DIATREME RESOURCES LIMITED — Investor Presentation 2021

Nov 11, 2021

ASX:DRX

Time to shine. Advancing to Mining High Purity Silica Mine

Noosa Mining Unearthed 12 November 2021

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Important Information

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.

Cautionary Statement

Whilst Diatreme Resources has concluded that it has a reasonable basis for providing the forward looking statements included in this presentation, Diatreme Resources advises that given the current price of zircon and the company’s current market capitalisation (compared to the capital expenditure required in connection with the Cyclone Zircon Project), the production targets and forecast financial information contained in this presentation do not provide an absolute assurance of economic development at this stage. The stated production targets and forecast financial information contained in this presentation are based on detailed PFS studies and Diatreme Resources’ current expectations of future results or events, including sourcing of project development finance within the targeted timeline and/or attracting suitable project major financial partners and should not be relied upon by investors when making investment decisions.

Additional Information

This presentation should also be read in conjunction with the DRX Annual Report for 2020 and the September 2021 Quarterly Activities report, together with any announcement made by Diatreme in accordance with its continuous disclosure obligations under the Corporations Act including but not limited to the following ASX releases:

• 9 November – Galalar Maiden Ore Reserve, PFS deliver substantial boost to new silica sand mine

• 3 November – Wayne Swan appointed Non-Executive Director & Chairman

• 28 September – Progress update – high priority northern exploration targets

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

• 6 September - $10M placement to progress Galalar Silica Project

• • 18 August 2021 – Northern exploration targets resource expansion • 11 August 2021 – Drilling boosts confidence in Galalar resource • 10 June 2021 – Mining Lease Application lodged for Nob Point export solution • 19 May 2021 – Offtake MOU advances development of Galalar Silica Project • 22 April 2021 – Positive initial testwork results received for Galalar DFS • 8 April 2021 – Final metallurgical testwork underway for Galalar project • 17 March 2021 – Galalar silica resource expands 30% to 61.9Mt • 23 February 2021 – Canberra meetings highlight community support for Galalar • 11 February 2021 – Diatreme advances community engagement for Galalar • 25 January 2021 – Diatreme eyes further silica sand resource expansion • 22 January 2021 – Galalar EIS study progresses with water monitoring underway

The Resource Estimates and Production Targets reported by the Company on 20 September 2021 continue to apply and have not materially changed. Diatreme confirms that it is not aware of any new information or data that materially affects the information included in these announcements and that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.

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Company Profile

Diatreme introduction.

• Public, ASX-listed company operating over 14 years focused on minerals exploration and development (ASX:DRX)

Diatreme Board Chairman Wayne Swan

• Current market cap ~ $66 million

• Flagship project - Galalar Silica Project, Far North Queensland

• Over 1,200 active shareholders including major shareholders Ilwella P/L (Flannery Family Office) (approx. 20%), Deutsche Balaton (approx. 11.5%)

• Experienced Board and management who have successfully implemented and managed many projects through to mining, with specific Nth Qld mining project implementation and management experience from greenfield to production.

Directors Michael Chapman Greg Starr William Wang

DRX Management CEO Neil McIntyre COO Peter Brown Project Manager Phil McMurtrie Geologist Neil Forbes CFO Tuan Do

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Corporate Overview

Share price A$0.023

At close trading 8 November 2021 52 week high $0.030, low $0.012

Shares on issue 3,014m

Market capitalisation A$66m

At 8 November 2021

Cash A$8.8m

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Ilwella P/L
(Brian
Flannery)
19.98%
German Mining
Fund
11.54%
Others
67.97%
Directors &
Management
0.51%
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Shareholder interests at 3 Nov 2021

At 30 September 2021

Options

219.2m

179.2m – Exp 4/2/22 @ $0.020 13.3m – Exp 27/5/26 @ $0.025 13.3m – Exp 27/5/26 @ $0.030 13.4m – Exp 27/5/26 @ $0.035

Performance rights 1.9m

Debt facility (unsecured)

A$1.5m

Repayment 30 November 2022

DRX Share price history 12 months to 3 Nov 2021

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$0.030
$0.025
$0.020
$0.015
$0.010
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World Class Silica Sands Project

Our vision is to become a near-term producer of high purity, “low iron” silica sands for use in growing global solar PV and specialty glass markets.

