Emerging silica sands developer and explorer Diatreme Resources (ASX:DRX), with joint venture partner SCR-Sibelco, has completed ahead of schedule its second tranche investment of $24 million into JV company, Cape Silica Holdings.
The investment has been completed well ahead of the scheduled 1 December 2023 payment date, resulting in global material solutions company Sibelco increasing its JV interest by 16.8% to 26.8%.
Sibelco invested $11 million in the first tranche investment in the JV, gaining an initial 9.99% interest. Sibelco’s second tranche investment was priced at a ‘look through’ value of $160 million for the Far North Queensland silica sand projects, with Diatreme currently advancing its flagship Northern Silica Project (NSP) towards development.
The investment follows Diatreme’s announcement of increased exploration activity at its NSP, with the potential for further resource increases, while the approvals and permitting process continues to advance.
A recent Scoping Study for the project showed the potential for a valuable long life mining operation, with a potential production rate of 5 million tonnes per annum capable of being sustained for 25 years, supplying ‘high-grade’ silica products to the solar photovoltaic (PV) and specialty glass market. The study estimated a net present value of $1.4 billion (pre-tax, 8% discount), with a pre-tax internal rate of return of 33%.
Announced in June 2022, Diatreme’s strategic partnership with Sibelco also included a $13.97 million corporate strategic placement, which saw Sibelco become a significant shareholder in Diatreme.
The long-term joint venture also included plans for joint product marketing, pursuit of onshore silica processing downstream opportunities and assistance in accessing project finance, benefitting from Sibelco’s established global networks from its 150 years of global operations and pre-eminence in global high purity silica markets and supply.
Welcoming the investment, Diatreme’s CEO Neil McIntyre says Sibelco has shown an extraordinary degree of confidence in the joint venture through the early payment of the second tranche, which provides a significant financial boost that will help to further advance the projects’ development.
“Importantly, this investment also shows Sibelco’s confidence in Diatreme’s management and ability to deliver these world-class, high purity silica sand projects amid rising global demand for high purity silica from the solar energy boom.
We can now move forward with even greater conviction, backed by an extraordinarily long funding runway, through the important next steps of permitting and regulatory approvals to eventual mining of this key critical mineral.”
“We can now move forward with even greater conviction, backed by an extraordinarily long funding runway, through the important next steps of permitting and regulatory approvals to eventual mining of this key critical mineral“
Sibelco Chief Strategy and Business Development Officer, Ian Sedgman adds that since the strategic partnership was reached last year, the company has been pleased with the joint venture’s progress in advancing the development of these ‘world-class’ high purity silica sand projects.
“Our early payment highlights our support for the joint venture and confidence that it will deliver this key resource, which the world’s speciality glass market desperately needs at a time of rapid solar PV growth and accelerating global decarbonisation.”
Supporting the NSP’s development, Diatreme has signed a MoU with a global manufacturer of PV grade glass used in solar panel manufacturing. The MoU also includes the potential for the establishment of PV glass manufacturing in Australia, amid calls for domestic manufacturing to support the fast-growing solar energy industry.
Write to Adam Orlando at Mining.com.au
Images: Diatreme Resources
