Annual report on exploration activities for EL 22333, year two of tenure, period ending 24th July 2004

Abstract

EL 22333 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 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. EL 22333 is included in a large group of Rio Tinto controlled tenements in the Victoria River region in the northwest of the Northern Territory referred to as the 'Victoria Diamond Programme'. During the first year of tenure, Rio Tinto conducted 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. Falcon has not been flown over EL 22333.