Interim report
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1 DIATREME RESOURCES LIMITED ABN 33 061 267 061 Financial Report Half year ended 30 June 2026
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CONTENTS Page Corporate directory 1 Directors’ report 2 Auditor’s independence declaration 6 Consolidated statement of profit or loss and other comprehensive income 7 Consolidated statement of financial position 8 Consolidated statement of changes in equity 9 Consolidated statement of cash flows 10 Notes to the financial statements 11 Directors’ declaration 18 Independent auditor’s review report 19 These interim financial statements are general purpose financial statements prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. They do not include all the notes of the type normally included in annual financial statements. Accordingly, these interim financial statements are to be read in conjunction with the annual report for the year ended 31 December 2025 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.
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Corporate Directory Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 1 Directors Brian Flannery, Non-Executive Chairman Karalyn Keys, Non-Executive Director Wayne Swan, Non-Executive Director Cheng (William) Wang, Non-Executive Director Michael Chapman, Non-Executive Director Tom Cutbush, Non-Executive Director Chief Executive Officer Neil McIntyre Company Secretary Tuan Do Registered Office Unit 8, 55-61 Holdsworth Street Coorparoo QLD 4151 Telephone: 07 3397 2222 Email: manager@diatreme.com.au Website: www.diatreme.com.au Share Registry Automic Pty Ltd Level 5, 126 Phillip Street Sydney NSW 2000 Securities Exchange Australian Securities Exchange ASX Code: DRX Auditors William Buck (Qld) Level 22, 307 Queen Street Brisbane QLD 4000
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Directors’ Report Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 2 The directors present their report on the Group consisting of Diatreme Resources Limited (‘the Company ’ or ‘Diatreme’) and the entities it controlled at the end of, or during, the half-year ended 30 June 2026. Directors The following persons were directors of Diatreme Resources Limited during the whole of the half -year and up to the date of this report: Mr Brian Flannery Non-Executive Chairman Ms Karalyn Keys Non-Executive Director Mr Wayne Swan Non-Executive Director Mr William Wang Non-Executive Director Mr Mike Chapman Non-Executive Director Mr Tom Cutbush Non-Executive Director Review of operations Company overview Diatreme Resources Limited (DRX) is a n Australian developer and explorer of mineral/silica sands. The Company is maintaining its focus on advancing development and exploration activities of its Northern Silica Sand Project and Cyclone Zircon Project. Results of operations The net loss of the Group for the half year to 30 June 2026 was $3,024,840 (2025: loss of $727,754). No dividends were proposed or paid during the period (20 25: nil). At 30 June 2026, the Group had $2,732,320 in cash and cash equivalents (31 December 2025: $2,338,919). In addition, the joint venture had $4,522,980 in cash at 30 June 2026. Northern Silica Project During the half -year period, the Company continued to advance its flagship Northern Silica Project (NSP) in Far North Queensland, with significant progress achieved across resource definition, environmental approvals, technical studies, community engagement and strategic project development activities. Key developments during the reporting period included: Environmental Impact Statement (EIS) Progress: Diatreme continued progressing the Environmental Impact Statement (EIS) process for the NSP following lodgement of the Draft Environmental Impact Statement (DEIS) with Queensland’s Office of the Coordinator - General in December 2025. The DEIS is currently undergoing review by the Office of the Coordinator -General, Queensland Government agencies and the Federal Department of Climate Change, Energy, the Environment and Water (DCCEEW). Subject to confirmation that the DEIS adequately addresses the Terms of Reference, the document is expected to proceed to public review and consultation during the second half of 2026 calendar year. The Company continued engagement with government agencies, Traditional Owners, local stakeholders and the broader Hope Vale and Cooktown communities as part of the approvals pathway.
