PROJECT FINANCE

Diatreme raises for silica development

DIATREME Resources has completed a bookbuild with Euroz Hartleys to close a A$10 million placement at 2.3c to fund the advancement of its flagship Galalar silica sand project in far north Queensland.

 Galalar is adjacent to the largest silica sands project

Galalar is adjacent to the largest silica sands project

The placement, to a mix of strategic, sophisticated, and professional investors, involved a cornerstone commitment from Diatreme's largest shareholder, Ilwella, which is run by Brian Flannery.
 
The cash is expected to cover completion of a definitive feasibility study, permitting and an examination of the Nob Point barge ramp and Cape Flattery Port export solutions.
 
The DFS is expected before the end of the year, with first production expected in late 2022.
 
A 2019 scoping study showed favourable economics, including a pre-tax net present value of $231 million and an internal rate of return of 150% and with payback in eight months.
 
The company already has a several offtake agreements with three Chinese firms for up to 750,000tpa of product.
 
Diatreme said that with rising demand for silica sand, the bookbuild was "heavily supported".
 
CEO Neil McIntyre said the company was keen to advance Galalar as rapidly as possible, with the company believing it can become a low-cost, premium silica producer delivering product from a world‐class silica province to supply the Asia‐Pacific's solar energy boom.
 
Some funds will be directed to drilling in the project's north, where it has identified the largest silica sand dunes within greater Cape Flattery dune field.
 
Four primary targets have been identified and are being subjected to cultural heritage surveys, ahead of initial hand auger drilling.
 
Given the combined area of the targeted dune system is some 50sq.km, it is expected an initial 40‐160 million tonne resource could be established from the auger program.  
 
Galalar is located next to world's largest silica sands project which is operated by Mitsubishi
And has operated for more than three decades. 
 
Diatreme has been exploring the area since 2018 and has defined a 62Mt resource grading 99.9% silica.
 
Diatreme's shares, which have traded between 1-3.1c over the past year, eased 2% today to 2.5c, valuing it at $66 million.
 
The 2.3c placement was priced at a 16% discount to recent trading levels.
 
The company started the current quarter with $2 million. 
 

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

editions

MiningNews.net Research Report 2024

Access a multi-pronged tool to identify critical risks and opportunities in Australia’s mining industry.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.