Relinquishment Report on blocks dropped at the conclusion of year two of tenure period ending 20 May 2004

Abstract

EL 10040 forms part of a farmin agreement between Rio Tinto Exploration Pty Ltd ('Rio Tinto') and Diamond Mines Australia Pty Ltd ('DMA'). Under this agreement, DMA will conduct predominantly diamond exploration over the tenements and will utilising the Falcon(tm) airborne gravity gradiometer system to detect kimberlite pipes. Gravity Capital Ltd is managing the farmin arrangement for Diamond Mines Australia and owns 40% of DMA. 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. This Report is in respect of the eighteen (18) blocks relinquished from EL 10040 at the conclusion of Year 2. No work was conducted on the ground and Falcon was not flown over this area.