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Directors’ Report Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 3 Significant Mineral Resource Upgrade – Si2 Deposit: In May 2026, Diatreme announced a significant upgrade to the Mineral Resource Estimate (MRE) for the Si2 Deposit, increasing the resource from 272.5 million tonnes to 301.5 million tonnes, representing a 10.6% increase. The updated MRE materially increased resource confidence, with 62% of the resource now classified as measured. The results confirmed continued mineralisation extensions to the south-east and further strengthened Si2 as one of Australia’s largest undeveloped high-purity silica sand resources. The updated geological model incorporated geological, geochemical and optical colour attributes collected through drilling and logging activities. These datasets are expected to support future mine scheduling, product blending strategies and predictive processing studies as the project advances. The upgraded MRE provides the geological foundation for the NSP Pre-Feasibility Study (PFS), which is progressing towards completion. Additional metallurgical testwork is continuing to refine product specifications and confirm suitability for photovoltaic glass, specialty glass and other high-purity silica applications. Maiden Mineral Resource Estimate – Casuarina Resource Area: In June 2026, Diatreme announced a maiden Mineral Resource Estimate for the Casuarina Resource Area of 102.7 million tonnes, further expanding the Company’s Far North Queensland silica sand resource base. The Casuarina Resource Area is located within the Cape Bedford –Cape Flattery Dune Field, adjacent to the Port of Cape Flattery and the operating Cape Flattery Silica Mine. The deposit is being advanced as a separate development opportunity within Diatreme’s broader silica sand portfolio. The maiden MRE provides a strong foundation for future exploration, technical assessment and potential development pathways. With 40.3% of the resource classified as Inferred, further drilling provides potential to grow and upgrade the resource. Following the Si2 and Casuarina resource updates, Diatreme’s total silica sand resource base increased to 632.8 million tonnes across its Far North Queensland projects, positioning the Company as a significant potential supplier of low-iron, high-purity silica sand for solar photovoltaic glass and specialty glass markets. Cape Flattery Silica Project Transaction: During the reporting period, Diatreme completed a strategic restructuring of its Far North Queensland silica assets through the divestment of the Cape Flattery Silica Project (CFSP) into the Diatreme/Sibelco joint venture company, Cape Silica Holdings Pty Ltd (CSH). Following shareholder approval at the Company’s Annual General Meeting held on 29 May 2026, completion of the transaction occurred on 9 June 2026. Under the transaction, Diatreme’s wholly owned subsidiary, Metallica Minerals Pty Ltd, transferred 100% of the issued share capital of Cape Flattery Silica Pty Ltd to CSH in exchange for equity in the joint venture. The transaction consolidates regional si lica assets under a single ownership structure, enabling operating synergies, streamlined environmental activities and enhanced development pathways. Sibelco subscribed approximately $5.1 million for shares in CSH at completion, with a further $4.4 million received following exercise of its call option after the reporting period. As part of the transaction, $2.1 million was paid by CSH to Diatreme at the completion date. Total net funding received by CSH under the transaction was approximately $7.4 million before other transaction costs and applicable stamp duty. The transaction strengthens the funding capacity of the silica joint venture and provides additional support for advancing the NSP through feasibility studies, permitting and approvals.
