Final report on exploration activities for EL 22742, Hodgson Diamonds Project

Abstract

EL 22742 is located approximately 215 km SE of Katherine, to the east of the Larrimah and Maryfield Station homesteads. The EL was granted on 9 July 2002 and forms part of a larger block of tenements held by Rio Tinto Exploration Pty Ltd ('Rio Tinto') and referred to as the Hodgson Diamonds Project. The tenement forms part of a farm-in agreement between Rio Tinto and Diamond Mines Australia Pty Ltd ('DMA') covering numerous Rio Tinto tenements and applications in the Northern Territory. Under this agreement, DMA will conduct predominantly diamond exploration by utilising the Falcon(tm) airborne gravity gradiometer system to detect kimberlite pipes. Gravity Diamonds Ltd ('Gravity') is managing the farm-in arrangement for Diamond Mines Australia and owns 100% of DMA. The project area is considered prospective for commercial sources of diamonds. Historic sampling identified kimberlitic indicator mineral occurrences, including microdiamonds within the tenement, but the source of these remains enigmatic. Gravity completed an assessment of the data compilation work carried out by Rio Tinto and concluded that the area covered by EL 22742 was not of sufficient priority to warrant a Falcon(tm) survey in the initial stages of the DMA-Rio Tinto farmin arrangement. No field work was carried out and the area was reviewed following the results from the Falcon(tm) survey completed on adjacent EL's. Extensive followup of targets generated from this survey, including drilling, did not locate any kimberlites. Given the disappointing results obtained from follow-up of areas considered more prospective than EL 22742, Gravity handed back EL 22742 to Rio Tinto in June 2005 and the licence was subsequently surrendered on 11 July 2005. There was no further work undertaken by Rio Tinto from the time the licence was handed back in June 2005 and the date of surrender on 11 July 2005.