Relinquishment report on blocks dropped at the conclusion of year two of tenure for EL 10072 'Waterloo', period ending 10 April 2005

Abstract

EL 10072 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 ('Gravity') is managing the farmin arrangement for DMA which is a wholly owned subsidiary of Gravity. During the initial year of tenure, a review of historic exploration data, including surface sampling focussed on diamonds, was conducted by Gravity and a number of anomalous results were noted in and around EL 10072. The planned program for EL 10072 during 2004 was contingent on Gravity achieving access clearance for follow up of Falcon survey targets in the nearby Tee Dee Hill area which, like EL 10072 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 10072 during the 2004 field season. No on-ground work was completed in the tenement during year 2. This Report is in respect of the one hundred and sixty-four (164) blocks relinquished from EL 10072 at the conclusion of Year 2.