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Directors’ Report Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 4 Exploration Activities: During the reporting period, Diatreme completed assessment of drilling undertaken between August and December 2025 across the Si2 and Casuarina deposits. The drilling program comprised 83 aircore holes for a total of 2,035 metres, with 524 composite samples analysed to assess dune morphology, deposit thickness, mineralisation continuity and silica quality characteristics. Results supported the existing geological interpretation of the Si2 Deposit and materially improved geological understanding of the Casuarina Resource Area, supporting both the Si2 MRE upgrade and the maiden Casuarina MRE. The Company will continue geological modelling, resource definition, metallurgical testwork and technical studies to support future mine planning and development activities. Community Engagement: Diatreme continued active engagement with the Hope Vale and broader Far North Queensland communities during the reporting period. The Company’s Hope Vale office continued to support community engagement activities, including participation in cultural heritage and environmental assessment programs associated with the NSP EIS. Diatreme continued discussions with Hopevale Congress Aboriginal Corporation (RNTBC), Walmbaar Aboriginal Corporation (RNTBC), affected native title holders and the broader Hope Vale community regarding the establishment of a mining project agreement framework. The Company also continued supporting local initiatives, sponsorships and programs focused on employment, training and education pathways to enhance long-term community participation. Cyclone Zircon/Heavy Mineral (HM) Project During the half-year period, Diatreme continued technical optimisation and strategic evaluation activities for its Cyclone Zircon Project in Western Australia’s Eucla Basin. Metallurgical Testwork and Project Optimisation: In March 2026, Diatreme announced completion of metallurgical testwork undertaken by Mineral Technologies (MT) on bulk samples from the Cyclone Project, demonstrating significant improvements in projected mineral recoveries and product outcomes. The optimised processing flowsheet incorporated improvements from Wet Concentrator Plant (WCP) and Mineral Separation Plant (MSP) testwork, including recovery improvements from an 8 -tonne bulk sample representing the initial years of mining. The updated testwork resulted in forecast increases in life-of-mine production, including: • Heavy Mineral Concentrate (HMC) production increasing by 58.3% to 3.2 million tonnes; • Zircon concentrate production increasing by 6.8% to 866 thousand tonnes; and • Titanium mineral concentrate production increasing by 95.6% to 1.6 million tonnes. The improved outcomes provide an enhanced technical basis for future project development discussions with potential partners, investors and customers. During the period, Diatreme continued assessment of strategic pathways to maximise shareholder value from Cyclone, including potential joint venture arrangements, project sale opportunities, offtake discussions and consideration of a separate corporate vehicle or asset spin-out structure.
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Directors’ Report Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 5 The Company also engaged with potential development partners, investors and government funding bodies through critical minerals industry forums and trade missions in Japan and the United States. Further technical reviews, validation testwork and site assessments are planned to support future development decisions. Corporate During the half-year period, Diatreme continued to strengthen its corporate position and financial capacity while maintaining focus on its core silica sand and critical minerals assets. Diatreme appointed Mr Brian Flannery as Chair effective 17 June 2026, with outgoing Chair Mr Wayne Swan remaining as a Non-Executive Director. Mr Flannery brings extensive mining and project development experience to support the Company through the approvals, financing and development pathway for the NSP. The Company held its Annual General Meeting on 29 May 2026, with all resolutions passed by poll. Diatreme secured a further 12 -month extension of its existing $1.0 million debt facility, extending the maturity date to 30 May 2027. During the period, the Company completed the strategic divestment of the CFSP, received reimbursement of approximately $2.1 million for agreed costs associated with the transaction, and strengthened its financial position through additional joint venture funding. The Company’s cash and cash equivalents totalled $2.7 million as at 30 June 2026 (including a further $4.5 million held within the silica projects joint venture), providing total available cash of approximately $7.2 million. During the period, Diatreme made total