Annual report on exploration activities for EL 8915 'Tee Dee Hill', year five of tenure, 7 June 2004 to 6 June 2005

Abstract

EL 8915 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 is conducting predominantly diamond exploration over the tenements utilising the newlydeveloped Falcon(tm) airborne gravity gradiometer system, which has been shown to be very effective in detecting kimberlite pipes. Gravity Diamonds Ltd ('Gravity') is managing the farmin arrangement for Diamond Mines Australia and owns 100% of DMA. During the initial stages of the farmin arrangement, a review of historic exploration data, including considerable surface sampling focussed on diamonds, was conducted by Gravity and numerous anomalous results were noted. On this basis, a Falcon(tm) survey was planned to cover the central part of EL 8915. Flying was conducted in November-December 2003 and results were received by Gravity in May 2004. Interpretation and exploration targeting were completed during 2004 and proposed field programmes were submitted to the Northern Land Council to obtain Traditional Owner approval. The NLC was not able to process Gravity's field programme proposal in 2004, but approval to proceed was received in early 2005 and field testing of kimberlite targets is scheduled for August-September 2005.