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ASX:DRX
DIATREME RESOURCES LIMITED
ASX ANNOUNCEMENT
16 April 2012
ABN 33 061 267 061 Level 2, 87 Wickham Terrace, Spring Hill, Qld, 4000 PO Box 10288 Brisbane Adelaide Street Qld 4000 Telephone : +61 7 3832 5666 Facsimile : +61 7 3832 5300
[email protected] www.diatreme.com.au
INVESTOR ROADSHOW PRESENTATION
Over the next two weeks, the Company’s Executive Chairman/CEO, Tony Fawdon, is conducting an institutional roadshow through the US, London and Hong Kong, using the following material:
Diatreme Resources is an Australian based diversified mineral explorer with significant projects in heavy mineral sands, copper, base metals and gold. The Company owns the world class Cyclone Zircon Deposit in Western Australia, situated within the recognised Eucla Basin province, along with extensive areas of underexplored ground prospective for heavy mineral sands. The Board and senior personnel exhibit wide experience, ranging through the exploration and development phases of resource management. Australian Securities Exchange Codes: DRX and DRXO Securities Ordinary shares (DRX): 354,597,423 Listed 15c options (30/09/13)(DRXO): 88,650,039 Board of Directors Executive: Tony Fawdon - Chairman/CEO David Hall - Operations Non-executive: George White Andrew Tsang William Wang Neil McIntyre Joint Company Secretaries: Leni Stanley Tuan Do Key Projects: • Eucla Basin Cyclone Zircon Project • Clermont Copper Project • Anabama Copper Project • Gilbert River Base Metals Project Diatreme Resources Contact: Tony Fawdon Executive Chairman/CEO Phone: +61 7 3832 5666 Fax: +61 7 3832 5300 Share Registry: Link Market Services Level 15, ANZ Building 324 Queen Street, Brisbane, Q4000
Attachment 1: Company presentation Cyclone Zircon Project Eucla Basin WA (April 2012) Attachment 2: Investor handout Right project in the right sector with large upside (April 2012) For further information: For media queries: David Hall Anthony Fensom Executive Director – Operations BWH Ph: 07 3832 5666 Ph: 07 3368 2355 About Diatreme Resources Diatreme Resources Limited (ASX code: DRX) is a diversified Australian mineral explorer with significant projects in heavy mineral sands, copper, base metals and gold. The Company owns the world-class Cyclone Zircon Deposit in Western Australia, situated within the recognised Eucla Basin province, along with extensive areas of ground prospective for heavy mineral sands, copper, base metals and gold. The Board and senior personnel exhibit wide experience, ranging through the exploration and development phases of resource management. About Zircon Zircon is a mineral sand used in the production of ceramics, including sanitary ware, tiles and tableware. It is also used in refractories, TV glass and foundry applications. Zircon is the source material for zirconia and a range of chemicals used in high-tech applications, including fuel cells and abrasives. Zirconium metal is used in nuclear fuel rods, while zirconia is used in jewellery.
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Diatreme Resources Limited - ASX announcement – 16 April 2012
Attachment 1
CYCLONE ZIRCON PROJECT – EUCLA BASIN WA
(Company Presentation) April 2012
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Tony Fawdon Executive Chairman/CEO April 2012
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DISCLAIMER 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.
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 is based on information compiled by Mr Ian Reudavey, who is a Member of the Australian Institute of Geoscientists, and a full time employee of Diatreme Resources Limited. 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 the 2004 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 that relates to Ore Reserves is based on information compiled by Mr Phil McMurtrie, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr McMurtrie is a director of Tisana Pty Ltd, and is a consultant to Diatreme Resources Limited. 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 2004 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.