payments of $115,000 to related parties, comprising $88,000 of director fees and $27,000 for specialist marketing consultancy services provided by a related party of one director. Events subsequent to reporting date Subscription of additional shares in Cape Silica Holdings Pty Ltd On 7 July 2026, Sibelco Silica Pty Ltd exercised its call option and subscribed for additional ordinary shares in Cape Silica Holdings Pty Ltd (CSHPL) in accordance with the subscription arrangements entered into during the reporting period. As a result, CSHPL received an additional subscription of $4.4 million (refer to the ASX announcement dated 8 July 2026). The transaction did not result in a change in joint control. Accordingly, the Group continues to account for its investment in CSH using the equity method. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6. This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001. Brian Flannery Non-Executive Chairman Brisbane, 31 August 2026
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Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 6 Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the directors of Diatreme Resources Limited As lead auditor for the review of the financial report of Diatreme Resources Limited for the half-year ended 30 June 2026, I declare that, to the best of my knowledge and belief, there have been: no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and no contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of Diatreme Resources Limited and the entities it controlled during the period. William Buck (Qld) ABN 21 559 713 106 Junaide Latif Partner Brisbane, 31 August 2026
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Consolidated Statement of Profit or Loss and Other Comprehensive Income For the half year ended 30 June 2026 Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 7 Note 30 June 2026 $ 30 June 2025 $ Revenue 23,269 88,294 Share of profit in joint venture - 42,966 Other income 176,942 143,020 Sale of IP - 568,305 Total revenue and income 200,211 842,585 Employee benefits expenses (597,407) (585,141) Depreciation expense (93,789) (159,307) Exploration expenditure written off - (922) Share based payment expense Share of loss in joint venture 6 - (185,192) (62,006) - Other expenses (1,081,219) (705,638) Finance costs (67,860) (57,325) Loss on disposal of Cape Flattery Silica Pty Ltd 5 (1,199,584) - Total expenses (3,225,051) (1,570,339) Loss before income tax (3,024,840) (727,754) Income tax expense - - Net loss for the half-year attributable to owners (3,024,840) (727,754) Other comprehensive income for the half-year, net of tax - - Total comprehensive loss for the half-year attributable to owners (3,024,840) (727,754) Cents Cents Loss per share Basic loss per share (0.06) (0.01) Diluted loss per share (0.06) (0.01) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
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Consolidated Statement of Financial Position At 30 June 2026 Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 8 Note 30 Jun 31 Dec 2026 $ 2025 $ Current assets Cash and cash equivalents 2,732,320 2,338,919 Trade and other receivables 119,804 206,004 Total current assets 2,852,124 2,544,923 Non-current assets Investment in joint venture 6 68,582,712 39,490,412 Investment in listed equity securities Property, plant and equipment 14 2,600,000 488,642 2,681,250 573,540 Right-of-use assets 163,710 32,910 Exploration and evaluation assets 7 16,883,935 49,130,201 Other assets 54,140 54,139 Total non-current assets 88,773,139 91,962,452 Total assets 91,625,263 94,507,375 Current liabilities Trade and other payables 924,425 939,798 Borrowings 8 1,018,750 1,016,875 Lease liabilities 69,438 37,810 Provisions 248,034 220,743 Total current liabilities 2,260,647 2,215,226 Non-current liabilities Lease liabilities 94,272 - Provisions 13,525 10,490 Total non-current liabilities 107,797 10,490 Total liabilities 2,368,444 2,225,716 Net assets 89,256,819 92,281,659 Equity Issued capital 9 124,320,539 124,320,539 Reserves 10 1,347,006 1,347,006 Accumulated losses (36,410,726) (33,385,886) Total equity 89,256,819 92,281,659 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
