Relinquishment report on blocks dropped at the conclusion of year five of tenure for EL 5953 'Mt Lean', period ending 2 August 2005

Abstract

EL 5953 forms part of a farmin agreement between Rio Tinto Exploration Pty Ltd ('RioTinto') 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 Falcon airborne gravity gradiometer system to detect kimberlite pipes. Gravity Diamonds Ltd is managing the farmin arrangement for Diamond Mines Australia and owns 100% of DMA. During the first reporting period Rio Tinto completed reconnaissance drainage sampling for kimberlite indicator minerals. This sampling returned grains of chromite, garnet, ilmenite and picroilmenite but no micro diamonds. It was interpreted that the chromite, garnet and ilmenite were of crustal origin, while the picroilmenite might be sourced from kimberlite. Subsequent work by Rio Tinto consisted of a review of the exploration data for EL 5953 relative to its Australia-wide diamond exploration tenement holdings. During year 4 of tenure (2003-2004), a portion of the tenement was flown with the Falcon system. The survey covered an area of approximately 75 km(2) (825 line kms) at the southern margin of the tenement with the greater part of the survey being over the neighbouring tenement to the south, which is also included in the farmin agreement between Rio Tinto and DMA. The area covered by the survey does not fall within the area relinquished. This Report is in respect of the two hundred and thirty eight (238) blocks relinquished from EL 5953 at the conclusion of Year 5.