Annual report on exploration activities, year eight of tenure, 1 November 2003 to 31 October 2004

Abstract

EL 9669 Cox River forms part of a farm in 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 airborne gravity gradiometer system to detect kimberlite pipes. Gravity Diamonds Ltd is managing the farm in arrangement for Diamond Mines Australia and owns 40% of DMA. During the eight years of tenure, on the basis of encouraging diamond sampling data from nearby tenements, a Falcon airborne gravity gradiometer survey was flown over a substantial part of the Cox River tenement. The survey was completed on September 27th, 2003 and acquired a total of 5153 linear kilometres of gravity gradiometer, magnetics, and laser scanner data. Approximately 10% of this survey was contained within EL 9669. Data was processed by BHP Billiton s Falcon Operations Group and delivered to Gravity Diamonds in November 2003. BHP Billitons Falcon Operations Group has identified a number of gravity gradient and magnetic anomalies that may indicate the presence of kimberlite pipes. The majority of the anomalies are gravity gradient lows. No coincident magnetic and gravity gradient anomalies have been identified Detailed interpretation, anomaly ranking and exploration targeting from the Falcon data by Gravity Diamonds is nearing completion, with several target areas already identified for follow-up work. Statutory requirements for field access and approvals for work programs are currently being finalised and it is envisaged that testing of these targets will commence during the current field season.