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DRX PROFILE MINERAL SANDS (100%)
Mid Tier Zircon Deposit in WA Probable Reserve 97Mt @ 2.5% HM 950,000 Tonnes of Zircon in Ground Prefeasibility Study Completed Decision to Proceed to Definitive Feasibility Study Further HMS Prospects in WA, SA and QLD
COPPER / GOLD (100% - Party earning up to 60%) New Porphyry Copper Gold System in QLD Multi Phased Cu, Au, Ag and Mo Mineralisation Joint Venture with Major Copper / Gold Miner
OTHER RESOURCES Pre Preparation Laboratory for Heavy Mineral Sands Drill Rig & Support Trucks, Bull Dozer, Vehicles & Equipment
HUMAN RESOURCES Highly Qualified Engineering, Geological & Metallurgical Team Highly Experienced & Entrepreneurial Management Strategic Board of Directors and Powerful Advisory and Broking Group
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PROJECT LOCATIONS
CYCLONE
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CYCLONE LOCATION
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CYCLONE DEPOSIT OPERATIONS
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MINING LEASE APPLICATION
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RESOURCE & RESERVES
MINERAL RESOURCE
Resource Category
HM cut-off
%
Material Mt
HM %
HM Mt
Slime %
OS %
Head Grade
Zircon Kt Zircon
% Rutile
% Leuc
% HiTi %
Alt Ilm %
Si TiOx %
MEASURED 1.0 107 2.4 2.63 4.1 5.6 0.77 0.08 0.17 0.52 0.26 0.55 830
INDICATED 1.0 29 1.6 0.47 3.6 6.1 0.44 0.06 0.06 0.50 0.11 0.31 130
TOTAL 1.0 136 2.3 3.10 4.0 5.7 0.70 0.08 0.14 0.51 0.23 0.50 950 Mineral Assemblage 31% 3% 6% 23% 10% 22%
ORE RESERVE
Reserve Category
Zircon cut-off
%
Material Mt
HM %
HM Mt
Slime %
OS %
Head Grade
Zircon Kt
Zircon %
Rutile %
Leuc %
HiTi %
Alt Ilm %
Si TiOx %
TOTAL PROBABLE 0.4 97 2.5 2.41 4.0 5.1 0.79 0.08 0.17 0.52 0.26 0.56 770
Mineral Assemblage 32% 3% 7% 21% 10% 23%
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BULK SAMPLE TESTWORK CPG Resources - Mineral Technologies tested a 7 tonne bulk sample. Key outcomes from the metallurgical testing include: The wet concentrator testwork produced a high grade HM
concentrate (97.8% HM) utilising conventional mineral sand separation technology.
The estimated distribution of zircon from the bulk sample to the wet concentrator process HM concentrate is 95.3%.
The estimated distribution of zircon from the HM concentrate to the mineral separation plant final Zircon product is 85.0%.
• A mineral separation process designed to produce Zircon and two titanium products, HiTi87 (86.6% TiO2) and HiTi67 (67.3% TiO2).
• The testwork has identified that conventional “off the shelf” technology can be used in the mineral processing at Cyclone.
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CYCLONE PRODUCTS Zircon: 65,000 tonnes per year ZrO2 % FE2O3
% SiO2 % Al2O3 % TiO2 % P2O5 % U+Th
ppm CeO2 %
66.0 0.10 32.8 0.20 0.31 0.07 369 0.020
HiTi87: 10,000 tonnes per year TiO2 % FE2O3
% SiO2 % Al2O3 % ZrO2 % MgO % MnO % CaO % CR2O3 % U+Th
ppm 86.6 2.6 5.0 1.01 3.3 0.04 0.02 0.03 0.06 84
HiTi67: 46,000 tonnes per year TiO2 % FE2O3 % SiO2 % Al2O3 % ZrO2 % MgO
% MnO % CaO % CR2O3 % U+Th
ppm 67.3 20.1 6.3 1.75 0.5 0.10 0.42 0.07 0.08 94
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CYCLONE DEPOSIT – 3D
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CYCLONE PROJECT PROPOSED OPERATIONS – VIDEO STILLS CYCLONE DEPOSIT / SITE LAYOUT
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CYCLONE DEPOSIT PROPOSED MINING METHODS
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CYCLONE PROJECT PROPOSED OPERATIONS – VIDEO STILLS MINING OPERATIONS
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CYCLONE PROJECT PROPOSED OPERATIONS – VIDEO STILLS OVERBURDEN REMOVAL
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CYCLONE PROJECT PROPOSED OPERATIONS – VIDEO STILLS TOP SOIL REMOVAL
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CYCLONE PROJECT PROPOSED OPERATIONS – VIDEO STILLS SLURRY ORE TO PLANT
