Located near the world’s largest silica sand mine in North Queensland, Diatreme’s Galalar Silica Project is capable of producing premium-quality silica for the fast-growing Asian solar panel market.

Introduction

High-purity silica sand has become an increasingly strategic resource due to its usage in photovoltaic panels and other high-tech applications.

Similarly, increasing demand from Asia’s infrastructure and automotive sectors for mineral sands has added to the positive outlook for Diatreme's Galalar project (part of the Cape Bedford EPM), which is favourably positioned to access these growing markets.

Significantly, Diatreme is working in genuine partnership with the traditional owners, Hopevale Congress (12.5% project interest), to ensure the community receives the full benefits from the project's potential.

A scoping study released in September 2019 highlighted the project's potential to generate strong returns for all stakeholders:

* Pre-tax nominal NPV $231 million

* IRR (internal rate of return) of 150%

* Estimated capital payback within 8 months; start-up capital $24.4m

* 15-year mine life, producing 750,000 tonnes per annum based on a 79% recovery rate.

Diatreme has signed two MOU agreements for offtake from the project, including with China's Wan Zhong Investment Group, a Hong-Kong based group that supplies major glass manufacturers in China, and with Fengsha Group, China's largest processor and supplier of photovoltaic (solar) and specialty high end silica sand. 

Both agreements may be scaled to reflect targeted production output and are subject to detailed negotiations and binding agreements.

In May 2019, Diatreme announced a maiden Indicated Resource for the Galalar project, comprising 21.5Mt > 99% SiO2, with total resources (Indicated and Inferred) rising to 30.2Mt > 99% SiO2, with a new satellite deposit identified at West Nob Point.

This resource has subsequently been further expanded in 2020, with a Maiden Measured Mineral Resource estimated comprising 30.9Mt > 99.28% SiO2 and the total Mineral Resource estimated at 47.5Mt.

Bulk testing results have confirmed the project's ability to produce a world-class silica sand product at 99.9% SiO2, meeting the requirements for high-end glass and solar panel manufacturing, capable of attracting premium prices. Significantly, testwork has demonstrated the Galalar silica sand product can be upgraded to "ultra-low iron" (sub 50ppm Fe2O3), attracting even higher prices.

In December 2019, Diatreme lodged a Mining Lease Application (MLA) for the project encompassing an area of 523 ha, including all of the identified Mineral Resource. This was followed by the lodgement in February 2020 of an application to undertake a voluntary Environmental Impact Statement (EIS).

In April 2020, an independent economic study by Cummings Economics showed the Galalar project's potential to deliver significant benefits to the Hope Vale/Cooktown region:

* Approx. $23-$24 million expenditure in construction phase and up to $42m in operation

* Total employment including flow-on effects of around 110 (equivalent full-time positions)

* Hope Vale households to see income gain of up to 68%

* Government royalties of around $1.5m and over $10m in company tax

* Operation to become Hope Vale's largest employer outside Hope Vale Aboriginal Shire Council.

Diatreme's preferred logistics solution is for shipping from a purpose-built barge ramp at Nob Point (3.6km from mine site), with transhipping occurring within the Cape Flattery designated port area. The Company is seeking Queensland Government approval for this solution, which would minimise community impacts.

Subject to regulatory approval, financing and offtake agreements, construction could begin as early as 2022, with the project expected to supply Asia's fast-growing solar PV market. 

