Relinquishment report on blocks dropped at the conclusion of Year two of tenure for period ending 25 July 2004 for EL 22333

Abstract

EL 22333 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 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. 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. The timing of the divestment arrangement with DMA during year two of tenure precluded the instigation of field exploration activities during 2003 Gravity Capital completed an assessment of the compilation work carried by Rio Tinto and concluded that the area was not of sufficient priority to warrant a Falcon(tm) survey in the initial stages of the DMA-Rio Tinto farmin arrangement. It was decided that the southern section of EL 22333 did not warrant further work and this section was relinquished.