High-purity silica sand has become an increasingly strategic resource due to its usage in photovoltaic panels and other 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, 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.
The project could generate 30-40 jobs in the construction phase and 60 in production, with a focus on local employment including for the traditional owners.
Further improvements to project economics have been identified, including logistics (development of a purpose-built barge ramp 3km from the mine site) and product (potential to develop an ultra-low iron silica export product priced at a significant premium).
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. The results have further increased confidence in the project's ability to become a source of premium quality silica product to growing Asian markets, including the fast-growing solar panel market.
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.
- 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)