Diatreme Resources (ASX:DRX) unit Metallica Minerals agreed to sell the Cape Flattery Silica project in Queensland to Cape Silica Holdings, a joint venture between Diatreme and Sibelco Silica, in exchange for additional shares in the JV, according to a Monday filing with the Australian bourse.

The deal values the project at about AU$26 million, and allows Diatreme to rationalize its project ownership and boost funding and synergies for its flagship Northern Silica project, per the filing.

Sibelco Silica, which holds 26.8% of the JV, will contribute up to about AU$9.5 million in exchange for shares in Cape Silica in a manner that potentially allows Sibelco to retain its current interest. On completion, Sibelco will subscribe for about AU$5.1 million worth of shares in the JV and will receive an option for an additional AU$4.4 million of shares, exercisable before July 7.

Using those funds, the JV will reimburse Diatreme around AU$2.1 million for costs associated with the takeover of Metallica, which was completed in September 2024, according to the filing.

The deal is subject to Diatreme shareholder approval.

Shares of Diatreme gained 6% in recent Monday trading.