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CYCLONE PROJECT PROPOSED OPERATIONS – VIDEO STILLS WET CONCENTRATION PLANT
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CYCLONE PROJECT PROPOSED OPERATIONS – VIDEO STILLS TRANSPORT OPTIONS
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FEASIBILITY STUDY • Geology & Mineralogy • Resources & Reserves • Hydrology • Mine Planning • Metallurgy & Mineral Processing • Environmental Studies • Infrastructure & Operations • Site Access & HMC Transport • Markets & Economics • Capital & Operating Costs
CYCLONE PROJECT TIMEFRAME Prefeasibility Study - Complete: Q1 2012 Definitive Feasibility Study Q3 2013 Project Financing Q4 2013 Construction & development 2014 Mining and production 2015
CYCLONE FEASIBILITY STUDY & SCHEDULES
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CYCLONE FEASIBILITY STUDY & SCHEDULES
DFEFINITIVE FEASIBILITY STUDY Mar-1
2
Apr-1
2
May-1
2
Jun-
12
Jul-1
2
Aug-1
2
Sep-12
Oct-12
Nov-12
Dec-12
Jan-
13
Feb-
13
Mar-1
3
Apr-1
3
May-1
3
Jun-
13
Jul-1
3
METALLURGY SAMPLES
NATIVE TITLE AGREEMENT
GEOLOGY, MINERALOGY, RESOURCE, RESERVES
ACCESS AND HAUL ROAD
PORTS AND SHIPPING
ENVIRONMENTAL & CULTURAL HERITAGE
WATER SUPPLY
AIRSTRIP & FIFO
WCP, TAILINGS, MSP
MINE PLANNING
FINANCIAL ANALYSIS & MARKETING
ROAD & RAILTRANSPORT
ACCOMMODATION FACILITY
POWER SUPPLY
RISK MANAGEMENT
TENEMENTS & APPROVALS
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PRODUCTS & USES
Zircon Over 50% of the world's zircon is used as an opacifier in ceramic glazes. Australia produces 40% of the world’s zircon which is mostly used in China and Europe.
Titanium 93% of world titanium minerals used to produce TiO2 pigment. TiO2 is a white powder with high opacity and brilliant whiteness.
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MINERAL SANDS PROJECTS – ZIRCON COMPARISON
CYCLONE – PLANNED ZIRCON PRODUCTION vs CURRENT OPERATIONS
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Cyclone – High Zircon assemblage
GLOBAL MINERAL SANDS DEPOSITS – Zr:Ti Ratio
ZIRCON SUPPLY / DEMAND ANALYSIS
TZMI
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PROJECT FINANCIALS - PFS
Capital Investment (including PFS & DFS) A$223 M Average Annual Sales Revenue A$191 M Average Annual Operating Costs A$88 M Average Annual Tax Payable A$24 M Average Annual Operating Cash Flow After Tax A$78 M Payback Period (Years) 2.1 IRR 32% NPV (10%) Base Case A$194 M
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CYCLONE PROJECT DYNAMICS & DRX VALUES • 950,000 tonne zircon resource
• Current zircon price of US$2,500
• Zircon constitutes >80% of revenue
• Independent valuation of Cyclone Project $300 Million • DRX Market capitalisation $28 Million
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200
300
400
500
600
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
OPERATING YEAR
$ m
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CYCLONE DEPOSIT CUMULATIVE NET CASHFLOW (AUD)
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CORPORATE INFORMATION
MAJOR SHAREHOLDERS HOLDING Andrew Tsang (Total) 21.80% Doral Industries Ltd 6.60% Zhangxi Zeng 4.50% Chaohui Zhang 2.30% Huntley Custodians 1.90%
DRX CAPITAL DIRECTORS BACKGROUND Shares on Issue 355 Million A.J. FAWDON Mining Exploration, 41 Years Options on Issue 89 Million D.H. HALL Exploration, Administration (ex Sept 2013 @ $0.15) A. TSANG Industrial Share Price 8.0 cents G.WHITE Mine & Company Management Option Price 1.7 cents C.WANG Economics, Import/Export Market Capitalisation $28 Million N. McINTYRE Accounting, Project Generation Cash at hand $3.6 Million (End Dec Quarter)
Diatreme Board
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SUMMARY
• Advanced project in strengthening Zircon market
• Highly experienced & effective Geological & Engineering Team
• Right project in the right sector with large upside
• Seeking Project or Equity Partners.
