MINERAL SANDS

Diatreme's mineral sands exploration focus centres on the highly prospective Eucla Basin, both in Western and South Australia, where a number of exciting heavy mineral sand (zircon) discoveries have been reported since late 2004. Significantly, Diatreme has extensive tenement holdings extending along a main fossil shoreline on the northern basin margin.

In March 2010, the Company announced positive results from a scoping study completed over the Cyclone Deposit in WA. The study showed the potential for a profitable mine producing about 280,000 tonnes of concentrate annually at a mining rate of 9Mt per annum. Since then, prefeasibility studies have commmenced, with a goal of commencing project construction in late 2012.

In early October 2010, the JORC compliant Cyclone Deposit resource was updated to 132.1 million tonnes (Mt) at 2.33% heavy minerals (HM) at a 1% HM cut-off grade, containing 3.1Mt HM, of which >40% is classified as Measured. 998,000 tonnes of zircon (excluding titanium minerals) exists within Cyclone, a 6.7% increase over previous estimates. It is expected that the conversion rate of the resource to "reserves" will be high due to the approach adopted by DRX personnel and knowledge gained by prefeasibility work.

Combined with the JORC resource announced by Image Resources NL (ASX:IMA) in July 2010 over their neighbouring Cyclone Extended Deposit, the deposit is shaping as a significant new Zircon development project.

Recent MOU's entered into with the BaoTi Group and Image Resources are positive indications that the Cyclone Deposit is attracting both local and overseas interest.

Diatreme has also identified the Zephyr Deposit, which is located within 2km of the Cyclone Deposit. A Maiden Inferred Resource estimate was released on 11/10/2010 - 106Mt at 1.5% HM at a 1% HM cut-off grade containing 1.5Mt HM.

Significant HM potential remains within the WA sector of the Eucla Basin, as shown in the Company's geological model and regional drilling program for the area.

With the current upturn in zircon and rutile prices expected to continue, the high percentages of these minerals within Cyclone (and Cyclone Extended) are significant for future development and market infiltration.

Cyclone represents potential for new, long-term, HM supply source for both Australian and overseas industries.

The Company also holds exploration ground for mineral sands in the Arckaringa Basin (SA), Casterton (VIC), Shark Bay (WA) and Cape Bedford (QLD).

COPPER, GOLD & BASE METALS

Diatreme holds exploration tenements for copper/gold at Clermont, Dooloo Creek and Tick Hill in QLD, and Anabama in SA. It also has base metal / gold projects at Bellfield and Ironhurst in QLD.

At Clermont, the Company has conducted deep diamond drilling within the Rosevale Porphyry Corridor in its quest to investigate the potential for the area to host a major mineralised porphyry copper/gold system. Reviews of the structural, geological, alteration and assay data is being undertaken before a second phase drilling program is undertaken.