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Return of Sibelco with $50m sandmining deal at Cape Flattery

Business

Sibelco, which was pushed off its sandmining leases on Minjerribah (Stradbroke Island) by the State Government in 2019, has returned with a $50 million deal to take a stake in Diatreme Resources and help develop its north Queensland silica sand project.

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A placement of 560 million new shares were issued to Sibelco at 2.5 cents a share to raise $13.97 million. A separate deal with Ilwella, which is an existing major shareholder in Diatreme, will raise a further $3.3 million resulting in a capital raising of $17.7 million.

Sibelco has also agreed to a joint venture development of Diatreme’s Galalar and Northern Resource silica projects with an injection of $35 million. The projects neighbour the world’s biggest silica sand mine at Cape Flattery.

The deal will give Sibelco a 15 per cent stake in Diatreme. Ilwella will hold 19.99 per cent.

The deal will give Sibelco a 26.8 per cent project stake.

A joint venture company, Cape Silica Holdings, would be created and responsible for developing the Galalar and Northern Resource silica sands projects. The tenements owed by Diatreme would be held by Cape Silica.

Both companies would be entitled to exclusive offtakes and marketing rights over their proportions of the production.

Diatreme chief executive Neil McIntyre said the deal was a vote of confidence in the company and its strategy.

“Having access to Sibelco’s world-leading technical, processing and marketing expertise is a step change for Diatreme that propels us onto the global stage, enhancing the successful development of our projects,” he said.

“Sibelco is a natural partner for us to unlock the value of our world-class silica sand deposits for the benefit of both companies and all of our stakeholders, including our First Nation partners and other local communities.”

Diatreme also said it was in discussions related to the potential sale of a small section of its Northern tenement area.

Sibelco is still rehabilitating its leases on Minjerribah after the State Government introduced legislation to phase out sand mining on the island.

 

 

 

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