Ann: Capital Raising Completed , page-7

Tuesday, September 29, 2009

Diatreme Resources raises $2.9m, fast tracking minerals sands development in Eucla Basin.

by Andrew McCrea

Mineral sands explorer Diatreme Resources (ASX: DRX) has been busy of late, raising new capital and boosting heavy minerals sands resource by 50% at its Eucla Basin project in the Western Australia.

The company was in a trading halt, but will raise $2.9 million via a placement of 21.2 million shares at 12.2 cents per share to sophisticated investors.

Behind the scenes Tony Fawdon chairman of Diatreme and team have been drilling the Cyclone deposit and recently boosted the inferred resource of heavy mineral sands at Cyclone by 50% to 98.4 million tonnes, for 2.8 million tonnes of contained heavy minerals.

Interestingly, the company has yet to receive a large number of assay results, try 2,446. Add to that, nearby prospects owned by Diatreme, have yet to be drilled and so probability must be good for increases to this resource at Eucla.

The mineralisation at Cyclone covers an area up to five kilometres long and up to 2.5 kilometres wide.

Also holding Diatreme in good stead, is that the higher priced zircon is tipped to rise to US$950 per tonne, up from US$785 per tonne. And 33% of the Cyclone resource is zircon.

The zircon market remained strong due to the growth of consumption in China, which had become the world’s top consumer with consumption of around 400,000 tonnes of zircon a year.

"Diatreme has already initiated scoping studies on Cyclone in preparation for a pre-feasibility study on the resource,” Fawdon said.

He said by moving quickly, the company can not only save time and costs on the full pre-feasibility study, but also ensure we are in an excellent position to potentially progress to mining.

So far the share price has been fairly steady, but this may not always be the case.

Zircon is a mineral sand used in the production of ceramics, including sanitary ware, tiles and tableware. It is also used in refractories, TV glass and foundry applications.

http://www.proactiveinvestors.com.au/companies/news/2689/diatreme-resources-raises-29m-fast-tracking-minerals-sands-development-in-eucla-basin-2689.html