DIATREME RESOURCES LIMITED — Capital/Financing Update 2021

Sep 27, 2021

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ASX ANNOUNCEMENT

28 September 2021

High Priority Northern Exploration Targets – Progress Update

• Low‐impact auger drilling continues in DRX’s high priority Cape Flattery exploration areas, ‘Silica Target 1’ and ‘Silica Target 2’, to confirm high‐purity in‐situ SiO2 quality

• Initial results anticipated to define a new silica sand resource which will add to DRX’s existing Galalar Silica Project resource located 25 km to the south

• DRX continues to work with Traditional Owners to avoid and minimise impacts in areas of high environmental and cultural heritage values

Emerging silica sand developer and explorer, Diatreme Resources Limited (ASX: DRX , or the Company ) is advancing its assessment of high priority target areas, Silica Target 1 ( Si1 ) and Silica Target 2 ( Si2 ), to the north of its flagship Galalar Silica Project in Far North Queensland.

Si1 and Si2 are two of the largest high‐priority target areas within the Cape Flattery area of Exploration Permit for Minerals (EPM) 17795. These targets are located to the southwest of the world’s largest high‐grade silica mine at Cape Flattery (owned by Mitsubishi Corporation). The Si1 and Si2 target areas are dune systems above the 40 m RL contour, which extend inland from the coast for approximately 6‐12 km in length with a width of 6‐7 km ( Figure 1 ).

Samples taken during a preliminary exploration program in 2019 returned assay results of >99% SiO2, indicating a potentially large and significant high‐purity silica occurrence (ASX release 18 August 2021). It is anticipated the results from Si1 and Si2 will add to the Company’s current 75.5 Mt JORC Mineral Resource at Galalar to the south (ASX release 20 September 2021).

An initial inferred resource will be estimated following receipt of assay results in Q4 with a view to announcing a ‘new’ world‐class silica resource in addition to the 75.5 Mt Galalar resource to the south. Given the proximity of the northern exploration targets areas to Cape Flattery, there are potential export and logistical advantages.

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DRX’s CEO, Neil McIntyre commented:

“These northern exploration targets have the potential to demonstrate the true extent of this world class high purity silica dune system, playing a key role in Diatreme’s future resource development and logistics planning.

“The Company remains focused on advancing the Galalar Silica Project into production as soon as possible, as it has a demonstrated ability to produce a low iron, premium quality silica sand (99.9% SiO2) product, perfect for the needs of Asia’s fast‐growing solar PV and specialty glass market. This is becoming even more significant amid growing global supply concerns, demands for an increasingly de‐carbonised global economy and the need for environmentally sustainable minerals supply as part of that solution.”

EXPLORATION TARGETS

The northern exploration targets comprise five (5) dune systems over a total area of approximately 50 km[2] . It is estimated that an initial resource of 40‐160 Mt of SiO2 (of high purity) will result from the hand‐auger drilling program ( Table 1 ).

Exploration Target	Estimated Area	Estimated SiO2 Resource Target (tonnes)
	km2 ha	From To
Si1 Target Si2 Target Si2 Target West Casuarina Hill Casuarina Hill West	12 1,200 25 2,500 9 900 4 400 1 100	9,600,000 38,400,000 20,000,000 80,000,000 7,200,000 28,800,000 3,200,000 12,800,000 800,000 3,200,000
Total	51 5,100	40,800,000 163,200,000

Table 1: Initial resource target*

*Cautionary statement: An ‘Exploration Target’ is a statement or estimate of the exploration potential of a mineral deposit in a defined geological setting where the statement or estimate, quoted as a range of tonnes [and a range of grade (or quality)], relates to mineralisation for which there has been insufficient exploration to estimate a Mineral Resource (JORC 2012).

The program is designed to identify areas of potential high purity silica within identified access constraints (cultural, environmental etc.), and has started with the most easily accessible sites utilising a utility task vehicle (UTV) buggy to minimise impacts. This is in tandem with ongoing Traditional Owner consultations and planning to establish access corridors in more inaccessible, and culturally and environmentally sensitive areas ( Figure 2 ).

