Emerging silica sands developer and explorer, Diatreme Resources Limited (ASX: DRX) has signed a new MOU for offtake from its Galalar Silica Project in far north Queensland, highlighting the strong Asian demand for its premium‐quality silica product amid the solar energy boom.
The MOU with Jiangxi Kangjia New Material Technology Co., Ltd (Jiangxi Kangjia) concerns the supply of 250,000 tpa of photovoltaic grade (=<100ppm Fe2O3 silica product) from the Galalar project at mine start‐up, with potential for further offtake volume post start‐up, subject to mutual agreement.
CEO, Neil McIntyre, said the agreement adds to previous MOU’s signed with Fengsha Group and Wan Zhong Investment Group, demonstrating the strength of demand from Asia’s top solar PV market for Diatreme’s premium silica product.
We welcome this agreement, which should give our investors and other project partners increased confidence in the future of our key project. Galalar is now positioning itself as a leading supplier of premium‐quality silica product to Asia amid a global solar energy boom that shows no sign of slowing,” Mr McIntyre said.
“We look forward to cementing these MOU’s into binding agreements that deliver mutually beneficial outcomes for all parties, together with valuable new jobs and investment for the Hope Vale/Cooktown region.”
Under the MOU, Jiangxi Kangjia has demonstrated its intent for the offtake of 250,000 tpa of a sub 100ppm Fe silica product from Galalar at mine start‐up, and for increased offtake volume post start‐up subject to mutual agreement. Jiangxi Kangjia also intends to explore the potential for joint investment in a potential silica processing plant within Diatreme’s tenement area, when the timing is appropriate.
Both Diatreme and Jiangxi Kangjia have expressed their strong interest in establishing a strategic partnership to build a strong and sustainable upstream and middle stream silica business chain to supply the exploding demand in China for premium‐grade silica products. The MOU provides a framework and road map for further cooperation, leading potentially to a legally binding offtake agreement.
Jiangxi Kangjia is a subsidiary of Konka Group, a major Chinese manufacturer of electronics products listed on the Shenzhen Stock Exchange. It is the only domestic enterprise that is able to produce third‐generation nano microcrystalline stone, and it is the largest nano microcrystalline stone manufacturer in China and the largest supplier of new nano microcrystalline materials and products in the world.
Next steps
The MOU requires the following milestones to further progress the agreement:
- Diatreme to provide all relevant information and schedule to production, including bulk samples for further testing if required
- Jiangxi Kangjia to provide Diatreme with specific requirements for final product specifications, packaging, indicative delivery schedule and name of port of discharge
- Parties to agree to commence negotiations and finalisation of formal agreements after successful and satisfactory completion of mutual due diligence by both parties.
The proposed cooperation under the MOU is for an initial duration of 12 months from the date of signature, with an intention to move to binding arrangements within that period and with its renewal subject to mutual agreement.
The latest project advance follows Diatreme’s recent announcement of a 30% increase in the size of the Galalar project’s silica resource, to 61.9 million tonnes. Positive initial testwork results from industry specialist Mineral Technologies have highlighted the project’s ability to deliver a premium‐ quality product.
A draft EIS is underway, with Diatreme aiming to lodge the necessary environmental and mining lease approval submissions by the fourth quarter of 2021, targeting mine production in 2022.
Diatreme continues to engage with a range of potential offtakers and other partners, with the aim of developing a project that brings significant employment and other economic benefits for the community of Hope Vale/Cooktown and all other stakeholders.
