Jul 16, 2019

Chinese deal for Cape York silica sand project

Chinese deal for Cape York silica sand project

Diatreme Resources has signed a Memorandum of Understanding with a Chinese manufacturer for the potential supply of up to 500,000 tonnes of photovoltaic grade silica sand.

The sand would be produced from its Galalar silica project, which is adjacent to the Cape Flattery silica sand mining operation on Cape York.

The agreement was inked with the privately owned Fengsha Group – China’s largest domestic supplier to major glass manufacturers of photovoltaic (solar) and other specialty high end silica sand products.

In a statement to the ASX, Diatreme said Fengsha was looking to increase production to more than 6Mtpa after a recent plant expansion at its facility in Anhui Province and some regional acquisition activity.

Diatreme chief executive officer Neil McIntyre.

“This is an extremely significant agreement for Diatreme as we work to unlock the potential of the Galalar project, in partnership with the traditional owners, Hopevale Congress,” Diatreme chief executive officer Neil McIntyre said.

“The Chinese market consumes approximately a third of the world’s industrial silica and we have identified and started the first stage of an important relationship with China’s largest supplier and processor of photovoltaic (solar) and high-end silica sand product.

“It is our intention to form a significant part of the long‐term supply solution in a market that is undergoing significant and constant demand growth.”

Fengsha Group and Diatreme will undertake a further silica product testing program to examine the potential for Diatreme to supply a further 250,000 tonnes per annum (in addition to the 500,000 tonnes) of photovoltaic quality sand.

This would be for specialised processing in the group’s state-of-the-art facility to meet low iron requirements for further higher value applications.

Tests will determine the Galalar product’s amenability to a chemical de‐ironization process, colloquially referred to in China as “chemical pickling”.

‘Chemical pickling’ vats used in silica sand product beneficiation, Fengsha Group, China.

The Fengsha Group will also assist Diatreme with more detailed China market logistics planning, further product specification development, mine development and other technical assistanc .

The parties will also discuss the potential for the group to directly invest into the Galalar project.

Diatreme said the MOU was non‐binding at this stage, but set a framework for further co‐operation, leading potentially to more binding arrangements between the parties subject to final negotiations.