DIATREME RESOURCES LIMITED — Capital/Financing Update 2019

Sep 18, 2019

==> picture [54 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [54 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [49 x 59] intentionally omitted <==

==> picture [54 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [54 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [49 x 59] intentionally omitted <==

==> picture [54 x 60] intentionally omitted <==

==> picture [55 x 60] intentionally omitted <==

==> picture [49 x 60] intentionally omitted <==

ASX ANNOUNCEMENT

==> picture [30 x 66] intentionally omitted <==

==> picture [54 x 66] intentionally omitted <==

==> picture [55 x 66] intentionally omitted <==

==> picture [34 x 66] intentionally omitted <==

19 S e ptember 2 0 19

Second MOU signed on Galalar Silica offtake

• Memorandum of Understanding (MOU) signed with China’s privately owned Wan Zhong Investment Group on potential supply of up to 500,000 tonnes per annum of photovoltaic grade (sub 100ppm Fe2O3) silica sand from Diatreme’s Galalar Silica Project in Far North Qld

• Agreement follows July’s MOU for silica offtake signed with Fengsha Group, one of China’s largest processors and suppliers of photovoltaic (solar) and specialty high end silica sand

• Agreement a further step forward for a potential new silica sand mine in Far North Qld, supplying premium quality silica to Asia’s fast‐growing solar panel market.

Plans for a new s ilica sand m ine in Far N orth Queen s land have f urther adva n ced, with e merging sili c a sands ex p lorer and developer, Diatreme R e sources Li m ited (ASX: D RX) annou n cing today a new MO U for offtak e from its G a lalar Silic a Project with China‐bas e d private c o mpany Wa n Zhong Inv e stment Gro u p.

The agreement i s for the p o tential supply of up to 5 00,000 ton n es per ann u m of phot o voltaic grade silica san d (sub 100 p pm Fe2O3) to be prod u ced on‐site from the p roject loca t ed around 2 00km nort h of Cairns. This follows the signing of an M O U (refer AS X announce m ent 16 Jul y 2019) with China’s Fen g sha Group f or the potential supply of up to 5 0 0,000 tonn e s per annu m of photov o ltaic grade s ilica sand ( s ub 100ppm Fe2O3).

Bot h Fenghsha G roup and W an Zhong G r oup final of f take requir e ments (vol u mes) may b e scaled ap p ropriately t o refl e ct targeted p roduction o utputs and are still subj e ct to detailed negotiati o ns and bin d ing agreements as the proj e ct transitio n s through n ext steps (p e rmitting and approvals ) towards es t ablishment of propose d mining activity.

Diat r eme’s com m ercial obje c tive in entering into an y early stage (pre‐mining activity) no n ‐binding of f take MOU’ s is as follows;

• To esta b lish relation s hips with r e putable pa r ties regardi n g supply of its silica pro d uct

==> picture [26 x 112] intentionally omitted <==

==> picture [55 x 112] intentionally omitted <==

==> picture [55 x 112] intentionally omitted <==

==> picture [55 x 112] intentionally omitted <==

==> picture [46 x 112] intentionally omitted <==

==> picture [54 x 112] intentionally omitted <==

==> picture [55 x 112] intentionally omitted <==

==> picture [27 x 112] intentionally omitted <==

==> picture [54 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [54 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [17 x 122] intentionally omitted <==

==> picture [54 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [54 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

• Access m arket intelligence on hi g h end silica product sp e cialist mark e t requirem e nts includi n g product specific a tions.

• • Give the Company a higher degr e e of certai n ty regardin g both curre n t and expe c ted product prices near e r production target ti m elines.

• To spre a d offtake risk by alignin g with a nu m ber of pote n tial produc t offtake par t ies.

• Create a competitiv e process for supply of p r oduct whe n moving to e ventual pr o duction

• • Give the Company s o me certain t y that its p o tential production targe t s are unde r pinned by g e nuine mar k et demand.

While the MOU is non‐bin d ing at this stage, it se t s a frame w ork for fur t her co‐ope r ation, leading potentially to binding arrange m ents betw e en the par t ies subject t o final neg o tiations an d the projec t ’s advance m ent through the next development steps. Fi n al product p ricing mec h anisms will be agreed between th e parties prior to signin g any binding agreem e nt. The MO U term is fo r 12 months, with the potential for m utually agr e ed extensions.

