource expressed as | •The resource boundary that has been formed is approximately 2.0km |
| length (along strike or otherwise), plan width, and depth below | in length and 700m at its widest point at East Nob Point and 650m in | |
| surface to the upper and lower limits of the Mineral Resource. | length and 400m at it’s widest point at West Nob Point. | |
| •Nob Point East the top of the resource predominantly following the | ||
| topography, the top of the resource at its highest point is 45.8 mRL to | ||
| the lowest at 20.4mRL. Depths to the resource depth range from | ||
| 0.3m to 12m with an average depth of 1.1m. Nob Point West also | ||
| had the top of the resource follow the topography the resource at its | ||
| highest point is 48m with a low of 19.3m. | ||
| •The base of the resource at East Nob Point ranges from 35.9mRL to | ||
| 6.8mRL. The surface is relatively flat with a variation of 29.1m over | ||
| 2,000m of strike. West Nob Point the base ranges from 38mRL to | ||
| 17.5mRL, which has a 20.5m change in elevation over the 650m | ||
| strike. | ||
| •Average thickness of the resource within the boundary is 16.7m at | ||
| East Nob Point and 12.7m at West Nob Point. | ||
| Estimation | • The nature and appropriateness of the estimation technique(s) | •The resource layers were determined using an inverse distance |
| and modelling | applied and key assumptions, including treatment of extreme grade |
analysis to the power of 2. With a 50m by 20m grid spacing with the |
| techniques | values, domaining, interpolation parameters and maximum distance | major axis aligning with the dune orientation at 330°. Minimum |
| of extrapolation from data points. If a computer assisted estimation | amount of holes that influenced interpolation were 3 with a distance of | |
| method was chosen include a description of computer software and | interpolation set to 250m. To determine the resource boundary, the | |
| parameters used. | top and bottom layers were intersected with the topography surface. | |
| • The availability of check estimates, previous estimates and/or mine | •Check estimate completed through changing of grid orientation and | |
| production records and whether the Mineral Resource estimate takes | spacing when modelling the deposit. | |
| appropriate account of such data. | •No deleterious elements were detected during the testing which was | |
| • The assumptions made regarding recovery of by-products. | compiled. | |
| • Estimation of deleterious elements or other non-grade variables of | •No block modelling was completed as part of this resource estimate. | |
| economic significance (eg Sulphur for acid mine drainage | •Grade cutting or capping was not applicable as no SiO2values | |
| _characterisation). _ | exceeded 100%. |
7
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| • In the case of block model interpolation, the block size in relation to | •There was an assumption that an increase in AlO2levels and | |
| the average sample spacing and the search employed. | moisture content indicated that the base material was clay, which | |
| • Any assumptions behind modelling of selective mining units. | indicated that this is the bottom of the hole and this was excluded | |
| • Any assumptions about correlation between variables. | from the resource estimate. | |
| • Description of how the geological interpretation was used to control | •The base and the top of the resource we determined by the silica | |
| the resource estimates. | assays completed on the 3m intervals originally and from the most | |
| • Discussion of basis for using or not using grade cutting or capping. • The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available. |
recent drilling program this is in 1m intervals. The maximum amount of material was classified as product that could be blended to ensure the grade was in excess of 99% silica. These heights were loaded into SURPAC 6.6.1 and modelled using an inverse distance |
|
| interpolation technique. | ||
| Moisture | • Whether the tonnages are estimated on a dry basis or with natural | •Moisture content testing has been conducted on 8 holes which were |
| moisture, and the method of determination of the moisture content. | logged in 1m intervals with samples sealed within plastic bags and | |
| then placed in canvas sample bags and were sent to ALS Townsville. | ||
| Cut-off | • The basis of the adopted cut-off grade(s) or quality parameters | •A cut-off grade of 99% silica was used to classify the Indicated and |
| parameters | applied. | Inferred Resource Estimate. |
| Mining factors | • Assumptions made regarding possible mining methods, minimum |
•It is expected that a truck/shovel or dozer push to conveyor mining |
| or | mining dimensions and internal (or, if applicable, external) mining | method would be selected subject to additional reviews which the |
| assumptions | dilution. It is always necessary as part of the process of determining | deposit size does not constrain either of these methods. The |
| reasonable prospects for eventual economic extraction to consider | resource was also limited to above the water table to make both of | |
| potential mining methods, but the assumptions made regarding | these mining methods plausible. | |
| mining methods and parameters when estimating Mineral Resources | •Dilution was not considered in the resource estimate. In some holes | |
| may not always be rigorous. Where this is the case, this should be | there was additional resource below the >99% silica floor which is | |
| reported with an explanation of the basis of the mining assumptions | slightly lower grade material and would only marginally dilute the | |
| made. | product. | |
| •Based on the sample assays and geological logs, the top 0.3m of the | ||
| deposit has been excluded from the resource estimate as it is | ||
| assumed that this would be a soil and vegetation layer and would be | ||
| scalped when mining the deposit. | ||
| Metallurgical | • The basis for assumptions or predictions regarding metallurgical | •Down hole sample compositing was undertaken to generate a single |
| factors or | amenability. It is always necessary as part of the process of | bulk sample for holes CB037, CB038, CBO047, CB048, CB053 and |
| assumptions | determining reasonable prospects for eventual economic extraction to | CB054 was completed as part of the exploration target with infill |
| consider potential metallurgical methods, but the assumptions | drilling and samples on downhole composites completed for the | |
