Annual report on exploration activities for EL 22732 'Mt Young', year three of tenure, 26 September 2004 to 25 September 2005

Abstract

EL 22732 'Mt Young' was acquired by Gravity Capital Limited from BHP Billiton soon after it was granted, as part of a diamond exploration venture involving Gravity, Gravity's 100%- owned subsidiary, Diamond Mines Australia Pty Ltd and BHP Billiton. These companies also have a diamond exploration arrangement with Rio Tinto Exploration covering a large number of Rio Tinto-controlled tenements in the Northern Territory. During the second year 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 Mt Young tenement. The field survey was completed in September, 2003 and acquired a total of 5153 linear kilometres of gravity gradiometer, magnetics, and laser scanner data. Approximately 25% of this survey was contained within EL 22732. Data was processed by BHP Billiton's Falcon Operations Group and delivered to Gravity Capital in November 2003. BHP Billiton's Falcon Operations Group has identified a number of gravity gradient and magnetic anomalies that may indicate the presence of kimberlite pipes. Detailed interpretation, anomaly ranking and exploration targeting from the Falcon data by Gravity Capital was completed during 2004. Gravity Capital Ltd changed its name to Gravity Diamonds Ltd late in 2004 to reflect its sole emphasis on diamond exploration and development. Several target areas were identified from the Falcon survey as requiring ground follow-up work. Statutory requirements for field access and approvals for work programs were not finalised until early 2005 and field testing of these targets is scheduled to commence during the current field season.