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1
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One of the world’s purest
silica sands projects.
Total Mineral Resource
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75.5Mt @99.1% SiO2
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2
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Proximity to the world’s
largest silica sands project
at Cape Flattery.
(Mitsubishi-owned) operating
30 years+
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3
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Global silica consumption
growing fast.
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Solar PV panels whose primary
component is glass sheeting
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4
Robust economics,
advancing fast.
Low CAPEX | OPEX
First production target Q1
2023
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Galalar Silica Project

Our Silica – making solar panels – de-carbonising the world economy

• Project will produce 31Mt gross silica sand over LOM, potentially used to produce over 3.2B solar panels producing “clean energy” well beyond actual Project mine life.

• Based on estimated energy generation over life of panels, the emissions saving compared to coal fired power would equate to taking 132M cars (petrol) off the road

• Savings in emissions equivalent to planting 34-291 million ha of trees

• Total emissions savings could power equivalent of 38.7M Australian households

• Net projected reduction in emissions of 25.5Kt CO2

• The total lifecycle emissions associated with solar panels produced as a result of the GSSP is approximately 1,093Mt CO2-e. This compares to approximately 26,669Mt CO2-e for the equivalent amount of energy generation by burning coal.

Calculation - Solar panels: 26,669 billion kWh x 0.041kg CO2-e/kWh = 1,093,425,000kg CO2-e - Versus Coal power:26,669 billion kWh x 1kg CO2-e/kWh = 26,669,000,000kg CO2-e

Note : Calculations on silica consumption in PV panel manufacturing and electricity generation undertaken by independent consultants BMT Oct 2021 from available public data and production data from DRX.

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45km
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Upcoming value catalysts 2021/2022

Q4 2021 New Maiden Resource – Northern Exploration Area

Q1 - Q2 2022 Finalise DFS Study

Q1- Q2 2022 Final environmental approvals targeted Q1- Q2 2022 Final approvals targeted for Mining Lease Q2 2022 FID 1H 2022 Assemble project level debt/ finalise offtakes / finalise finance support Q4 2022 Commence site works

Note : Timing expectations are based on current best estimates and may be subject to change

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Galalar Silica Project

Premium quality silica – with size and scale

• Project located 20km north of Cooktown, FNQ adjacent to world’s largest high purity silica sand mine at Cape Flattery (Mitsubishiowned) operating 30 years plus

• Diatreme holds dominant exploration position in known silica province at over 500 sq km

• High purity silica resource identified (75.5Mt) and maiden Ore Reserve estimated (32Mt); further potential for resource expansion at Project and in Northern tenement area.

• Pre-Feasibility Study shows positive investment fundamentals, incl. post-tax NPV8 of $358m, IRR 66% , payback 1.4 years

• Short-term pathway identified to cashflow via low capex project, targeting mine construction commencement in Q4 2022

• Strong demand from Asia for premium quality, low iron product for booming solar PV market and specialty glass applications

• Declining global supply highlights need for new projects

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Galalar Silica Project

Expanding mineral resource & Maiden mining reserve estimate

• Silica resource continues to expand, increasing 22% to 75.5Mt in latest upgrade (refer ASX release 20 September 2021)

• Total resource covers 486 ha with average thickness 15.5m, comprising 92.9% of MLA

• Clean, high-purity in-situ SiO2 grade, with average in situ 99.16% SiO 2

• Potential for further resource expansion, including northern exploration targets

• Maiden Mining Reserve – 32.5 Mt at 98.5% SiO2 cut-off grade

JORC Resource Estimate 13 September 2021

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Inferred
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9.22Mt Silica sand

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99.1% SiO2 grade
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Indicated
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Silica 23.12Mt sand

99.20% SiO2 grade

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Measured
Silica
43.12Mt sand
>99.21% SiO2 grade
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Total
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Silica
75.5Mt sand
>99.20% SiO2 grade
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Galalar Silica Project

High quality silica product.

