Diatreme Resources takeover bid of Metallica Minerals

An emerging Cape York silica miner has launched a takeover bid to secure sand leases of a rival Cape Flattery lease holder to create a far larger resource needed for the solar panel industry.

Diatreme’s Northern Silica project has the potential to make Far North Queensland a leading supplier of low-cost, premium silica. Picture: Ports North

Emerging Cape York silica miner Diatreme Resources has announced a conditional takeover of rival sand mine leases owned by Metallica Minerals.

The move by the Brisbane-based Diatreme Resources would combine the Metallica Minerals’ silica sand assets at Cape Flattery to create a far larger resource base for the global solar PV industry.

There is a planned investment of more than $500m in Diatreme’s Northern Silica project, which is expected to begin extracting sand in 2025 after an official declaration of a co-ordinated project was received by the Queensland co-ordinator-general in February.

Existing Cape Flattery sand mining operations. Picture: Ports North

The greenfield silica sand mine and processing plant project is expected to produce 5m tonnes per annum of silica sand product for export throughout a 25 year lifespan.

The takeover by Diatreme gives Metallica shareholders the opportunity to participate in the growth of the combined entity through an offer of shares in place of cash.

Former treasurer and Diatreme chairman Wayne Swan said the takeover represented a “compelling opportunity” for the shareholders of Metallica and Diatreme

According to the latest ASX announcement, Metallica shareholders will receive 1.3319 fully paid ordinary shares in Diatreme for every one ordinary share in Metallica.

Silica deposits at Cape Bedford near Hopevale on the Cape York Peninsula. Picture: Kerry Trapnell

“This is expected to see us create value for the shareholders of both companies, as well as external stakeholders such as traditional owners, local business and the broader Cooktown and Hopevale communities,” he said.

A scoping study of the resource, located 60km north of Cooktown, highlighted potential for the Far North to become a leading supplier of low-cost, premium quality, silica products to be used in the manufacture of solar panels.

Major shareholders of Metallica and Diatreme Sibelco Asia Pacific have shown early support for the deal.

The Queensland government has identified Cape Flattery as a critical minerals mining area and export hub of significance. Picture: Supplied

“Diatreme has the financial capacity, technical expertise, industry partners and third-party stakeholder relationships required to advance the silica assets of the combined entity in the interest of all combined shareholders with the aim of bringing the projects into timely production,” Diatreme chief executive officer Neil McIntyre said.

In August last year Diatreme Resource withdrew the Environmental Impact Statement process attached to the Galalar Silica sand project at Cape Bedford to focus on the Northern Silica Project which is expected to use existing ship loading facilities owned by Mitsubishi Corporation at Cape Flattery.

The Northern Silica Project has been granted Regional Significance status by the Department of Regional Development, Manufacturing and Water which allows the company to apply for a 5000 mega litre water entitlement held in the strategic reserve for Cape York’s Water Plan.

Water is required to create a sand slurry mix to enable piping of the resource where it’s turned back into a solid before being loaded onto ships.

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Originally published as Diatreme Resources takeover bid of Metallica Minerals