Final report on exploration activities for EL 10040 'Wave Hill' Victoria River Region, NT

Abstract

EL 10040 was granted to Ashton Mining Ltd, a wholly owned subsidiary of the Rio Tinto Group ('Rio Tinto'), on 21 May 2002. Rio Tinto was at that time in negotiation with Gravity Diamonds Limited ('Gravity') concerning the deployment of the Falcon(tm) airborne gravity gradiometer system over Rio Tinto's diamond tenements in northern Australia. The Falcon(tm) system is a unique exploration tool developed by BHPB and it has particular application in diamond exploration. BHPB and Gravity concluded an arrangement on Falcon(tm) deployment in Australia during the year (ASX announcement 01/07/2003) and then formed a farmin joint venture, through its 100% owned associated company, Diamond Mines Australia Pty Ltd ('DMA') with Rio Tinto Exploration, concerning the diamond and base metal exploration over a large number of Rio Tinto-controlled tenements in the Northern Territory) (ASX announcement 25/07/2003). On the basis of these agreements, Gravity (on behalf of DMA) commenced diamond exploration in the Northern Territory during July 2003. In essence, the agreements provide for DMA to deploy the Falcon(tm) system and earn an interest in any discovery. BHP Billiton retains a right to buy into DMA's interest in any discovery. Gravity is managing all exploration for DMA. The flying program carried out in 2003 was focussed on areas of strongly anomalous diamond indicator mineral sampling results, obtained from Rio Tinto and surveys were conducted in the McArthur, Hodgson and Arnhem Land regions of the NT as well is in the Victoria River region which is the general locality of EL 10040. EL 10040 was not covered in the Victoria River survey, the closest flying being at Tee Dee Hill some 90 kilometres to the northwest. While the principal target in the area is diamonds, some interest was also directed toward base metal deposits.