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Consolidated Statement of Changes in Equity For the half year ended 30 June 2026 Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 9 Issued capital $ Share based payments reserve $ Accumulated losses $ Total equity $ At 1 January 2025 124,320,539 1,260,752 (32,640,931) 92,940,360 Total comprehensive income: Loss for the half-year - - (727,754) (727,754) Transactions with owners in their capacity as owners: Options and performance rights issued - 62,006 - 62,006 At 30 June 2025 124,320,539 1,322,758 (33,368,685) 92,274,612 Issued capital $ Share based payments reserve $ Accumulated losses $ Total equity $ At 1 January 2026 124,320,539 1,347,006 (33,385,886) 92,281,659 Total comprehensive income: Loss for the half-year - - (3,024,840) (3,024,840) Transactions with owners in their capacity as owners: Options and performance rights issued - - - - At 30 June 2026 124,320,539 1,347,006 (36,410,726) 89,256,819 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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Consolidated Statement of Cash Flows For the half year ended 30 June 2026 Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 10 30 June 2026 $ 30 June 2025 $ Cash flows from operating activities Payments to suppliers and employees (1,479,813) (1,367,099) Interest received 23,269 128,727 Finance costs (52,500) (41,482) Other income 154,557 711,093 Net cash outflow from operating activities (1,354,487) (568,761) Cash flows from investing activities Proceeds from sale of Cape Flattery Silica Pty Ltd 2,109,018 - Cash disposed from sale of Cape Flattery Silica Pty Ltd (7,378) - Payments for plant & equipment (2,516) (10,474) Payments for exploration and evaluation assets (313,426) (702,829) Net cash outflow from investing activities 1,785,698 (713,303) Cash flows from financing activities Repayments of lease liabilities (37,810) (84,002) Net cash inflow (outflow) from financing activities (37,810) (84,002) Net Increase/(decrease) in cash and cash equivalents 393,401 (1,366,066) Cash and cash equivalents at the beginning of the half-year 2,338,919 5,187,296 Cash and cash equivalents at the end of the half-year 2,732,320 3,821,230 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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Notes to the Financial Statements 1. REPORTING ENTITY These consolidated interim financial statements (‘interim financial statements’) for the half year to 30 June 2026 comprise Diatreme Resources Limited ( ‘Diatreme’ or ‘the Company’) and the entities it controlled during or at the end of the half year ended 30 June 2026 (‘the Group’). 2. BASIS OF PREPARATION Statement of Compliance These interim financial statements are general purpose financial statements prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. Compliance with AASB 134 ensures compliance with the International Financial Reporting Standard IAS 34 Interim Financial Reporting . The Group is a for-profit entity for financial reporting purposes under the Australian Accounting Standards. They do not include all the notes of the type normally included in annual financial statements. Accordingly, these interim financial statements are to be read in conjunction with the annual report for the year ended 31 December 2025 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. Unless otherwise stated in the financial statements, the principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period. These interim financial statements were authorised for issue by the Company’s Board of Directors on 31 August 2026. Critical accounting estimates and judgements The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Share-based payment transactions: The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of options and performance rights is determined using either the Binomial or Monte Carlo Simulation Models taking into account the terms and conditions upon which the instruments were granted. Exploration and evaluation assets: The application of the Group’s accounting policy for exploration and evaluation assets requires judgement in determining whether it is likely that future economic benefits are likely either from future exploitation or sale where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. Sale of Cape Flattery Silica Pty Ltd During the half-year, the Group transferred its wholly owned subsidiary, Cape Flattery Silica Pty Ltd ("CFS"), to Cape Silica Holdings Pty Ltd ("CSHPL"), a jointly controlled entity accounted for using the equity method. Management exercised judgement in determining that the transaction represented a downstream transaction with a joint venture within the scope of AASB 128 Investments in Associates and Joint Ventures , rather than an internal group reorganisation. Accordingly, the loss arising from the transaction has been recognised only to the extent of the interests of unrelated investors in CSHPL, with the remaining portion eliminated against the carrying amount of the Group's investment in CSHPL. Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 11