PROJECT SUMMARY

  • One of the largest high purity silica exploration land packages in Australia, covering an area of 542 sq km in Queensland’s Eastern Cape York region, around 200km north of Cairns
  • Cape Bedford EPM17795 covers a large Quaternary sand dune field, part of which is currently being mined by Mitsubishi Corporation subsidiary, Cape Flattery Silica Mines Pty Ltd and is the world’s largest silica sand mining operation
  • Closest proximity high-grade undeveloped project to the world’s largest silica markets in China, Japan, South Korea and Taiwan
  • High-grade silica used in glass manufacture, foundry casting, electronics, ceramics and construction – industries in demand and growing in developing Asia, with the market expected to expand at a compound annual growth rate of 7.2% through to 2022, reaching revenues of US$9.6 billion (source: IMARC Group)
  • The global solar PV glass market is seen growing to US$48.2 billion by 2025, up from US$3.3 billion in 2016, amid strong demand from the Asia-Pacific region (source: Bizwit Research & Consulting)
  • Estimated pre-tax nominal NPV of $231m and IRR of 150%; potential to deliver around 110 new jobs for the Hope Vale/Cooktown region.

Click to Enlarge

/media/1175/galalar2.png

Located near the world’s largest silica sand mine in North Queensland, Diatreme’s Galalar Silica Project is capable of producing premium-quality silica for the fast-growing Asian solar panel market.

Exploration Overview

The Cape Bedford EPM17795 is located approximately 200km north of Cairns in North Queensland, and covers the extent of a large Quaternary sand dune field, part of which is currently being mined by Cape Flattery Silica Mines Pty Ltd (CFSM), a wholly owned subsidiary of Mitsubishi Corporation. Cape Flattery has operated since 1967 and is the world's largest silica sand mining operation.

The Cape Bedford / Cape Flattery region of north Queensland is dominated by an extensive Quaternary sand mass and dune field that stretches inland from the present coast for approximately 10km and extends 50km from north to south.

Diatreme executed a Conduct and Compensation Agreement (CCA) in January 2017, and a Cultural Heritage Agreement (CHA) in June 2017 with the traditional owners, Hopevale Congress. The CCA allows access for ground disturbing exploration activity and ensures the traditional owners share in the potential economic benefits of this new project, while the CHA sets out the protocol for cultural heritage issues.

Cultural heritage surveys for the first proposed exploration program were undertaken in August 2017 and subsequent exploration access granted in September 2017.

In 2018, Diatreme identified high purity silica sand resources after initial activities at the Nob Point target area. Regional exploration commenced in 2019 to prioritise targets generated from desktop studies.

In March 2019, Diatreme completed an initial regional helicopter sampling program of all the target sand dunes. In May 2019, this was followed up with shallow auger hole drilling at the Elim Road North and South exploration targets to confirm sand quality and surface continuity.

 

Located near the world’s largest silica sand mine in North Queensland, Diatreme’s Galalar Silica Project is capable of producing premium-quality silica for the fast-growing Asian solar panel market.

Galalar Resource

Based on air-core drilling programs, an initial Inferred Resource of 21.6 Mt of high purity silica sand was estimated in August 2018 by Ausrocks Pty Ltd. The resource was upgraded in March 2019 to 30.2 Mt of high purity silica sands following additional air-core drilling and processing studies. Within the new resource, 21.5 Mt >99% SiO2 was categorised with Indicated confidence.

Previous bulk testing results undertaken in specialist labs have demonstrated the project’s ability to produce using industry standard processing techniques a premium-grade silica product (silica sand at 99.9% SiO2) (refer ASX announcement 16 August 2018), including grain size being within a 30-120 mesh size range (125-600 micron) and iron content below 100ppm. This meets the requirements for high-end glass and solar panel manufacturing, capable of attracting premium prices (refer ASX announcement 9 January 2019).

Excellent recovery rates during testing were obtained for the final product of approximately 79% from raw sand feed. These results also showed the potential to obtain secondary, high-value heavy mineral sands during mining, adding to the project’s value.

