Annual report on exploration activities for EL 23994 'Tanaburs NE' year 1 of tenure, 8 September 2004 to 7 September 2005

Abstract

EL 23994 'Tanaburs NE' was granted to Gravity Diamonds Ltd ('Gravity') on 8 September 2004. The EL lies within a general area where Gravity is operating a large diamond exploration program, much of which is under an exploration agreement with Rio Tinto group companies and Diamond Mines Australia (DMA), which is a 100%-owned subsidiary of Gravity. During 2003 and 2004, DMA had an exclusive arrangement with BHP Billiton to deploy the Falcon airborne gravity gradiometer system in diamond exploration in Australia. The Falcon system has proved very effective in diamond exploration since its development by BHP Billiton in the late 1990's. During the first year of tenure Falcon data was acquired over part of EL 23994. The system includes airborne gravity gradient data, high resolution magnetics and accurate elevation data derived from on-board differential GPS and laser scanner devices. The area of coverage amounted to approximately 27 km(2) (~295 line kms) . Survey results have been processed and the initial interpretation / target definition process is largely complete. Field follow up is planned during the 2006 dry season.