Relinquishment report on blocks dropped at the conclusion of year three of tenure, period ending 24 February 2005, EL 22339 Roper Valley

Abstract

EL 22339 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 is conducting predominantly diamond exploration over the tenements and is utilising the Falcon(tm) airborne gravity gradiometer system, to detect kimberlite pipes. Gravity Diamonds Ltd is managing the farmin arrangement for Diamond Mines Australia which is a wholly owned subsidiary of Gravity. During the first year of tenure, Rio Tinto conducted a thorough review of historic exploration data, including considerable surface sampling focussed on diamonds, and recommended divestment of the tenement. The timing of the divestment arrangement with DMA during year two of tenure precluded the instigation of field exploration activities during 2003. Gravity Diamonds conducted extensive field based programmes during the 2004 field season. These work programmes focussed on a number of targets defined by the Falcon(tm) airborne gravity gradiometer surveys within the Larrimah area located approximately 70 km south west of EL 22339. Work in that area included heavy mineral drainage, loam, conventional surface geochemical sampling and drilling. Due to exploration prioritisation on Larrimah project area the planned exploration on EL 22339 during the 2004 field season was postponed. No on-ground work was completed in the tenement during year 3. This Report is in respect of the forty-one (41) blocks relinquished from EL 22339 at the conclusion of Year 3.