DIATREME RESOURCES LIMITED — Investor Presentation 2021

Jul 13, 2021

ASX:DRX

Time to shine.

Advanced, high grade, low-cost silica project located adjacent to the world’s largest silica mine Noosa Mining & Exploration Investor Conference 14 July 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 December 2020 and March 2021 Quarterly Activities reports, 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:

• 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 • 26 November 2020 – Environmental studies advance for Galalar project • 9 October 2020 – Capital Raising to Progress Galalar

• 22 September 2020 – Drilling program highlights Galalar expansion potential

• • 24 July 2020 - Diatreme advances Galalar Environmental Approvals • 12 May 2020 - Galalar silica resource expanded 25%

• 8 April 2020 - Galalar regional economic study

• 20 February 2020 - Galalar silica resource expanded 26%

• 6 February 2020 – EIS application lodged for Galalar

• 27 January 2020 – Application to conduct voluntary EIS lodged for Galalar Silica Project

• 23 December 2019 – Mining Lease Application lodged for Galalar Silica Project

• 29 November 2019 – Product upgrade potential for Galalar

• 19 September 2019 – Second MOU signed for Galalar silica offtake

The Resource Estimates and Production Targets were reported by the Company on 17 March 2021 and 9 September 2019, 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.

• 9 September 2019 – Galalar scoping study emphasises high return potential (ASX release of Scoping Study)

• 7 August 2019 – Regional support builds for Galalar silica mine

• 16 July 2019 – Offtake MOU on Galalar Silica Project Signed With Fengsha Group

• 20 June 2019 – Boost for Galalar with sampling of regional exploration targets confirming continuity of high silica grades

• 14 May 2019 – Galalar Silica Project further expands with maiden Indicated Resource

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Company Profile

Diatreme introduction.

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

Diatreme Board Chairman Gregory Starr

• Current market cap ~ $54m

• Flagship project - Galalar Silica Project, Far North Queensland

• Over 1,200 supportive shareholders including Ilwella P/L (Flannery Family Office) (approx.17%), Deutsche Balaton (approx. 8%) and directors and management (approx. 7%)

• 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 Daniel Zhuang William Wang

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

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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
61.9Mt @99.2% 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
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.
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Low CAPEX | OPEX First production target 2022

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Galalar Silica Project

Premium quality silica.

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

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Diatreme Resources ASX:DRX
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• Diatreme holds dominant exploration position in known silica province at over 500 sq km

• Further exploration upsides underway

• High purity silica resource identified (61.9Mt)

• Short-term pathway identified to cashflow via low capex project, targeting production by late 2022

• Offtake MOU’s with potential to supply up to 750,000 tonnes for solar PV market

• 2019 Scoping Study showed favourable economics, including pre-tax NPV $231m, IRR 150% and capital payback in 8 mths

• Further Scoping Study update and DFS studies underway, targeting mine life extension and production increase at start-up

Note: Refer to ASX announcement on 9 September 2019 –“Galalar scoping study emphasizes high return potential”. 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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Key upcoming company value catalysts 2021

July/Aug 2021 Northern tenement exploration - Potential for significant new resource discovery August 2021 Mining reserve established for ML area – to support scoping study improvements Aug/Sept 2021 Updated scoping study - reinforcing strong project fundamentals & improvements Q4 2021 Finalise DFS Study 2H 2021 Assemble project level debt/ offtake / finalise finance support Q1 2022 Final approvals targeted for Mining Lease Q1 2022 Final environmental approvals targeted

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

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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

• Independent economic study* (Cummings Economics) shows project would inject $23-24m in construction phase and up to $42m in operation for benefit of Hopevale/Cooktown region, while generating 110 (FTE) jobs and $1.475m p.a. in state royalties

• Refer ASX release dated 8 April 2020 – “Galalar regional economic study” for detail on full economic report.

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Galalar Silica Project

Local backing.

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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 100ppm 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

TRENDS 2009 - 2022

• 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

• No direct substitutes in majority of applications

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Galalar Silica Project

Expanding mineral resource.

• Scoping Study production target derived from 2018 JORC Resource ( @ 30.2m total tonnes as at March 2019)

• Planned further drilling in 2021 to expand and upgrade the size of the existing resource, further define mineable reserves and lower the overall waste-to-ore ratio for the project

• Significant JORC Exploration Target* highlights potential to expand resource

*Note: The potential quantity and grade of the Exploration Target is conceptual in nature. There has been insufficient exploration completed to date to estimate a Mineral Resource in accordance with the JORC 2012 Edition Guidelines. It is uncertain if further exploration will result in the estimation of a Mineral Resource.

JORC Resource Estimate 17[th] March 2021

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Inferred
5.8Mt Silica sand
>99.21% SiO2 grade
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Indicated
Silica
20.6Mt sand
>99.20% SiO2 grade
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Measured
Silica
35.5Mt sand
>99.27% SiO2 grade
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Total
Silica
61.9Mt sand
>99.24% 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% purity silica with “low iron” less than 100ppm iron oxide levels

Galalar expected quality – From bulk product testing

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Iron oxide
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=< 100ppm

International required specifications <100ppm

100% in range

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Silicon dioxide
=> 99.7%
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International required specifications >99%

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 < 1000ppm

100% in range

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2019 Scoping Study

Positive results.

