ASX-listed Diatreme Resources' prefeasibility study (PFS) on the Northern Silica project in northern Queensland has confirmed its potential as a profitable, long-life and high-purity silica sand mine.

The PFS outlines a Phase 1 startup of operations comprising three-million tonnes of capacity for a capital cost of $443-million, which estimates a before-tax net present value (NPV) of $1.29-billion, an internal rate of return (IRR) of 36%, a payback period of four years and life-of-mine (LoM) gross revenue of $8.1-billion.

These ecomomics are underpinned by a C1 cash cost of $25/t, which could reduce to $18/t in an optional Phase 2 expansion scenario.

The Phase 2 expansion can ramp up capacity to five-million tonnes a year from year three, which would deliver a before-tax NPV of $2.4-billion, IRR of 46% and LoM gross revenue of $13.1-billion, for just $38.5-million of additional capital expenditure.

Diatreme also announced a maiden ore reserve for Northern Silica comprising 151-million tonnes grading 99.25% silicon dioxide, which underpins an initial 25-year LoM for the project, and supports the expanded production requirements under the Phase 2 expansion. The project's mineral resource stands at 301-million tonnes grading 99.2% silicon dioxide, making it one of the largest and highest-purity silica sand projects in the world.

Notably, Diatreme believes the project can benefit local communities such as Hope Vale and Cooktown through employment opportunities - including 214 jobs expected to be created during construction and 128 jobs during operation.

The company is targeting 50% Indigenous employment and maximum local procurement, while it plans to offer training and business development initiatives. 

"The PFS confirms what we have long known - that the Northern Silica project is a genuine world-class asset. The Phase 1 economics place the project among the most compelling critical mineral developments in Australia. With our silica resource base and our joint venture with global material solutions leader Sibelco, we are exceptionally well positioned to move through the next steps including a definitive feasibility study (DFS) and then into development," says Diatreme CEO Neil McIntyre.

Chairperson Brian Flannery adds that the scale and purity of Diatreme's silica portfolio, combined with growing global demand for solar PV and specialty glass, gives the company a rare opportunity to build an inter-generational, low-iron, high-purity silica business, with the Cape Flattery deposit being one of the largest high-purity silica sand deposits globally.

Diatreme aims to have a DFS published on the project by the third quarter of 2028, while a final investment decision is targeted for the fourth quarter of 2028.