Annual report on exploration activities year two of tenure 20 January 2004 to 19 January 2005

Abstract

EL 9926 forms part of a farmin agreement between Rio Tinto Exploration Pty Ltd ('Rio Tinto') and Diamond Mines Australia Pty Ltd ('DMA') covering numerous Rio Tinto controlled tenements and applications in the Northern Territory. Under this agreement, DMA will conduct predominantly diamond exploration over the tenements and utilising the newly-developed Falcon(tm) airborne gravity gradiometer system to detect kimberlite pipes. Gravity Diamonds Ltd is managing the farmin arrangement for Diamond Mines Australia and owns 40% of DMA. During the initial year of tenure, a review of historic exploration data, including surface sampling focused on diamonds, was conducted by Gravity and a number of anomalous results were noted in and around EL 9926. The field program for Year 1 of the joint venture, which comprised flying Falcon(tm) airborne gravity gradiometer surveys was focused on a number of areas, including the 'Abner Range' area located approximately 10 km to the east of EL 9926. Due to exploration prioritisation on adjacent project areas and the onset of an early wet season the planned exploration on EL 9926 during the 2004 field season was postponed and subsequently unable to proceed. This work is now scheduled to commence in 2005. No onground work was completed in the tenement during year 2.