Final report on exploration activities for EL 10296 'Fraynes 2', Victoria River Region, NT

Abstract

EL 10296 formed part of a farmin agreement between Ashton Mining Limited ('Ashton') andDiamond 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 first year of tenure, North Mining, the then holder of the licence, conducted a thorough a review of historic exploration data, including considerable surface sampling focussed on diamonds, and recommended divestment of the tenements. The timing of the divestment arrangement with DMA during year two of tenure precluded the instigation of field exploration activities on the EL during 2003. The planned program for EL 10296 during 2004 was contingent on Gravity achieving access clearance for follow up of Falcon survey targets in the nearby Tee Dee Hill area which, like the above EL, forms part of the original Rio Tinto 'Victoria Project Area'. Gravity was not able to get the required access clearances and this resulted in the postponement of planned exploration on EL 10296 during the 2004 field season. No on-ground work was completed in the tenement during year 3. A 50% reduction in the area of EL 10296 was made at the conclusion of Year 3. Gravity handed back EL 10296 to Ashton in March 2005 because other tenements in the farmin arrangement were deemed to have much higher priority. The licence was subsequently surrendered by Ashton on 18 April 2005. There was no further work undertaken by Ashton from the time the licence was handed back in March 2005 and the date of surrender on 18 April 2005.