Hand‐auger sampling is limited to a depth of 5 m, and an off‐track vacuum rig is being considered to access areas to test the full depth of silica mineralisation and characteristics beyond the 5 m capability of a hand‐auger ( Figure 3 ).

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Work to date has been progressing well with 92 holes for a total of about 447 m ( Table 2 ). Due to freight logistics and high demand at ALS laboratories, preliminary assay results are not expected until Q4 2021; however, visually, the samples obtained from the 5 m holes auger holes are highly encouraging ( Figure 4 ).

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Figure 1: Location of Si Target 1 and Si Target 2 areas

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NEXT STEPS

The current program will progressively continue over the coming Quarter (Q4 2021) as the Company continues using low impact techniques and careful assessment of the terrain for future development potential ( Figure 5 ).

Sample analysis results (currently experiencing some turnaround time issues due to high lab services demand) will also be assessed to determine areas of highest priority determined by silica purity and assessment of other contaminants such as iron and heavy minerals. The hand‐auger program will also be supplemented by deeper drilling in select low impact areas moving forward during the upcoming Quarter.

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Figure 2: Cultural heritage survey

Figure 3: Hand‐auger sampling

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CULTURAL HERITAGE

The northern exploration areas are located within the boundary of the Hopevale Native Title determination area (QUD174/1997), which is administered by the Walmbaar Aboriginal Corporation RNTBC. The Si1 and Si2 dunes are located within the Dingaal Clan area. Cultural heritage advisers engaged by DRX are conducting interviews to record oral history and traditions, and are accompanying Dingaal representatives on cultural heritage field assessments.

The Company is advancing the regulatory approval process, Preliminary Feasibility Study (due in the coming weeks) and Definitive Feasibility Study to ensure the project plays a role in the region’s recovery from the impact of COVID‐19. The draft EIS is now being finalised with a target of receiving the necessary environmental approvals and grant of MLA 100235 in Q1 2022 and potential first production in late 2022.

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Figure 4: Samples from 5 m hand‐auger hole

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Figure 5: Aerial view of proposed and completed holes

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Table 2: Drill hole data

Hole ID MGA_E MGA_N RL TD MA001 312490 8333093 98 5 MA002 312198 8333040 83 1.5 MA003 312535 8333361 110 5 MA004 312328 8333518 121 5 MA005 312653 8333121 101 5 MA006 312801 8332925 93 5 MA007 312154 8332790 89 5 MA008 311954 8332949 83 4 MA009 311747 8333116 75 5 MA010 311555 8333272 71 5 MA011 311361 8333432 64 5 MA012 311184 8333602 61 5 MA013 310993 8333764 61 5 MA014 310826 8333970 60 5 MA015 313157 8332188 49 5 MA016 312909 8332221 88 5 MA017 312960 8332032 78 4.3 MA018 312705 8332368 99 5 MA019 312531 8332540 102 5 MA020 312393 8332680 97 5 MA021 312462 8331469 90 5 MA022 312279 8331642 95 5 MA023 312087 8331799 103 5 MA024 311876 8331934 97 5 MA025 311666 8332089 96 5 MA026 313096 8332431 45 5 MA027 312880 8332555 52 5 MA028 312722 8332750 61 5 MA029 312698 8331817 70 5 MA030 312509 8331989 83 5 MA031 312349 8332182 77 5 MA032 312099 8332304 78 5 MA033 312088 8330697 74 2.5 MA034 312249 8330780 73 4.7 MA035 311917 8331366 94 5 MA036 311634 8331875 83 5 MA037 311877 8331617 92 5 MA038 311619 8331104 83 5 MA039 311808 8330803 82 5 MA040 311666 8330617 58 5 MA041 311046 8331338 55 5 MA042 311031 8331621 75 5 MA043 311894 8330270 58 5 MA044 311799 8330442 59 5 MA045 311545 8330830 65 5 MA046 312188 8331418 98 5	Hole ID MGA_E MGA_N RL TD
	MA047 311586 8331578 85 5
	MA048 312056 8331075 75 5
	MA049 310687 8332375 71 5
	MA050 310411 8332669 72 5
	MA051 311254 8331846 82 4
	MA052 311003 8332097 75 5
	MA053 310157 8332908 67 5
	MA054 310425 8332340 70 5
	MA055 310617 8332171 70 5
	MA056 311025 8332559 78 5
	MA057 311354 8332309 84 5
	MA058 311291 8331019 57 5
	MA059 310763 8331582 49 5
	MA060 310404 8331742 46 5
	MA061 310080 8332025 70 5
	MA062 309791 8332326 57 5
	MA063 309523 8332625 59 5
	MA064 309241 8332914 61 5
	MA065 308966 8333191 64 5
	MA066 312055 8329982 53 5
	MA067 311734 8330242 52 5
	MA068 311354 8330380 49 5
	MA069 311154 8330622 55 5
	MA070 310760 8330470 53 5
	MA071 310385 8330621 55 5
	MA072 310038 8330814 51 4.5
	MA073 309717 8331070 49 5
	MA074 310857 8331036 40 5
	MA075 310448 8331090 38 5
	MA076 310164 8331069 43 5
	MA077 310025 8331343 44 5
	MA078 310780 8331309 45 5
	MA079 310724 8332802 65 5
	MA080 310424 8333084 65 5
	MA081 310145 8333367 65 5
	MA082 311378 8331317 75 5
	MA083 312416 8332934 90 4.4
	MA084 311429 8333149 72 5
	MA085 311658 8332862 69 5
	MA086 311444 8332613 53 4
	MA087 309868 8333646 71 5
	MA088 309614 8333966 72 5
	MA089 309327 8334308 71 5
	MA090 308814 8334914 69 5
	MA091 308546 8335196 69 3
	MA092 309052 8334612 69 5

