Key Highlights

  • KPMG’s assessment estimates a net benefit to Queensland of A$412.6 million in present value terms at a 7% discount rate.
  • The benefit-cost ratio is 4.1.
  • The result is most sensitive to the silica sand price.
  • The assessment measures benefits to the community and economy, not returns to shareholders.

Diatreme Resources (ASX:DRX) has released an economic impact assessment of its Northern Silica Project on Cape York, Queensland, prepared by KPMG. The assessment was commissioned by Diatreme and forms part of the project's Environmental Impact Statement, which is being assessed under a bilateral process between the Queensland and federal governments.

It estimates that over a 25-year mine life the project would increase real Queensland gross state product by A$2.53 billion and real household consumption by A$729 million. It points to up to 214 construction jobs and 128 direct operational roles, and Diatreme has set a 50% Indigenous employment target.

An important caveat applies. The assessment states it was not prepared to inform financial or commercial decisions. It measures benefits to the community and economy, not returns to Diatreme or its shareholders.

The cost-benefit result

KPMG's cost-benefit analysis estimates a net benefit to Queensland of A$412.6 million in present value terms at a 7% discount rate, with a benefit-cost ratio of 4.1. Undiscounted, the net benefit is about A$1.23 billion. The largest contributors are Producer Surplus and taxes, partly offset by an estimated A$399.7 million undiscounted cost for greenhouse gas emissions.

Over the life of mine, the assessment estimates A$305 million in state royalties and native title payments and A$2.1 billion in company income tax.

Price is the swing factor

In every sensitivity tested, benefits exceeded costs. A worst case, with benefits 20% lower and costs 20% higher, still produced a net benefit of A$151.5 million and a ratio of 2.0.

The result is most sensitive to the silica sand price. A 20% change in price shifts the net benefit by about 40%, while the outcome is comparatively insensitive to costs. That is worth noting for investors too, because silica sand prices drive project revenue.

Separate from the feasibility numbers

The assessment builds on a pre-feasibility study released in October 2026, which reported a pre-tax net present value of A$2.4 billion, a pre-tax internal rate of return of 46% and a free-on-board cash cost of A$18 a tonne. Those figures measure project Economics and are not comparable with the KPMG measures.

The project would be a greenfield open-cut silica sand mine, processing plant and export Facility about 30 kilometres north of Hope Vale, producing three million tonnes a year initially and potentially five million tonnes from year three, for a total of 121 million tonnes of product. Exports would use existing wharf and shiploading infrastructure at the Port of Cape Flattery, subject to commercial arrangements with Ports North and Cape Flattery Silica Mines.

Community context

About 89% of Hope Vale residents identify as Aboriginal and/or Torres Strait Islander, and Unemployment in the Hope Vale and Cook areas was 9.9% in March 2026, against 4.0% statewide. The assessment assumes native title payments equal to 2% of net revenue, about A$195.7 million over the mine life, but no native title agreements have been finalised.

Chief executive Neil McIntyre said the assessment confirmed the project would be of enormous benefit to Cape York and Queensland.

Why these studies matter for approvals

Economic impact assessments are a standard part of major project approvals in Queensland. They help regulators weigh benefits against environmental and social costs. Including an explicit cost for emissions, as KPMG has done, makes the overall analysis more robust and credible.

The road ahead

Construction is scheduled to start in the December quarter of 2028, subject to approvals, with Phase 1 operations planned from the June quarter of 2030. Diatreme says realising the benefits depends on approvals, native title and cultural heritage agreements, port access, offtake, financing and a final Investment decision. Development partner Sibelco has invested about A$56 million in the silica projects and the company. The EIS decision is the next major milestone.