Relinquishment report on blocks dropped at the conclusion of year four of tenure period ending 24 July 2004

Abstract

EL 8819 is located approximately 150km northeast of Daly Waters in the Northern Territory, within the Hodgson Downs 1:250,000 map sheet. The EL was granted to Ashton Mining on 24th July 2000. Ashton Mining Ltd was taken over by Rio Tinto Limited in the 4th quarter of 2000. EL 8819 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 tenements and applications in the Northern Territory. Under this agreement, DMA will conduct predominantly diamond exploration 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 8819 is considered prospective for commercial sources of diamonds. Historic gravel sampling shows that there are unresolved chromite and diamond occurrences in an area of Bukalara Sandstone on a nearby licence. During the past year of tenure, a review of historic exploration data was conducted by Gravity. The surface sampling had identified macrodiamonds, microdiamonds and other indicator mineral occurrences and clusters. On this basis, a Falcon(tm) airborne gravity gradiometer survey was planned and acquired in August and September, 2003. This survey was carried out over a licence to the southeast of EL 8819 but no work was relevant to the relinquished areas.