DIATREME RESOURCES LIMITED — Capital/Financing Update 2019

Mar 26, 2019

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ASX ANNOUNCEMENT

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27 M arch 2019

$1.5m placement to progress Galalar Silica Project

Emerging silica sands explor e r and devel o per, Diatre m e Resourc e s Limited ( A SX:DRX) an n ounced today the completion of a b ookbuild t o raise $1.5 m illion (before costs) via a placemen t of approxi m ately 136 m illion fully p aid ordi n ary shares a t an issue price of 1.1 c e nts, with the funds targeted towar d s the Comp a ny’s emerg i ng Galalar Silica Proj e ct in North Queensland.

The placement w as well sup p orted by n e w sophistic a ted and pr o fessional in v estors and e xisting sha r eholders, w i th leading Australi a n financial services company Hartle y s Limited a c ting as Lead Manager.

The f unds raised from the pl a cement will be used to advance th e Galalar pro j ect, includi n g:

• Further r esource dri l ling focusse d on major r esource ext e nsion targets Elim Roa d North/Sou t h;

• • Bulk tes t ing and pro d uct definiti o n ‐ deliver y of larger b u lk samples to potential o ff‐takers; • Advanc e ment of permitting and developme n t approvals (mining lea s e, environ m ental and o t her approv a ls); • Advanc e ment of project econo m ic studies; and • Workin g capital.

The s uccessful f u nd‐raising f o llows Diatr e me’s recen t announce m ent of an i n itial silica s a nds Explor a tion Target ranging from 21 0 million tonnes (Mt) to 2 .1 billion t o nnes (refer A SX announ c ement 25 M arch 2019) , and the pre v ious upgrad e of its Infer r ed Mineral Resource es t imate to 2 6 .4 Mt > 99 % SiO2 (silico n dioxide) (r e fer ASX ann o uncement 7 March 201 9 ).

Commenting on the placem e nt, Diatreme’s Chief Ex e cutive Offic e r, Neil McI n tyre, said: “Diatreme thanks the su p port of s h areholders a nd welcom e s new inve s tors to our r egister foll o wing this si g nificant inv e stment in t h e future of our Company.

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“We continue to advance th e Galalar pr o ject at a ra p id pace in t h is world‐cla s s silica pro v ince, with previous results sho w ing our ability to produ c e premium ‐ grade silica for fast‐gro w ing Asian m arkets (ref e r ASX anno u ncement 9 January 2019).

“Ou r recent min e ral resourc e upgrade a n d large mai d en regiona l Exploration Target hav e further de m onstrated t he proj e ct’s potential to make a n importan t contribution to the region’s develo p ment, in p a rtnership w i th the tradi t ional owners, Hopeva l e Congress.

“We will now fu r ther test pr i ority explor a tion target s and furthe r delineate r e source ext e nsions, alo n g with othe r studies evaluati n g Galalar’s a bility to del i ver genuin e economic r e turns for t h e benefit of all stakehol d ers.”

Placement Details

The new shares w ill be issue d on the sa m e terms an d rank equal l y in all resp e cts with th e existing fully paid ordi n ary shares in the Co m pany. The a llotment o f the placem e nt (except f or Director participatio n ) is not subject to shareholder approval and will fall within the Compa n y’s 15% pla c ement cap a city under A SX LR 7.1 shares.

Settlement is ex p ected on o r around Wednesday, 3 A pril 2019.

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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Figure 1. Galalar Silica Project and Resource Area

About Galalar Silica Project

The G alalar Silic a Project EP M 17795 is located appro x imately 20 0 km north o f Cairns in N o rth Queen s land, and c o vers the e xtent of a l a rge Quater n ary sand dune field, pa r t of which i s currently b e ing mined b y Cape Flat t ery Silica M i nes

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Pty L td (CFSM), a wholly ow n ed subsidia r y of Mitsub i shi Corpora t ion. Cape F l attery has o perated sin c e 1967 and is the w orld's larg e st silica san d mining op e ration.

The C ape Bedfo r d/Cape Flat t ery region o f north Queensland is d o minated b y an extensi v e Quaterna r y sand mas s and dun e field that s t retches inl a nd from the present co a st for approximately 10 k m and exte n ds 50km fr o m north to south.

Hist o rical explor a tion has fo c used on th e Cape Flatt e ry area, wit h in the Mini n g Leases of CFSM, but reconnaissa n ce expl o ration has b een carried out over th e entire dune field in th e late 1960's and again i n the early 1 9 80's. This expl o ration confirmed the p r esence of b o th silica sa n d and heav y mineral sa n ds, and Dia t reme inten d s to build on the exis t ing data an d initially tar g et those ar e as (e.g. No b Point) where prospective silica san d dunes hav e been iden t ified and access is re a dily available.

Foll o wing the si g ning in 201 7 of a Conduct and Com p ensation A g reement and a Cultural Heritage Ag r eement with the trad i tional own e rs, Hopeval e Congress, D iatreme ha s worked cl o sely with H o pevale Con g ress to maximise the eco n omic benef i ts for the lo c al community.

In A u gust 2018, D iatreme defined a mai d en Inferred Mineral Resource for th e project’s N ob Point Sil i ca Sand Pro s pect (no w Galalar Sili c a Project) l o cated in th e southern a r ea of the t e nement (re f er ASX ann o uncement r e leased 13 Aug u st 2018).

Diat r eme subse q uently ann o unced an e x panded Inf e rred Miner a l Resource (refer ASX a n nounceme n t 7 March 2 0 19) of 2 6 .4 Mt > 99 % SiO2, follo w ed by a maiden Explor a tion Target ranging fro m 210 millio n tonnes to 2 .1 billion to n nes of si l ica (refer A S X announcement 25 M a rch 2019).

Bulk testing res u lts have de m onstrated the project’s ability to pr o duce prem i um‐grade s i lica using st a ndard processing tech n iques, mee t ing the req u irements fo r high‐end g l ass and sol a r panel ma n ufacturing a nd capable o f attr a cting premi u m prices (r e fer ASX an n ouncement 9 January 2 0 19).

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