DIATREME RESOURCES LIMITED — Investor Presentation 2011

Oct 26, 2011

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DIATREME RESOURCES LIMITED

ABN: 33 061 267 061

Postal Address: PO Box 10288 Brisbane Adelaide Street QLD 4000 Registered Office: Level 2 87 Wickham Terrace Spring Hill QLD 4000 PH: +61 (0)7 3832 5666 FX: +61 (0)7 3832 5300 www.diatreme.com.au manager@diatreme.com.au

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ASX : DRX

Company Announcement Office Australian Securities Exchange Level 4, 20 Bridge Street Sydney NSW 2000

27 October 2011

MINING 2011 CONFERENCE – BRISBANE, AUSTRALIA COMPANY PRESENTATION

Diatreme Resources Limited is pleased to attach a copy of a presentation entitled “Cyclone Zircon Project, Eucla Basin, WA” to be delivered by Tony Fawdon, Executive Chairman/CEO, at the Mining 2011 Resources Convention in Brisbane on 27 October 2011.

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David Hall Executive Director - Operations

Attach:

Tony Fawdon

DISCLAIMER

This presentation contains certain forward‐looking statements and forecasts which include without limitation, expectations regarding future performance, exploration, mineral resources, the financial position of Diatreme Resources Limited (the “Company”), industry growth or other trend projections.

Whilst this presentation is based on information from sources which are considered reliable, the Company, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information in this presentation is complete or accurate. To the maximum extent permitted by law, the Company disclaims any responsibility to inform any recipient of this presentation of any matter that subsequently comes to its notice, which may affect any of the information contained in this document and presentation.

Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities.

STATEMENT IN ACCORDANCE WITH THE AUSTRALASIAN CODE FOR REPORTING OF EXPLORATION RESULTS, MINERAL RESOURCES AND ORE RESERVES (THE JORC CODE)

The information in this presentation, insofar as it relates to Exploration Results and Mineral Resources , is based on information compiled by Mr David Jelley, who is a full time employee of Diatreme Resources Limited and a Member of the Australasian Institute of Mining and Metallurgy. Mr Jelley 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 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Jelley consents to the inclusion in this presentation of the matters based on the information in the form and context in which it appears.

DRX PROFILE

• LARGE WORLD ORDER ZIRCON DEPOSIT AT CYCLONE, EUCLA BASIN WA

• CYCLONE DEPOSIT PREFEASIBILITY NEARING COMPLETION

• NEGOTIATING CYCLONE FARM IN PROVISIONS FOR BFS & DEVELOPMENT

• EXPLORING SATELLITE RESOURCES AT CYCLONE FOR FURTHER ZIRCON

• JOINT VENTURING DRX GOLD & BASE METAL PORPHYRY & VMS TARGETS

• SELF CONTAINED GEOLOGICAL, ENGINEERING, DRILLING & PREPREP LAB

PROJECT LOCATIONS

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Cape Bedford (HM)
Bellfield (BM)
Tick Hill MLs(Au)
Clermont(Cu‐Au Mo)
CYCLONE DEPOSIT (Zr)
Shark Bay (HM)
Eucla Basin (HM)
Anabama (Cu‐Au)
Casterton (HM)
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CYCLONE LOCATION

CYCLONE DEPOSIT

MINING LEASE APPLICATION

CYCLONE DEPOSIT – 3D

CYCLONE PROPOSED MINING METHODS

CYCLONE PFS & SCHEDULES

PRE FEASIBILITY STUDY

• Geology, Resources &

• • Reserves

• Hydrology

• Mineralogy & Mine Planning

• • Metallurgy & Mineral Processing

• • Environmental Studies

• Infrastructure & Operations

• Site Access & Mineral Transport

• • Markets & Economics

• • Capital & Operating Costs

CYCLONE PROJECT TIMEFRAME Prefeasibility Study: 2011 Definitive Feasibility Study 2012 Project Financing 2013 Construction & development 2013 - 2014 Mining and production 2015

PRODUCTS & USES

Titanium

93% of world titanium minerals used to produce TiO2 pigment. TiO2 is a white powder with high opacity and brilliant whiteness.

Zircon

Over 50% of the world's zircon is used as an opacifier in ceramic glazes. Australia produces 40% of the world’s zircon which is mostly used in China

HEAVY MINERAL CONCENTRATE

GLOBAL MINERAL SANDS DEPOSITS – Zr:Ti Ratio

Cyclone – High Zircon assemblage

MINERAL SANDS PROJECTS – ZIRCON COMPARISON

CYCLONE – Planned zircon production vs current operations

SCOPING STUDY FORECASTS Capital Expenditure (including pre-development) $201.5 Million Average Annual Sales Revenue $187 Million Average Annual Cash Operating Cost $69 Million Average Annual Sustaining Capital Cost $2 Million Average Annual Tax Payable $28 Million Average Annual Net Operating Cashflow $88 Million Source: Terence Willsteed & Associates, June 2011

PROJECT FINANCIALS 10 Year Mine Life at 9.8 Mt ore mined per annum Average Annual Sales Zircon Product 66,000 t Average Annual Sales Titanium Product 69,000 t Payback Period 1.85 Years IRR 45% NPV (10%) Base Case $266 Million Sensitivity Range $208 Million to $463 Million Valuation Most Likely $300 Million

CYCLONE PROJECT DYNAMICS & DRX VALUES

• One million tonnes of zircon

• Current zircon price of USD 2770 & escalating

• Zircon constitutes >80% of revenue

• Independent valuation of Cyclone Project $300 Million

• DRX Market capitalisation $25 Million

CORPORATE INFORMATION

CAPITAL

Shares on Issue 355 Million Options on Issue (ex Sept 2013 @ 15 cents) 89 Million Share Price 7.1 cents Option Price 2.4 cents Market Capitalisation $25 Million Cash at hand (End Sept Quarter) $4.9 Million

MAJOR SHAREHOLDERS HOLDING Andrew Tsang (Total) 21.8% Doral Industries Ltd 6.6% Zhangxi Zeng 4.5% Chaohui Zhang 2.3% Huntley Custodians 1.9%

DIRECTORS A.J. FAWDON D.H. HALL A. TSANG G.WHITE C.WANG

SUMMARY

• Advanced project in strengthening Zircon market

• Highly experienced & effective Geological & Engineering Team

• Right project in the right sector with large upside

• New prospective heavy mineral projects for testing in 2012