• The sand from the Galalar project is some of the world’s purest

• Bulk sample testwork confirms ability to produce premium grade silica product for high-end glass & solar panel manufacturing (which demands minimum iron content)

• Positive results from initial metallurgical testwork by industry specialist, Mineral Technologies

• Solar panel manufacturers’ feed stock requires >99.5% purity silica with “low iron” less than 120ppm iron oxide levels

Galalar expected quality – From bulk product testing

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Iron oxide
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=< 110ppm

International required specifications <120ppm

100% in range

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Silicon dioxide
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=> 99.9%

International required specifications >99.5%

100% in range

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Particle size distribution
109-700 Microns
24-140 mesh
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International required specifications 109-700microns 98% in range

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Titanium dioxide
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< 140ppm

International required specifications < 400ppm

100% in range

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Aluminium oxide
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< 500ppm

International required specifications < 1,000ppm

100% in range

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Galalar Silica Project

PFS Now Complete – Project Economics – Strong Fundamental Improvements Achieved

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Annual ore feed Annual production Silica price Annual gross revenue Gross revenue
1,650,000tpa 1,320,000tpa US$58/t A$105m x 23.5 years A$2.5b
Project life
The price assumption is for a ‘low
iron’ silica sand product suitable for
solar PV cover glass manufacturing CAPEX [+] Payback period Annual operating costs
( FOB - Cape Flattery Port)
+Capital development costs include a A$68m 1.4 years A$47m
11% contingency ($7.8m)
Pre-tax NPV8% IRR (pre-tax) Annual operating margin Total project EBITDA
A$358m 66% A$58m x 23.5 years A$1.37b
Project life
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Note: Refer to ASX announcement on 9 November 2021 –“Galalar Maiden Ore Reserve, PFS delivers substantial boost to new silica sand mine” and 20 September 2021 – “Galalar silica resource expands by 22% to 75.5Mt” . Diatreme confirms it is not aware of any new information or data that materially affects the information included in these announcements and that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.

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Pre-Feasibility Study

PFS - Positive investment case.

• Post-tax NPV8 $358 million (vs Scoping Study’s $158m), IRR 66% and life of mine net revenue $2.5 billion

• Low initial capex of $60.1m; payback period of 1.4 years

• Maiden Mineral Reserve estimate of 32Mt, sufficient for 18 years of initial operations; 23.5 year mine life scheduled

  • Forecast annual yield of 1.32Mt of premium, low iron SiO2 product at full production

  • Conventional mine extraction and physical separation processing plant with small footprint

  • Northern exploration targets identified, offering potential to expand project

• Project to become significant regional employer (Hope

• Vale/Cooktown), directly employing 80-85 people, mainly from local community (drive in, drive out)

• DFS to be delivered in Q1/Q2 CY2022, supporting FID in Q2 CY2022 , targeting mine construction commencement Q4 2022

• Estimated $800m contribution to local economy during LOM

Note: Refer to ASX announcement on 9 November 2021 –“Galalar Maiden Ore Reserve, PFS delivers substantial boost to new silica sand mine” and 20 September 2021 – “Galalar silica resource expands by 22% to 75.5Mt” . Diatreme confirms it is not aware of any new information or data that materially affects the information included in these announcements and that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.

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Silica market

Solar market consuming more sand for panel manufacturing.