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Notes to the Financial Statements Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 12 Management also considered the requirements of AASB 128.29 and AASB 6 Exploration for and Evaluation of Mineral Resources and concluded that the transaction did not provide evidence of impairment of the exploration and evaluation assets transferred. Going concern The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The Group has incurred a net loss after tax for the half year ended 30 June 2026 of $3,024,840 and a net cash outflow from operations of $1,354,487. The Group’s ability to continue as a going concern is dependent on the successful raising of additional funding through equity and the extension of existing debt facilities. These factors give rise to material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern. The Directors have considered the Group’s current financial position, cash flow forecasts, and business outlook. While the Group has incurred operating losses, the Directors are confident in the Group’s ability to meet its obligations as and when they fall due. This confidence is supported by the Group’s track record in raising capital and/or realising value through the partial sale or joint venture of exploration assets, should the need arise. Accordingly, the Directors believe it is appropriate to prepare the financial statements on a going concern basis. These financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts, nor to the amounts or classification of liabilities, which may be required if the Group were unable to continue as a going concern 3. MATERIAL ACCOUNTING POLICY INFORMATION Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. They do not have a material impact on the Group’s financial statements. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. 4. SEGMENT INFORMATION The Group currently operates in one business segment and one geographical segment, namely exploration for heavy mineral sands and base metals in Australia. The revenues and results of this segment are those of the Group as a whole and are set out in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
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Notes to the Financial Statements Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 13 5. SALE OF CFS During the half-year, the Group completed the sale of all of the issued shares in CFS, a wholly owned subsidiary, to CSHPL, the Group's jointly controlled entity. The transaction formed part of the Group's strategy to consolidate its silica sand assets within CSHPL, which is accounted for using the equity method in accordance with AASB 128 Investments in Associates and Joint Ventures. Under the Share Sale Agreement, the Group transferred its shares in CFS to CSHPL in exchange for 2,220 ordinary shares in CSHPL issued to Diatreme. In addition, CSHPL reimbursed the Group $2,109,018 for historical transaction costs incurred in connection with the acquisition of Metallica Minerals Limited , the parent company of CFS. The consideration received was as follows: $ Fair value of CSHPL shares received (Note 6) 26,001,017 Cash for reimbursement of transaction costs 2,109,018 Total consideration received 28,110,035 The shares received consist of 2,220 CSHPL shares valued at $11,712 per share. This fair value per share is determined based on the latest subscription of CSHPL shares by Sibelco Silica Pty Ltd. The carrying amount of the net assets disposed of was $32,586,094, resulting in a total accounting loss on disposal of $4,476,059 before applying the downstream transaction requirements of AASB 128. The carrying amount of net assets disposed comprises of: $ Cash at bank 7,378 Property, plant and equipment 26,788 Exploration and evaluation assets 32,551,928 Total net assets disposed 32,586,094 As the disposal was made to a joint venture accounted for using the equity method, AASB 128 requires gains and losses arising from downstream transactions to be recognised only to the extent of unrelated investors' interests in the joint venture. Accordingly, $1,199,584 of the loss has been recognised in the Consolidated Statement of Profit or Loss, representing the portion attributable to the unrelated joint venture participant. The remaining $3,276,475 has been eliminated against the carrying amount of the Group's investment in CSHPL. The recognised loss is reconciled as follows: $ Carrying amount of net assets disposed (32,586,094) Fair value of CSHPL shares received (Note 6) 26,001,017 Reimbursement of transaction costs 2,109,018 Total consideration received 28,110,035 Loss before AASB 128 adjustment (4,476,059) Unrealised portion eliminated against investment in CSHPL (Note 6) 3,276,475 Loss recognised in profit or loss (1,199,584) Following completion of the transaction, CFS became a wholly owned subsidiary of CSHPL and ceased to be consolidated by the Group.
