Relinquishment report on blocks dropped at the conclusion of year 3 of tenure, period ending 24 February 2005, EL 22332 Sailor Creek

Abstract

EL 22332 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 a 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. The planned program for EL 22332 during 2004 was contingent on Gravity Diamonds achieving access clearance for follow up of Falcon survey targets in the nearby Tee Dee Hill area which, like EL 22332 forms part of the original Rio Tinto 'Victoria Project Area'. Gravity was not able to get the required access clearances and this resulted in the postponement of planned exploration on EL 22332 during the 2004 field season. No onground work was completed in the tenement during year 3. This Report is in respect of the one hundred and fifty-one (151) blocks relinquished from EL 22332 at the conclusion of Year 3.