• Solar panel PV market forecast to reach US$48.2 billion by 2025, with a CAGR of 34.7%*

• World Bank estimates global renewable capacity will grow by over 1TW from 2018 to 2023, up 46%, with solar PV accounting for more than half of this growth

• Galalar project confirmed capable of supplying solar PV market with premium product

• Solar panel manufacturers’ feed stock requires >99% purity silica with less than 120ppm iron oxide levels

• Est. 70% of each ‘typical’ commercial solar panel comprises glass sheeting made from ‘low iron’ high purity silica

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Source: ”Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition,” World Bank, 2020

• Source: Bizwit Research & Consulting

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Silica market

Growing global demand.

• Silica sand has many uses, the market is experiencing increasing demand from emerging consumers such as China and India from foundry, automotive and construction industries including the solar PV market

• Silica described as the ‘next lithium’ due to boom in solar PV; IEA estimates 162GW of extra capacity by 2022, 50% higher than 2019 level

• IMARC estimates global silica sand market could grow from US$8B in 2019 to US$20B by 2024; Asia-Pacific the fastest growing region with potential to reach US$8B by 2026

• Supply is diminishing as a lot of the sand used in Asia comes from rivers where environmental concerns are increasingly restricting extraction

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Source: IMARC Group, Report Title: “Asia Pacific Silica Sand Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021-2026,” February 2021

• No direct substitutes in majority of applications

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Galalar Silica Project

Permitting/Approvals advancing towards near-term production.

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* Timing expectations are based on current best estimates and may be subject to change or modification

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Galalar Silica Project

Export solution: Nob Point.

• Mining Lease Application lodged June 2021 for Nob Point barge ramp, haulage road and temporary stockpile area

• Minimises community and environmental impacts as well as reducing transport costs (lower opex)

• Strongly backed by local stakeholders including Hopevale Congress and other affected Native Title holders (under a heads of agreement).

• Construction of new 3.6km conveyor system from mine site to purpose-built barge ramp at Nob Point

• Barging silica product (benign in nature) over open water (covered barges) to ship transfer site

• All transhipping activity undertaken within the Cape Flattery designated port defined area (in GBRMP exclusion zone)

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45km
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Galalar Silica Project

Project design.

• Simple gravity plant

• No processing chemicals apart from inert flocculent to settle clay/fines

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PFS Design Process Plant

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Galalar Silica Project

Strong stakeholder support.

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• Project being developed with support of traditional owners. Hopevale Congress Aboriginal Corporation is the RNTBC entity, representing the interests of native title holders

• Memorandum of Co-operation (MOC) for preferred infrastructure development approach at Nob Point signed with Hopevale Congress, and native title holders the Thiithaarr and Gamaay People

• Thiithaarr and Gamaay People have established negotiation committee, with aim of delivering substantial benefits, business programs and direct community involvement - benefits include a 12.5% direct “free carry” stake in Project

• Pre-Feasibility Study shows project would become region’s largest private employer, with 80-85 directly employed, and contributing over $800 million in wages, royalties and taxes during LOM

• Refer ASX release dated 9 November 2021 – “Galalar Maiden Ore Reserve, PFS deliver substantial boost to

• new silica sand mine”.

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Galalar Silica Project

Potential to move downstream.

• Potential for further downstream processing or manufacturing – sites being examined in Townsville, Qld

• Potential for further beneficiation process to produce ultralow iron (sub 50ppm Fe) silica product used in high-end, high value electronics

• Diatreme consulting with potential parties to examine economics of establishing onshore glass manufacturing operations to supply solar PV market

• Move would capture added value for benefit of Qld, regional investment and jobs, supporting Qld Govt renewable energy drive and “new economy minerals” initiatives

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Silica market

ESG benefits and environmental principals to be established at mine inception.

