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Scoping study values Diatreme Resources' Galalar silica project at A$231M

A scoping study indicated that Diatreme Resources Ltd.'s Galalar project in Queensland, Australia, can become a low cost and premium quality silica producer in the near term.

The company said Sept. 9 that it aims to produce high-purity silica sand for solar panel and ultra-clear glass products, with off-take discussions ongoing.

The study outlined a pretax net present value of A$231 million, a 150% internal rate of return and an eight-month payback period.

Development capital expenditure was estimated at A$24.4 million, with Galalar expected to produce 750,000 tonnes per year for 15 years.

Annual operating costs were estimated at A$42.0 million, assuming the product is trucked from the mine site to an area 63 kilometers away.

Diatreme is assessing optimizations including developing a purpose-built barge ramp about 4 kilometers from the proposed mining lease area, which it said could result in operating cost savings of A$20 per tonne to A$25/t.

The project will be developed in partnership with the traditional owner, Hopevale Congress Aboriginal Corp., which owns a 12.5% interest in Galalar.

Galalar hosts indicated and inferred resources totaling 30.2 million tonnes grading more than 99% silica dioxide, including an indicated resource of 21.5 million tonnes.

The company signed a memorandum of understanding in July to supply Anhui Fengsha Mining Group Co. Ltd. with up to 500,000 tonnes of photovoltaic-grade silica sand to be produced from Galalar.