Annual report on exploration activities for EL 22328 'Pear Tree Creek', year two of tenure, period ending 10 April 2005

Abstract

EL 22328 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, which 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 22328. The planned program for EL 22328 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 22328 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 22328 during the 2004 field season. No onground work was completed in the tenement during year 2. This work is now scheduled to commence in 2005. The tenement however is considered to be prospective for diamondiferous kimberlite pipes on the basis of its geological setting, its general proximity to the Timber Creek kimberlites and because positive indicator mineral results have been returned from sampling on neighboring tenements.