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Renewable solar power to supply operation

110 FTE equivalent jobs + up to $800m during LOM in various taxes, royalties and wages

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Downstream processing option for Townsville

Traditional owners hold 12.5% direct project stake and high indigenous employment targets at start-up

Small development footprint – no chemicals - with sustainable rehabilitation

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‘Net zero’ emissions target for mining operation to be established

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Supplying solar energy market with essential commodity to panel manufacturing

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Sustainable rehabilitation – no disturbance to reef habitat

CONTACT DETAILS

E: manager@diatreme.com.au W: www.diatreme.com.au

APPENDIX

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Galalar Silica Project

Local backing.

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Appendix 1

Resource statement Galalar Silica Project

Galalar Silica Sand Project – Resource Estimate*

JORC Resource Category (in situ)	Silica Sand (t)	Silica Sand	Cut - off	SiO 2 (%)	Fe 2 O 3 (%)	TiO 2 (%)	LOI (%)	Al 2 O 3 (%)	Density
		(m 3 )	Grade						(t/m 3 )
			SiO 2 (%)
Measured	43.12	26.95	98.5	99.21	0.09	0.11	0.16	0.13	1.6
Indicated	23.12	14.45	98.5	99.16	0.09	0.13	0.24	0.10	1.6
Inferred	9.22	5.76	98.5	99.10	0.11	0.16	0.27	0.11	1.6
Total	75.46	47.16	98.5	99.18	0.09	0.12	0.20	0.12	1.6
(Measured + Indicated + Inferred)

*Resource Estimate current as of 13 September 2021.

**Total Inferred, Indicated and Measured.

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Competent person’s statement.

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Statement in accordance with the Australasian code for reporting of exploration results, mineral resources and ore reserves (the JORC code)

The information in this report that relates to Exploration Results and Exploration targets from the Galalar Silica Sand Project is based on information reviewed and compiled by Mr. Neil Mackenzie ‐ Forbes, a Competent Person who is a Member of the Australian Institute of Geoscientists. Mr. Mackenzie ‐ Forbes is a director of Sebrof Projects Pty Ltd (a consultant geologist to Diatreme Resources Limited). Sebrof Projects Pty Ltd have been engaged by Diatreme Resources Limited to prepare this independent report and there is no conflict of interest between the parties.

Mr. Mackenzie ‐ Forbes has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity for which he is undertaking 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 (The JORC Code). 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.

The information in this report that relates to Mineral Resources at the Galalar Silica Sand Project is based on information, geostatistical analysis and modelling carried out by Mr Chris Ainslie, Project Engineer – Mining & Quarrying. Mr Ainslie is an employee of Ausrocks Pty Ltd and a Member of the Australasian Institute of Mining & Metallurgy. Mr Ainslie worked under the supervision of Mr Carl Morandy, Mining Engineer who is Managing Director of Ausrocks Pty Ltd and a Member of the Australasian Institute of Mining & Metallurgy and Mr Brice Mutton, Senior Geologist who is an Associate of Ausrocks Pty Ltd and is a Fellow of the Australasian Institute of Mining & Metallurgy and a Fellow of The Australian Institute of Geoscientists.

Ausrocks Pty Ltd have been engaged by Diatreme Resources Limited to prepare this independent report and there is no conflict of interest between the parties.

Mr Mutton has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity for which he is undertaking 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 (The JORC Code). Mr Mutton consents to the inclusion in the report on the matters based on their information in the form and context in which it appears.

The information in this report that relates to Ore Reserves at the Galalar Silica Sand Project is based on information reviewed or work undertaken by Mr Carl Morandy, Mining Engineer & Managing Director. Mr Morandy is the Managing Director of Ausrocks Pty Ltd and a Member of the Australasian Institute of Mining & Metallurgy. Mr Morandy has relied on Diatreme for marketing, environmental, economic, social and government permitting. Ausrocks Pty Ltd have been engaged by Diatreme Resources Limited to prepare this independent report and there is no conflict of interest between the parties.

Mr Morandy has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the preparation of mining studies to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Ore Reserves (The JORC Code). Mr Morandy consents to the inclusion in the report on the matters based on their information in the form and context in which it appears.