Galalar Silica Project  – Resource Boundaries

 

Galalar Silica Project – Resource Update (as at 9 May 2019)

 

Resource Estimate Base Assumptions

The following summary parameters, base assumptions, exploration activities and laboratory testing results form the basis for the Inferred Resource Estimate prepared independently by Ausrocks Consulting Mining Engineers:


• In-situ density of target material – 1.62 t/m3
• Cut-Off grade material - >99% SiO2
• Topography – Sourced from Geo Image photogrammetry survey and Ausrocks UAV drone survey with DGPS by Veris used as ground control
• Topsoil Thickness – 0.3m sourced from Cape Flattery topsoil thickness, anything that is less than 0.3m below the surface was excluded from the resource estimate
• Top and Base of Resource – This was determined by completing weighed averages of each 3m composites by ensuring the top composite tested and all in between down to the bottom of the hole had a weighed average >99% SiO2 by blending. The top could not exceed 0.3m below the surface (top soil) and the base was generally the bottom of the drillhole which either finished in clay or the water table was met
• No resource below the water table was considered, as the drilling method could not drill below this level and hence no data is available
• Resource Boundary was determined by modelling the top and bottom surface in SURPAC 6.6.1 and considering where the surface meets the topography and ensuring that the boundary was within 200m from the drillhole
• Grid Spacing used for interpolation – 20m by 20m grid
• Spatial Interpolation Method – Inverse Distance.

Located near the world’s largest silica sand mine in North Queensland, Diatreme’s Galalar Silica Project is capable of producing premium-quality silica for the fast-growing Asian solar panel market.

Regional Exploration

In March 2019, Diatreme announced an initial silica sands Exploration Target at Galalar, ranging from 210Mt to 2.1Bt of silica (refer ASX announcement 25 March 2019). In the same month, Diatreme completed an initial helicopter sampling program of target sand dunes.

Results received confirmed the existence of high purity silica sand in the priority target areas as well as highlighting significantly elevated TiO2 within the Gubbins Range sand dune system. Key outcomes from the regional exploration/sampling and testing program included:

• Potential Existing Resource Extensions - Elim Road North & South – High Purity Silica Sands: Sampling of the sand dunes where accessible returned high SiO2 results, including a high of 99.67% in situ purity and averaging 98.95% Si02 over the whole sampling area. This confirmed the aerially large dune system could potentially host a large and significant occurrence of high purity silica sand. These areas will continue to be prioritised for their potential to add significant additional high purity silica resource to the existing discovery.

• Heavy Minerals - Gubbins Range HMS: Sampling highlighted elevated TiO2 within the dune system immediately east of Gubbins Range. Gubbins Range is a large basement high which forms the western boundary to the sand dune system to the south of McIvor River (see Figure 1).

The Gubbins Range dune system consists predominantly of longitudinal sand dunes, all of which are approximately 6,000m in length and of varying height and size. The northern sand dune terminates into a large active elongate parabolic dune sometimes referred to as “Seagrens Dune” near the McIvor River.

In all, 12 sand auger samples were collected from the Gubbins Range dune system at six locations on three of the sand dunes. TiO2 percentages ranged from 0.32 to 1.17% and averaged 0.8%. This confirmed historic sampling conducted in the dune system in 1981 by exploration company Essington Breen.

In May 2019, Diatreme announced test results from hand auger exploration program sampling that confirmed potential resource extension targets Elim Road North and South contained extremely high purity silica sand suitable for the premium silica market (refer ASX announcement 21 June 2019).

Nearly all 20 auger holes returned >99% SiO2, showing the potential for a further resource upgrade following the maiden Indicated Resource estimate (refer ASX announcement 14 May 2019). Sampling was conducted using a sand auger to vertically drill test to a depth of 4m, which was the limit of available extension rods. Sampling was conducted on 1m intervals and generally three samples were taken between 1m and 4m.

Regional Exploration Targets - Galalar Silica Project

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.

Cautionary Statement: An Exploration Target is a statement or estimate of the exploration potential of a mineral deposit in a defined geological setting where the statement or estimate, quoted as a range of tonnes and a range of grade (or quality), relates to mineralisation for which there has been insufficient exploration to estimate a Mineral Resource.

May 2019- Auger Hole Location (SiO2)

Project Updates

Keep up to date with all the latest news for Diatreme's Galalar Silica Project. Join our mailing list and keep an eye on this page for further developments!

