Diatreme Resources (ASX:DRX) has locked in China-based ENFI Engineering to assist with finding finance and offtake partners and completing a definitive feasibility study for its Cyclone zircon project in Western Australia.
The cooperation and consulting services agreements replace a previous memorandum of understand regarding completion of a definitive feasibility study for Cyclone.
As part of the first co-operation agreement, ENFI will use its China government and banking networks to assist with sourcing project investors, potential offtake partners and debt funding for the project.
In the consulting agreement, ENFI will complete project costings, economics, engineering studies and implement planning for the remaining parts of the definitive feasibly study.
ENFI anticipates this will be undertaken within a five-month timeframe.
Commenting on the agreements, Diatreme chairman William Wang said it’s a “historic day” for both Diatreme and the mineral sands sector as a whole.
Meanwhile, Diatreme chief executive officer Neil McIntyre said the deal represented the “final push forward” for the project. He said the company anticipated the project would be in first production by the end of the decade coming into an environment of rising prices and tight supply.
“We now have the right technical partner in place to deliver the right project at the right time, securing increased value for our loyal shareholders,” Mr McIntyre added.
Diatreme gained its final approvals from the Western Australian Government in January last year including its mining licence and requisite environmental permits.
Cyclone was discovered in 2007 and is situated 25km from the state border between Western Australia and South Australia.
The project has a measured and indicated mineral resource of 211 million tonnes grading 2.3% heavy minerals for 4.8 million tonnes of heavy minerals.
According to the company, industry analyst TZMI has indicated a pick up in heavy mineral demand, combined with tightening supply, would result in a positive pricing environment when Cyclone came online.
Major mineral sands producer Iluka boosted its zircon price to US$1,230 per tonne last September, with several analysts predicting the price would push past US$1,300 per tonne this year.
The mineral sands sector has been languishing for the last five years with oversupply of heavy minerals and downstream users hoarding stockpiles resulting in depressed prices.
For those unfamiliar with heavy minerals – they include a suite of titanium minerals (ilmenite, leucoxene and rutile) and they usually co-exist with zircon. Titanium minerals are used as pigment in many everyday items such a paint and plastics, while zircon is generally used in manufacturing tiles.
The titanium mineral cycle has traditionally followed the ebb and flow of GDP.
The market reacted extremely positively to today’s news, with Diatremes share price surging more than 114% to close the day at A$0.03.