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Independent study confirms viability of Diatreme’s flagship Cyclone project

15th June 2016

By: Samantha Herbst

Creamer Media Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – An independent project enhancement and update study has confirmed the viability of ASX-listed mineral sands developer Diatreme Resources’ Cyclone zircon project, in Western Australia, which now has a net present value of $121-million and an internal rate of return of 23%.

Diatreme announced on Wednesday that the project now has a payback period of under three years, based on an updated estimate of processing plant capital and operating costs, as well as shipping and diesel costs, with revenue streams adjusted for current product pricing.

Diatreme CEO Neil McIntyre noted that the study confirmed the Cyclone project’s potential to deliver economic benefits for all stakeholders.

“Following the expected award of environmental approvals this month, we can now move confidently towards the completion of the definitive feasibility study and the delivery of this valuable new mine for Western Australia,” he said.

Current industry and market conditions presented further opportunities for cost savings on key capital and operating expenditures, compared with the prefeasibility study estimates.

The company further noted that confidence in Cyclone’s future had also been boosted by the recent Global Zircon Conference 2016, which took place in Nanjing, China, from May 24 to 26. The conference indicated that an upturn in China’s residential market had lifted demand for ceramics, with producers expecting higher prices for zircon from the third quarter of this year.

Moreover, analysis by research company Beer & Co. had suggested that the zircon price could reach $1 500/t by late 2018 and, with forecasts of a looming supply deficit within three years, Cyclone was set to start production amid favourable pricing conditions for its key product.

The Cyclone project was the largest undeveloped zircon project in the Eucla basin, which borders South Australia.

Edited by Creamer Media Reporter

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