FAQs

Frequently Asked Questions

What are the draft Terms of Reference (TOR)?


The draft TOR outline the requirements and scope of technical studies that must be undertaken by Diatreme Resources as part of the EIS for the GSSP. These include environmental studies as well as assessing implications on social and economic values. 

The GSSP has not been approved. Approval of the Project (including the granting of a mining lease by the Queensland Government) will be dependent on the outcomes of the EIS process.

 

What is the current public submission period related to the EIS?


The EIS has not yet been prepared, though a number of technical studies have commenced. The draft TOR for the EIS are currently available for public review and comment from 27 July 2020 to 14 September 2020.      

If there are additional or specific issues that the community wants addressed in the draft TOR, the current public comment period is aimed at seeking this feedback. The formal submission process is being managed by the Queensland Department of Environment and Science (DES) with details here.

Submissions on the draft TOR should be made to the Department directly as the entity managing the EIS process.

 

Why are public submissions being sought?


The purpose of this step in the EIS process is to make affected and interested persons aware of the GSSP proposal and to invite the public to review and provide submissions on the draft TOR, which outline what topics and issues the EIS must cover and contain.

However, this is only the first stage of a broader stakeholder engagement programme on the draft EIS that will be occurring in parallel with the preparation of the document. 

The public will have the opportunity to make a submission on the actual draft EIS document once it is prepared (this is expected in mid-2021). 

 

Why did only some people receive notices in the mail about the submission period on the TOR?


The public notice about the GSSP TOR appeared in The Australian newspaper on 25 July, 2020 as a newspaper circulating nationally. 

At this early stage of the EIS process, the focus of local consultation is required for ‘affected’ and ‘interested’ persons as defined by the Environmental Protection Act 1994 under which the EIS is being developed.

Given the location of the proposed GSSP at Cape Bedford, in addition to notifying the two local government entities as ‘affected’ persons (Hope Vale Aboriginal Shire Council and Cooktown Shire Council), the Project team identified all properties along the road route from the proposed mine at Cape Bedford to the boat ramp at Marton in Cooktown. 

Letters containing a copy of the notice were mailed out to these residents as potentially ‘interested persons’. Copies of the notice were also sent to regional stakeholder groups and bodies identified by the Queensland Government representing conservation, fishing, tourism, and indigenous interests in the region.

Notwithstanding this process, anyone can download the initial documentation about the GSSP and make a submission if they so choose and interested parties are encouraged to contact Diatreme directly on either manager@diatreme.com.au or via the Project 1800 512 189 number for more information.

 

What is the involvement of Traditional Owners in the Galalar Project?


Under a partnership with Diatreme Resources, Hope Vale Congress (RNTBC) on behalf of affected native title holders will hold a 12.5% stake in the Project, ensuring that the economic benefits flow directly to the region’s Traditional Owners for their long term benefit if the Project is approved.

It is acknowledged that the land where the proposed mine is situated has significance to First Nation peoples and a key focus of the EIS will be on identifying and understanding Aboriginal cultural heritage values and associations with the land and adjoining waters.

 

What is the difference between the exploration permit area and the mine site?


Diatreme Resources holds an Exploration Permit for Minerals (EPM) issued by the Queensland Government covering a large area of approximately 542 square kilometre (54,200 ha) near and adjacent to Cape Bedford.

The area that is proposed for mining that is the subject of the EIS will be a much smaller and defined area of 535 hectares within the EPM area near Nob Point. This represents only about 1% of the EPM area.

 

What effect will the mine have on adjacent land, sea and waterways?


The EIS process will involve comprehensive environmental studies to determine the extent to which the proposed mining and associated export operation effect the environmental values of the land, sea and waterways. 

It is planned that the mine site will have extensive buffer areas proposed to protect waterways, wetlands, and important vegetation communities.