Diat r eme’s CEO, Neil McIntyre, said the s econd such offtake MOU for Galala r highlighte d the strength of interna t ional demand for silic a sand and t h e project’s potential to become a new and secure supply s o urce for Asi a n markets.

“Ga l alar is fast b ecoming an extremely desirable pro j ect as dem o nstrated by the recent s c oping stud y and this la t est MO U is another i ndication o f the strengt h of deman d for its pre m ium‐grade s ilica produc t ,” Mr McIn t yre said.

“Th e Chinese m a rket consu m es around a third of the world’s ind u strial silica a nd we are e xtremely encouraged b y the inte r est shown by Wan Zhong, Fengsha a nd other gr o ups in obta i ning offtak e from Galal a r. We look f orward to neg o tiating pot e ntial bindin g agreemen t s that achie v e mutually b eneficial o u tcomes for a ll parties, i n cluding our proj e ct partner, H opevale C o ngress.”

The W an Zhong G roup of Companies wa s founded in 1996 with i t s headquar t ers based i n Hong Kong and its logi s tics, ship p ing and su p ply chain o p eration bas e d in China w ithin the Xiamen Speci a l Economic Z one. The G roup core b usiness act i vities are in investment , warehousi n g, logistics a nd bulk ma t erials shipp i ng and commodity trad i ng. Wan Zh o ng is a sup p lier and dis t ributor to m ajor glass manufacturer s in China requiring pho t ovoltaic (so l ar) grade silica (sub 100ppm Fe2O3) a nd other s p ecialty high end silica s a nd specification produc t s.

The Galalar Sili c a Project is adjacent to the world’s largest silica sand mining op e ration min e d by Mits u bishi Cor p oration. In September 2019, Diatr e me released a scoping study sho w ing the pr o ject’s favourable econ o mics, incl u ding its pot e ntial to generate around 60 local jobs in produ c tion for an o peration w i th a project e d mine life of 15 years, with an e s timated pr e ‐tax nomin a l NPV of $ 2 31 million, a n IRR of 15 0 % and esti m ated capit a l payback w ithin eigh t months (r e fer ASX rele a se dated S e ptember 9[t] [h] , 2019).

==> picture [26 x 111] intentionally omitted <==

==> picture [55 x 111] intentionally omitted <==

==> picture [55 x 111] intentionally omitted <==

==> picture [55 x 111] intentionally omitted <==

==> picture [47 x 111] intentionally omitted <==

==> picture [54 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [54 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [17 x 122] intentionally omitted <==

==> picture [54 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [54 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [48 x 72] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [54 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [21 x 142] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [54 x 61] intentionally omitted <==

==> picture [55 x 61] intentionally omitted <==

==> picture [48 x 71] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [54 x 62] intentionally omitted <==

==> picture [55 x 62] intentionally omitted <==

==> picture [48 x 72] intentionally omitted <==

==> picture [337 x 213] intentionally omitted <==

----- Start of picture text -----

Regional Setting
----- End of picture text -----

Figure 1. Galalar Exploration Tenement and Resource Area

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

==> picture [26 x 111] intentionally omitted <==

==> picture [55 x 111] intentionally omitted <==

==> picture [55 x 111] intentionally omitted <==

==> picture [55 x 111] intentionally omitted <==

==> picture [47 x 111] intentionally omitted <==

==> picture [54 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [54 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [49 x 59] intentionally omitted <==

==> picture [54 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [54 x 59] intentionally omitted <==

==> picture [55 x 59] intentionally omitted <==

==> picture [49 x 59] intentionally omitted <==

==> picture [54 x 60] intentionally omitted <==

==> picture [55 x 60] intentionally omitted <==

==> picture [49 x 60] intentionally omitted <==

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).

Bric e Mutton con s ents to the i n clusion in th e report on the matters ba s ed on their i n formation in the form and context in w h ich it ap p ears.

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.

==> picture [26 x 112] intentionally omitted <==

==> picture [55 x 112] intentionally omitted <==

==> picture [55 x 112] intentionally omitted <==

==> picture [55 x 112] intentionally omitted <==

==> picture [46 x 112] intentionally omitted <==