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Diatreme Resources Limited - ASX announcement – 16 April 2012
Attachment 2
DIATREME RESOURCES RIGHT PROJECT IN THE RIGHT SECTOR WITH LARGE UPSIDE
(Investor Handout) April 2012 F
or p
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DIATREME RESOURCES
Right project in the right sector with large upside
April 2012
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Statements • 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.
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 is based on information compiled by Mr Ian Reudavey, who is a Member of the Australian Institute of Geoscientists, and a full time employee of Diatreme Resources Limited. 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 the 2004 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 that relates to Ore Reserves is based on information compiled by Mr Phil McMurtrie, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr McMurtrie is a director of Tisana Pty Ltd, and is a consultant to Diatreme Resources Limited. 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 2004 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.
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Diatreme Resources Limited
• Project located in Western Australia • ASX listed with code DRX • 100% owner of the high grade Cyclone mineral sands project in the Eucla Basin • Significantly undervalued high grade zircon asset • Probable Reserve – 97Mt @ 2.5% HM • 770,000 Tonnes of Zircon in Ground (Reserve) • Prefeasibility study completed – Decision to proceed to DFS immediately
A Snapshot
Substantial Shareholders Interest Mr Andrew Tsang 21.80% Doral Industries Ltd 6.60% Zhangxi Zheng 4.50% Chaohui Zhang 2.30% Huntley Custodians 1.90% Total Interest of Top 20 Shareholders 46.33%
Capital Structure Shares on Issue 355 Million Options on Issue (ex Sept 2013 @ $0.15) 89 Million Share Price (as at 30/03/2012) A$0.07 Option Price (as at 30/03/2012) A$0.014 Market Capitalisation A$25 Million
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Investment Fundamentals
• Mineral Sands sector commanding attention with demand driven by urbanisation and wealth
• Emerging supply shortfall of Zircon worldwide
• Massive imbalance between current share price and value of Cyclone deposit
• PFS completed, NPV of Cyclone is AUD$194M
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Products & Uses for Heavy Mineral Sands
Zircon Over 50% of the world's zircon is used as an opacifier in ceramic glazes. Australia produces 40% of the world’s zircon which is mostly used in China and Europe.
Titanium 93% of world titanium minerals used to produce TiO2 pigment. TiO2 is a white powder with high opacity and brilliant whiteness.
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Zircon Supply / Demand Analysis
TZMI
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CYCLONE DEPOSIT
EUCLA BASIN WESTERN
AUSTRALIA
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Location
CYCLONE
•The Cyclone Deposit is in the highly prospective Eucla Basin
• Eucla Basin known for very high value mineral sand deposits including Iluka’s Jacinth-Ambrosia Project.
• Single underlying landowner who is committed to development.
• Port options by standard gauge railway.
•Western Australia – well known mining state.
