PERTH (miningweekly.com) – A scoping study for the Northern Silica project, in Far North Queensland, has indicated that the project could support a production rate of five-million tonnes a year over a 25-year period.

ASX-listed Diatreme Resources on Wednesday told shareholders that the scoping study was based on an indicated and inferred mineral resource of 235-million tonnes, with further expansion drilling planned for this year.

The scoping study estimated a post-tax net present value of A$830-million for the Northern Silica project, and an internal rate of return of 32%, with the pay-back period estimated at six years. The base case analysis estimated a capital cost of A$356-million, including a A$46.4-million contingency, to establish a three-million-tonne-a-year operation.

An additional capital investment of A$179-million will be required two years after the start of production, to increase the run rate to five-million tonnes a year.

“This scoping study demonstrates the extraordinary potential of our Northern Silica project to become a long-term producer of high purity low iron silica products, contributing extremely valuable new jobs and investment for the Hope Vale/Cooktown region, focusing on local communities,” said Diatreme CEO Neil McIntyre.

“Standouts include the project’s large and expanding resource base, strong underpinning economics, pathway to growing export markets and ability to meet the requirements of solar panel sheet glass manufacturers, a market under pressure for new sources of supply. For example, solar investment is expected to exceed oil investment for the first time ever in 2023, with total clean energy investment expected to exceed $1.7-trillion, according to the International Energy Agency.

“For Diatreme shareholders, the scoping study results show the potential returns achievable from this project and we look forward to advancing a full feasibility study to cement these indicative numbers, while also further optimising the project’s development.

“With the Northern Silica project’s permitting and studies pathway now advancing, including access to the port precinct to undertake relevant studies, the Northern Silica project becomes Diatreme’s most immediate silica project development priority and we look forward to further de-risking the project and ensuring its delivery in the quickest possible timeframe for the benefit of all stakeholders,” said McIntyre.