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Notes to the Financial Statements Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 14 6. INVESTMENT IN JOINT VENTURE Cape Silica Holdings Pty Ltd (CSHPL) On 1 December 2022, Diatreme Resources Limited and Sibelco Silica Pty Ltd (Sibelco) entered a Shareholder’s Deed outlining the intent of the parties to conduct a joint venture for the purposes of exploring and developing silica sand assets in the Cape Flat tery and Cape Bedford regions. Sibelco subscribed for a 9.99% interest in CSHPL for AU$11 million. At this date the Group’s control of CSHPL ceased; the remaining interest in the entity is accounted for using the equity method in the consolidated financial statements. On 17 October 2023 Sibelco subscribed for a further 16.8% in CSHPL for AU$24 million, for a total of 26.8% interest in CSHPL. Set out below is the joint venture of the group as at 3 0 June 2026 which, in the opinion of the directors, is material to the group. The entity listed below has share capital consisting solely of ordinary shares, which are held directly by the group. The country of incorporation or registration is also their principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held. Name of Entity Place of business/ country of incorporation % of ownership interest Nature of relationship Measurement method Carrying Amount Jun 2026 Dec 2025 Jun 2026 Dec 2025 % % $ $ Cape Silica Holdings Pty Ltd Australia 73.2 73.2 Joint Venture (1) Equity Method 68,582,712 39,490,412 (1) A joint venture between Diatreme Resources Ltd and Sibelco Silica Pty Ltd. (2) During the half-year, the Group transferred Cape Flattery Silica Pty Ltd to CSHPL in exchange for additional ordinary shares in CSHPL. The investment continues to be accounted for as a joint venture using the equity method. Half year from Full year from 1 Jan 2026 - 1 Jan 2025 - 30 Jun 2026 31 Dec 2025 $ $ Reconciliation of carrying amount in joint venture Opening balance Fair value of CSHPL shares received (Note 5) Elimination of unrealised downstream loss (AASB 128) (Note 5) 39,490,412 26,001,017 3,276,475 39,449,507 - - Share of (loss)/profit in joint venture for the period (185,192) 40,905 68,582,712 39,490,412 The elimination of the unrealised downstream loss represents the portion of the loss arising from the transfer of Cape Flattery Silica Pty Ltd that is not recognised under AASB 128 because it relates to the Group's retained interest in CSHPL. This amount has been reflected in the carrying amount of the investment in CSHPL .
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Notes to the Financial Statements Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 15 7. EXPLORATION AND EVALUATION ASSETS 30 Jun 2026 31 Dec 2025 $ $ Exploration and evaluation assets – at cost less impairment 16,883,935 49,130,201 Opening balance 49,130,201 49,594,306 Disposal of subsidiaries – Chalcophile Resources Pty Ltd and PGE Minerals Pty Limited Disposal of subsidiary – Cape Flattery Silica Pty Limited - (32,551,928) (1,363,037) - Costs capitalised during the period 305,662 898,932 16,883,935 49,130,201 8. BORROWINGS 30 Jun 2026 31 Dec 2025 $ $ Unsecured loan 1,018,750 1,016,875 Total borrowings 1,018,750 1,016,875 During the period the Company extended the loan for further 12 months to 30 May 2027. The loan's interest rate of 7.5% per annum remains unchanged. 9. ISSUED CAPITAL 30 Jun 2026 31 Dec 2025 $ $ 5,008,281,841 (Dec 2025: 5,008,281,841) ordinary shares 124,320,539 124,320,539 (a) Movements in ordinary share capital: 30 Jun 2026 30 Jun 2026 31 Dec 2025 31 Dec 2025 Number of shares $ Number of shares $ Balance at start of the reporting period 5,008,281,841 124,320,539 5,008,281.841 124,320,539 Shares issued during the period - - - - Total issued capital at reporting period 5,008,281,841 124,320,539 5,008,281,841 124,320,539 10. SHARE-BASED PAYMENTS RESERVE 30 Jun 2026 31 Dec 2025 $ $ Opening balance 1,347,006 1,260,752 Options expense - 86,254 1,347,006 1,347,006 Nature and purpose of share-based payment reserve The share-based payment reserve is used to recognise the fair value of options issued to the directors and other KMP. The Group provides benefits in the form of share-based payment transactions as follows:
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Notes to the Financial Statements Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 16 Type Holder(s) Services provided Options to directors Directors Employment – corporate governance Options to other KMP CEO and CFO & Company Secretary (CFO) Employment – incentive with vesting conditions Grant Date Holder(s) Type Number of instruments at 1 Jan 2026 Granted in current period Vested and shares issued Lapsed in current period Closing balance as at 30 June 2026 Weighted average exercise price 27 May 2021 Directors Options 30,000,000 - - (30,000,000) - - 26 May 2022 Directors Options 10,000,000 - - - 10,000,000 0.031 25 July 2022 CEO and CFO Options 20,000,000 - - - 20,000,000 0.040 8 August 2023 Directors Options 10,000,000 - - - 10,000,000 0.040 11. CONTINGENCIES There are no contingent liabilities (31 December 2025: nil) as at the reporting date. 12. COMMITMENTS Tenement expenditure commitments So as to maintain current rights to tenure of exploration tenements, the Group will be required to outlay amounts in respect of tenement rent to the relevant governing authorities and to meet certain annual exploration expenditure commitments. These outlays (exploration expenditure and rent), which arise in relation to granted tenements are as follows: 30 Jun 2026 $ 31 Dec 2025 $ Payable within 1 year 118,756 105,028 Payable between one and five years 1,088,230 1,063,347 1,206,986 1,168,375 The outlays may be varied from time to time, subject to approval of the relevant government departments, and may be relieved if a tenement is relinquished. At 30 June 2026 cash security bonds totalling $22,000 were held by the relevant governing authorities to ensure compliance with granted tenement conditions (31 Dec 2025: $22,688). 