Mount Eleanor, Hodgson Basin Region NT, Relinquishment report on blocks dropped at the conclusion of year two of tenure period ending 23 July 2004 for EL 22397

Abstract

EL 22397 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 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 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. 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. The area was reviewed when results from Larrimah Falcon(tm) survey were finalised and it was decided that the northern section of EL 22397 did not warrant further work and this section was relinquished.