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Resource & Reserves
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MINERAL RESOURCE
Resource Category
HM cut-off
%
Material
Mt
HM %
HM Mt
Slime %
OS %
Head Grade Zirco
n Kt
Zircon %
Rutile %
Leuc %
HiTi %
Alt Ilm %
Si TiOx %
MEASURED 1.0 107 2.4 2.63 4.1 5.6 0.77 0.08 0.17 0.52 0.26 0.55 830
INDICATED 1.0 29 1.6 0.47 3.6 6.1 0.44 0.06 0.06 0.50 0.11 0.31 130
TOTAL 1.0 136 2.3 3.10 4.0 5.7 0.70 0.08 0.14 0.51 0.23 0.50 950 Mineral Assemblage 31% 3% 6% 23% 10% 22%
ORE RESERVE
Reserve Category
Zircon cut-
off %
Material
Mt
HM %
HM Mt
Slime %
OS %
Head Grade
Zircon Kt
Zircon %
Rutile %
Leuc %
HiTi %
Alt Ilm %
Si TiOx %
TOTAL PROBABLE 0.4 97 2.5 2.41 4.0 5.1 0.79 0.08 0.17 0.52 0.26 0.56 770
Mineral Assemblage 32% 3% 7% 21% 10% 23%
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Cyclone Project Dynamics
Zircon Reserve 770,000 Tonnes
(Current) Zircon Price US$2,500
Zircon Constitutes >80% Revenue
Independent Value of Cyclone Project 2011 – Wilsteed Valuation
AUD $300 Million
NPV (March 2012) DRX Pre-feasibility Study
AUD $194 Million
DRX Market Capitalisation AUD $28 Million
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600
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
OPERATING YEAR
$ m
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CYCLONE DEPOSIT CUMULATIVE NET CASHFLOW (AUD)
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Project Financials – PFS
Capital Investment (including PFS & DFS) AUD$223 Million
Average Annual Sales Revenue AUD$191 Million
Average Annual Operating Costs AUD$88 Million
Average Annual Tax Payable AUD$24 Million
Average Annual Operating Cash Flow After Tax AUD$78 Million
Payback Period (Years) 2.1
IRR 32%
NPV (10%) Base Case AUD$194 Million
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Project Timeline
Schedule Date
Pre-Feasibility Study Completed MARCH 2012
Definitive Feasibility Study Q3 2012
Project Financing Q4 2013
Construction & Development 2014
Mining & Production 2015
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DFS Schedule
DFEFINITIVE FEASIBILITY STUDY Mar-12
Apr-12
May-12
Jun-12
Jul-1
2
Aug-12Sep
-12
Oct-12
Nov-12Dec-1
2
Jan-1
3
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-1
3
METALLURGY SAMPLES
NATIVE TITLE AGREEMENT
GEOLOGY, MINERALOGY, RESOURCE, RESERVES
ACCESS AND HAUL ROAD
PORTS AND SHIPPING
ENVIRONMENTAL & CULTURAL HERITAGE
WATER SUPPLY
AIRSTRIP & FIFO
WCP, TAILINGS, MSP
MINE PLANNING
FINANCIAL ANALYSIS & MARKETING
ROAD & RAILTRANSPORT
ACCOMMODATION FACILITY
POWER SUPPLY
RISK MANAGEMENT
TENEMENTS & APPROVALS
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Peer Comparison
Matilda -Keysbrook
BeMax - Snapper
Min. Comm. - Tormin
Base - Kwale Gunson - Coburn
Ti Corp - Athabasca
Exxaro - FairbreezeDiatreme - Cyclone
MDL - Grand Cote
Astron - Donald
WTR-Toliara
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000
In-s
itu
Zir
co
n G
rad
e (
%)
Proposed annual Zircon production (t)
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Planned Zircon Production vs Current Operations
Cyclone – High Zircon assemblage
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Cyclone Products Zircon: 65,000 tonnes per year ZrO2 % FE2O3 % SiO2 % Al2O3 % TiO2 % P2O5 % U+Th
ppm CeO2 %
66.0 0.10 32.8 0.20 0.31 0.07 369 0.020
HiTi87: 10,000 tonnes per year TiO2 % FE2O3
% SiO2 % Al2O3
% ZrO2
% MgO
% MnO
% CaO % CR2O3
% U+Th ppm
86.6 2.6 5.0 1.01 3.3 0.04 0.02 0.03 0.06 84
HiTi67: 46,000 tonnes per year TiO2
% FE2O3
% SiO2
% Al2O3
% ZrO2
% MgO
% MnO
% CaO % CR2O3 % U+Th
ppm 67.3 20.1 6.3 1.75 0.5 0.10 0.42 0.07 0.08 94
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Mining Lease Application
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Cyclone Deposit – 3D
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Cyclone Deposit – Layout
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Proposed Mining Methods
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Mining Operations
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Overburden Removal
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Top Soil Removal
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Slurry Ore to Plant
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Wet Concentration Plant
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Transport Options
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Investment Summary
• Advanced project in strong Zircon market
• Highly experienced & effective Geological & Engineering Team
• Right project in the right sector with large upside
• Independent Broker values DRX at 36c per share (current price $0.08)
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Diatreme Resources Limited
Level 2, 87 Wickham Terrace Spring Hill QLD 4000
AUSTRALIA
www.diatremeresources.com.au
Tony Fawdon Executive Chairman / CEO +61 7 3832 5666
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