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This announcement was authorised for release by the Board.

Neil McIntyre Chief Executive Officer

Greg Starr Chairman

Contact:

For media enquiries, please contact:

Mr Neil McIntyre manager@diatreme.com.au Ph: 07 3397 2222

Mr Anthony Fensom, Republic PR anthony@republicpr.com.au Ph: 0407 112 623

ASX releases referenced in this release

• Galalar silica resource expands 22% to 75.5 Mt – 20 September 2021

• Northern exploration targets resource expansion – 18 August 2021

ABOUT DIATREME RESOURCES

Diatreme Resources (ASX:DRX) is an emerging Australian producer of mineral and silica sands based in Brisbane. Our key projects comprise the Galalar Silica Project in Far North Queensland, located next to the world's biggest silica sand mine, together with the Cyclone Zircon Project in Western Australia’s Eucla Basin, considered one of a handful of major zircon‐rich discoveries of the past decade.

For more information, please visit: www.diatreme.com.au

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MINERAL SANDS AND SILICA – COMPETENT PERSON STATEMENT

The information in this report that relates to Exploration Results and Exploration Targets for the Cape Flattery and Cape Bedford regional target areas is based on information reviewed and compiled by Mr Neil Mackenzie‐Forbes, a Competent Person who is a Member of Australian Institute of Geoscientists (AIG). Mr Mackenzie‐Forbes is a Director of Sebrof Projects Pty Ltd (a consultant geologist to Diatreme Resources Limited).

Mr Mackenzie‐Forbes has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity being 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 Mackenzie‐Forbes consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

FORWARD LOOKING STATEMENTS

This document may contain forward looking statements. Forward looking statements are often, but not always, identified by the use of words such as “seek”, “indicate”, “target”, “anticipate”, “forecast”, “believe”, “plan”, “estimate”, “expect” and “intend” and statements that an event or result “may”, “will”, “should”, “could” or “might” occur or be achieved and other similar expressions. Indications of, and interpretations on, future expected exploration results or technical outcomes, production, earnings, financial position, and performance are also forward‐looking statements.

The forward‐looking statements in this presentation are based on current interpretations, expectations, estimates, assumptions, forecasts and projections about Diatreme, Diatreme’s projects and assets and the industry in which it operates as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made.

The forward‐looking statements are subject to technical, business, economic, competitive, political and social uncertainties and contingencies and may involve known and unknown risks and uncertainties. The forward‐looking statements may prove to be incorrect.

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