Annual report on exploration activities for EL 10048 'Scrutton Range' year 2 of tenure, 5 February 2004 to 4 February 2005

Abstract

EL 10048 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 utilising the 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 focussed on diamonds, was conducted by Gravity and a number of anomalous results were noted in and around EL 10048. Owing to the timing of the exploration agreement between DMA and Rio Tinto (late July 2003) field exploration under the agreement did not extend to EL 10048 during the 2003 field season. 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 Tanaburs area located immediately south of EL 10048. Work includes heavy mineral drainage, loam and conventional surface geochemical sampling. Due to exploration prioritisation on adjacent project areas the planned exploration on EL 10048 during the 2004 field season was postponed and subsequently unable to proceed due to the onset of an early wet season. This work is now scheduled to commence in 2005. No onground work was completed in the tenement during year 2.