The mining operation is not proposed to extend into or below the natural groundwater table and any indirect impacts on surface water and groundwater both within and adjacent to the mine site will be comprehensively assessed as part of the EIS.

The mining lease area is near the coast at Nob Point, but there is no mining activity on or around any beach or any tidal areas. The actual proposed mining activity takes place approximately half a kilometre from the beach area. All vegetation in this transition zone will be strictly protected.

The Project will be closely regulated by Government approval processes at the Commonwealth, State and local government level, which will require best practice environmental management approaches are undertaken.

 

What are the export options being considered?


The EIS intends to examine two options for export of the mined silica sand by sea.

One is through the establishment of a barge ramp close to the proposed mining operations at Nob Point, while the other is through expansion of the Marton boat ramp site on the Endeavour River in Cooktown. Diatreme’s preferred export option is via Nob Point (refer below).

Both options will involve barging the covered or containerised silica sand to a larger ocean-going vessel for transhipment through the designated shipping lanes of the Great Barrier Reef region. 

The EIS will examine several locations where the larger vessel could be anchored, including immediately offshore from the mine site as well as within or adjacent to existing port limits (at either the Port of Cape Flattery or the Port of Cooktown, which are both designated ports).

 

What is the preferred export option?


Diatreme’s preferred export option is through the establishment of a barge ramp at Nob Point. This will cause only a very small development footprint and will reduce levels of community disturbance compared to the Endeavour River trucking and barging option.

It is intended that the Nob Point barge ramp would also be designed for joint community use and could be utilised for reef monitoring and active reef maintenance programs

Transhipping can occur within the Cape Flattery designated port area to the north or immediately offshore from the mine site.

 

Are there human health risks from silicosis associated with the Project?


It is acknowledged that there may be community concern with the human health implications involving the stockpiling and transportation of silica sand. This is a matter that will be addressed and confirmed in the EIS. 

The silica sand, in its natural form as mined and during proposed transport over land and water as part of the GSSP, is inert sand with a typical particle size that does not represent a human health risk as dust or as air emissions. 

This is in contrast to silica dust (crystalline silica) which is more generally associated with further processes after mining, such cutting or grinding of manufactured quartz products and is harmful when inhaled into the lungs. This respirable quartz is approximately 100 times smaller than a typical grain of beach sand which Diatreme Resources is looking to mine and process at Galalar.   

 

Will the Project affect the use of Elim Beach and existing beach shacks?


No. At its closest point the proposed mine is over 3.5 km from Elim Beach, although the mine infrastructure area itself is about 7 km away. By road the distance is nearly 18 km (the turnoff from Beach Road to the proposed mine is about 10 km from Elim Beach). The operation will have no effect on any beach shacks at Elim Beach or the campground.

 

Will public access to the beach adjacent to Nob Point be affected?


The public road that goes from Hope Vale to the beach near the mine (to a point known locally as ‘The Church’) would remain open, even though it passes through the proposed ML. There would need to be appropriate safety measures and management to make sure that road users and mine traffic are not in conflict, but otherwise all existing rights to access the beach at this location are proposed to remain.

 

What are the benefits of the Project for the local community?


An independent economic study by Cummings Economics (excerpts on Diatreme website – ASX releases) estimates the Project has the potential to generate more than 110 equivalent full-time jobs including flow-on effects, becoming Hope Vale’s largest employer outside local government.

The Project is expected to inject around $24 million in the construction phase and up to $42 million in its operation, with the majority of expenditure to occur in the region.

Diatreme’s priority is on employing local community-based workers including traineeships and apprenticeships in a drive-in, drive-out operation, with the Company also putting priority on local suppliers.

 

How will the silica product be used?


The Project will produce a premium-quality silica sand, suitable for the fast-growing solar panel manufacturing industry and other high-tech applications. Demand for solar energy continues to increase, with the World Economic Forum estimating that the world will add 70,000 solar panels every hour in the period through to 2022.