| regarding metallurgical treatment processes and parameters made | Inferred Resource. | |
| when reporting Mineral Resources may not always be rigorous. | •It is assumed that the feed material for the proposed processing plant | |
| Where this is the case, this should be reported with an explanation of | be in excess to 99% SiO2. IHC Robins completed a bulk (1.8t) | |
| the basis of the metallurgical assumptions made. | laboratorysample to determine viabilityofproduct through a one |
8
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| stage of Mineral Technologies MG12 spiral, which yielded 99.9% | ||
| SiO2at 88% recovery. | ||
| •(CNBM) Bengbu Design & Research Institute for Glass Industry Co., | ||
| Ltd December 2018 completed another bulk (0.35t) laboratory sample | ||
| to determine the viability of the product as high value glass product | ||
| which resulted in 78% recovery of a >99% SiO2raw sample to 99.9% | ||
| SiO2. | ||
| •Qinfeng Mining Co Ltd (QMCL) demonstrated in small-scale the | ||
| potential to increase the value of final product through additional | ||
| chemical processing. | ||
| •As this is an Inferred Resource estimate no metallurgical factors were | ||
| considered in the resource calculation, with the bulk testing showing | ||
| that >99% SiO2raw feed material is a suitable cut-off grade to | ||
| produce a 99.9% SiO2processed material. | ||
| Environmenta | • Assumptions made regarding possible waste and process residue | •Due to the high-grade nature of the deposit it is expected that there |
| l factors or | disposal options. It is always necessary as part of the process of | will be minimal tailings produced through processing and thus |
| assumptions | determining reasonable prospects for eventual economic extraction to | minimal disposal. |
| consider the potential environmental impacts of the mining and | •Environmentally sensitive areas have been excluded from the | |
| processing operation. While at this stage the determination of | resource area. | |
| potential environmental impacts, particularly for a greenfields project, | •There is a 50m offset either side of Alligator Creek which bisects East | |
| may not always be well advanced, the status of early consideration of | Nob Point and West Nob Point. | |
| these potential environmental impacts should be reported. Where | ||
| these aspects have not been considered this should be reported with | ||
| _an explanation of the environmental assumptions made. _ | ||
| Bulk density | • Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the |
•55 density samples have been undertaken on site using a Dormer Push Tube. The in-situ density of 1.62 t/m3was an average of the |
| frequency of the measurements, the nature, size and | samples across the deposit and was used to calculated the Indicated | |
| representativeness of the samples. | and Inferred Resource estimate. Both are reported as in-situ | |
| • The bulk density for bulk material must have been measured by | densities with the natural moisture profile not yet determined, with | |
| methods that adequately account for void spaces (vugs, porosity, | further testing required to determine the dry density if/when the | |
| etc), moisture and differences between rock and alteration zones | resource is taken to a JORC compliant reserve. Bulk Density | |
| within the deposit. | sampling procedure and data can be found in Appendix D of this | |
| • Discuss assumptions for bulk density estimates used in the | report. | |
| _evaluation process of the different materials. _ | ||
| Classification | • The basis for the classification of the Mineral Resources into varying | •The deposit has an Inferred Resource Estimate of 8.7Mt and an |
| confidence categories. | Indicated Estimate of 21.5Mt. | |
| • Whether appropriate account has been taken of all relevant factors (ie | •The most recent drilling campaign using 1m increments for logging |
|
| relative confidence intonnage/grade estimations, reliability of input | and samplingthrough the continuityof the twinned holes to those |
9
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| data, confidence in continuity of geology and metal values, quality, | previously drilled in 3m increments shows an appropriate correlation. | |
| quantity and distribution of the data). | Over 1,100 geochemistry samples have been taken to accurately | |
| • Whether the result appropriately reflects the Competent Person’s | show correlation between drillholes. | |
| view of the deposit. | •The result accurately reflects the competent person’s view of the | |
| deposit. | ||
| Audits or | • The results of any audits or reviews of Mineral Resource estimates. | •This updated Inferred Resource Estimate and a maiden Indicated |
| reviews | Resource Estimate. The Inferred Resource Estimate, which has | |
| been completed by separate competent persons and reviewed | ||
| internally by Ausrocks Pty Ltd. | ||
| Discussion of | • Where appropriate a statement of the relative accuracy and | •It is the opinion of the competent person that the relative accuracy |
| relative | confidence level in the Mineral Resource estimate using an approach | and confidence level in both the Inferred and Indicated Resource |
| accuracy/ | or procedure deemed appropriate by the Competent Person. For | Estimate is adequate, given the drill density and continuity of |
| confidence | example, the application of statistical or geostatistical procedures to | geochemical samples. |
| quantify the relative accuracy of the resource within stated confidence | •The Inferred and Indicated Resource boundary is tightly constrained |
|
| limits, or, if such an approach is not deemed appropriate, a qualitative | based on the drill density. |
|
| discussion of the factors that could affect the relative accuracy and | •No production data is available at present as this is a Greenfields | |
| confidence of the estimate. | project. However Cape Flattery Silica Mine lies in the same adjoining | |
| • The statement should specify whether it relates to global or local | coastal dunes immediately to the North, suggesting potential viability. | |
| estimates, and, if local, state the relevant tonnages, which should be | ||
| relevant to technical and economic evaluation. Documentation should | ||
| include assumptions made and the procedures used. | ||
| • These statements of relative accuracy and confidence of the estimate | ||
| _should be compared with production data, where available. _ |
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