13. EVENTS SUBSEQUENT TO REPORTING DATE Subscription of additional shares in Cape Silica Holdings Pty Ltd On 7 July 2026, Sibelco Silica Pty Ltd exercised its call option and subscribed for additional ordinary shares in Cape Silica Holdings Pty Ltd (CSHPL) in accordance with the subscription arrangements entered into during the reporting period. As a result, CSHPL received an additional subscription of $4.4 million (refer to the ASX announcement dated 8 July 2026). The transaction did not result in a change in joint control. Accordingly, the Group continues to account for its investment in CSH using the equity method.
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Notes to the Financial Statements Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 17 14. Fair value measurement Fair value hierarchy The following tables detail the consolidated entity's assets, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability Level 1 Level 2 Level 3 Total Consolidated - 30 June 2026 $'000 $'000 $'000 $'000 Assets Investment in listed equity securities 2,600,000 - - 2,600,000 Total assets 2,600,000 - - 2,600,000 Level 1 Level 2 Level 3 Total Consolidated - 31 December 2025 $'000 $'000 $'000 $'000 Assets Investment in listed equity securities 2,681,250 - - 2,681,250 Total assets 2,681,250 - - 2,681,250 Investment in listed equity securities consist of ordinary shares listed on the Australian Securities Exchange. They are carried at fair value through profit or loss.
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Notes to the Financial Statements Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 18 DIRECTORS’ DECLARATION The Directors declare that the financial statements and notes set out on pages 7 to 17 are in accordance with the Corporations Act 2001 and: (a) comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) give a true and fair view of the consolidated entity’s financial position as at 30 June 20 26 and of its performance for the half-year ended on that date. In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Directors and is signed for and on behalf of the Directors by: Brian Flannery Non-executive Chairman Brisbane, 31 August 2026
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Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 19 Independent auditor’s review report to the members of Diatreme Resources Limited Report on the half-year financial report Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of Diatreme Resources Limited (the Company), and its subsidiaries (the Group) does not comply with the Corporations Act 2001, including: giving a true and fair view of the Group’s financial position as at 30 June 2026 and of its financial performance for the half-year then ended; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. What was reviewed? We have reviewed the accompanying half-year financial report of the Group, which comprises: the consolidated statement of financial position as at 30 June 2026, the consolidated statement of profit or loss and other comprehensive income for the half- year then ended, the consolidated statement of changes in equity for the half-year then ended, the consolidated statement of cash flows for the half-year then ended, notes to the financial statements, including material accounting policy information, and the directors’ declaration. Basis for conclusion We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s responsibilities for the review of the financial report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
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Diatreme Resources Limited Financial Report for the half year ended 30 June 2026 20 Material uncertainty related to going concern We draw attention to Note 2 in the financial report, which indicates that the Group incurred a net loss after tax of $3,024,840 during the half year ended 30 June 2026 and had net cash outflows from operating activities of $1,354,487 for the half year. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our conclusion is not modified in respect of this matter. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor’s responsibilities for the review of the financial report Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 30 June 2026 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. William Buck (Qld) ABN 21 559 713 106 Junaide Latif Partner Brisbane, 31 August 2026