• Pre-tax NPV $231m, IRR 150% and estimated capital payback within 8 mths

• Estimated development capex $24.4m based on trucking product for transhipment outside Cooktown

• Product price estimate US$75/t (A$107); annual cash costs $43.5m, cash margin $36.8m

• Potential for significant improvement to project economics including logistical solution with purpose-built barge ramp at Nob Point, which could cut $20-$25/t (trucking and transhipment costs) from operating costs

• Additional improvement from developing ultra-low iron silica sand, currently trading at significant price multiple

• 15-year mine life with annual mining rate of 950,000t, producing 750,000t low-iron silica product (79% recovery rate)

• Exploration targets identified within 1km of Mineral Resource, offering potential to expand project

• Potential to generate 30-40 jobs in construction phase and 60 (plus) in production; drive-in, drive-out workforce

Note: Refer to ASX announcement on 9 September 2019 –“Galalar scoping study emphasises high return potential” and 17 March 2021 – “Galalar silica resource expands 30% to 61.9Mt” . 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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Galalar Silica Project

Original Scoping Study snapshot – Next Step is to Improve Fundamentals.

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Annual ore feed Annual production Silica price Annual gross revenue Gross revenue
950,000tpa 750,000tpa US$75/t A$80m x 15 years A$1.2b
Project life
The price assumption is for a ‘low
iron’ silica sand product suitable for
solar PV CAPEX [+] Payback period Annual operating costs
+
Capital development costs include a A$24m 8 months A$42m
20% contingency
Pre-tax NPV8% IRR (pre-tax) Annual operating margin Total project EBITDA
A$231m 150% A$37m x 15 years A$555m
Project life
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Note: Refer to ASX announcement on 9 September 2019 –“Galalar scoping study emphasises high return potential”. 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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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

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

• Barging 750,000t of silica product per year over open water to ship transfer site (5,000t barges)

• 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 Visual impact.

Preliminary Visualisation (conceptual) – Yr 15

Mine Progressive Rehabilitation

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Nob Point
GSSP
Nob Point
Barge Ramp
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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 jobs + up to $42m yr economic injection

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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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Corporate Overview

Share price A$0.021

At close trading 9 July 2021 52 week high $0.030, low $0.009

Shares on issue 2,575m

Market capitalisation A$54m

At 9[th] July 2021

Cash A$4.07m

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Ilwella P/L
(Brian
Flannery)
17%…
German
Mining
Fund 8%
Large Priv.
Fund
Others
Investor
66%
2%
Directors &
Management
7% 6%
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Shareholder interests as at 9 July 2021

At 31 Mar 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 Nov 2021

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DRX share price history - 12 months to 9 Jul 2021
$0.032
$0.028
$0.024
$0.020
$0.016
$0.012
$0.008
$0.004
$0.000
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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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Conceptual Process Plant

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Galalar Silica Project

Environmental monitoring.

Upgrade to Baseline Monitoring

• Increased frequency of sampling during EIS-leads into EA conditions

• Reference and receiving sites established at Galalar (23 bores in total)

• Deep monitoring bore to basement

• All data is feeding into regional and mine groundwater models

• Sites established to Nob Point, though without sufficient road access (not all bores are in place)

• Water level monitoring commenced in December 2020

• Sediment and surface water sites established

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Appendix 1

Resource statement Galalar Silica Project

Galalar Silica Sand Project – Resource Estimate – March 2021

JORC Resource Category	Silica Sand (Mt)	Silica Sand (Mm3)	Cut-off **SiO2 % **	SiO2 %	Fe2O3 %	Al2O3 %	TiO2 %	LOI %	Density **(t/m3) **
Inferred	5.8	3.6	98.50	99.21	0.05	0.07	0.09	0.14	1.6
Indicated	20.6	12.9	98.50	99.20	0.05	0.08	0.07	0.14	1.6
Measured	35.5	22.2	98.50	99.27	0.09	0.12	0.10	0.10	1.6
Total Inferred + Indicated + Measured	61.9	38.7	98.50	99.24	0.07	0.11	0.09	0.12	1.6

*Resource Estimate current as of 15[th] of March 2021.

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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 Mineral Resources at the Cape Bedford Project is based on information compiled by Bryce Mutton from Ausrocks Pty Ltd who has significant experience in Industrial Minerals and Quarry Resource assessments. Bryce 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). Bryce 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 Exploration Results and Exploration targets from the Cape Bedford 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). 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.

The information in this report, insofar as it relates to Mineral Resources at the Cyclone Project is based on information compiled by Mr Ian Reudavey, who was a full-time employee of Diatreme Resources Limited and a Member of the Australian Institute of Geoscientists. Mr Reudavey 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 the2012 Edition of ‘The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Reudavey consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.

The information in this report, insofar as it relates to Ore Reserves at the Cyclone Project is based on information compiled by Mr Phil McMurtrie, who is a director of Tisana Pty Ltd (a consultant to Diatreme Resources Limited), and a Member of the Australasian Institute of Mining and Metallurgy. Mr McMurtrie 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 2012 Edition of ‘The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr McMurtrie consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.