The company has delivered a maiden inferred resource from late 2021 drilling at the Si 2 North project area of 53 million tonnes grading 99.3% silica.
Some deeper drilling in the area delivering higher grades such as 42m at 99.4% and 30m at 99.6%.
It adds to the existing 75Mt averaging 99.16% resource at Galalar, located in the southern end of the Galalar project.
Si 2 North covers some 305 hectares in the northern section of the Cape Bedford tenement and is immediately adjacent to the world's largest silica sand mine, the 3Mtpa Cape Flattery mine, operated by Mitsubishi, which has been in operation since 1967.
CEO Neil McIntyre said the new discovery showed the potential for Diatreme to run multiple mining operations within its 480sq.km lease, with Si 2 North potentially being able to utilise the existing state-owned port infrastructure.
The main Galalar deposit is being progressed its permitting and approvals process, and the company is also looking to fast track a mining lease over Si 2 North.
It will next take bulk samples for metallurgical test work to determine if the same processing route used at Galalar can be used.
The Si 2 North dunes remain open in all directions, and there are numerous exploration prospects throughout the exploration lease.
Hand auger holes completed at Si 1 South to 5m depth have indicated elevated titanium, a higher than usual heavy mineral sand assemblage compared to the S1 and S2 dune systems.
Preliminary metallurgical and mineralogy studies have commenced to determine the assemblage of HMS and options to separate from the otherwise high-purity silica sand.
At Si 1 North, first-pass vacuum drilling indicates high-purity silica and elevated HMS, while at Si 2 North extension area the dune system is described as a "chaotic" mix of older and younger dunes, however the area remains a priority target given the size of the dune field.
Diatreme delivered maiden reserves at Galalar of 32Mt in November, along with a prefeasibility study on a A$60-70 million development.
The company is targeting first production by year's end, with a number of Chinese firms signing offtake agreements.
Shares in Diatreme were off 2% at 2.2c today, capitalising the company at $69 million. The stock has traded between 1.6c and 3.1c over the past year.
