Report on blocks relinquished at the conclusion of year two of tenure for EL 24285 'Abner South'

Abstract

EL 24285 'Abner South'was granted to Gravity Diamonds Ltd ('Gravity') on 24 January 2005. Gravity, through its wholly owned subsidiary, Diamond Mines Australia Ltd (DMA), has an agreement with BHP Billiton to utilise BHP Billiton's Falcon airborne gravity gradiometer system in diamond exploration in Australia and Gravity has established a number of diamond projects in northern Australia using this technique. The Falcon system has proven very effective in detecting kimberlite pipes in Canada, Africa and in Australia. The BHP Billiton - DMA 'Falcon Agreement' allows DMA to conduct exploration using Falcon and BHP Billiton retains certain buy-in rights to major discoveries. During 2004, Falcon data was acquired over tenements controlled by DMA immediately to the north of EL 24285. The survey covered approximately 267 square kilometres with 100m spacing, north south oriented flight lines, flown at a mean terrain clearance of 80m. Gravity gradiometer, magnetics, and laser scanner data were gathered and compiled. Interpretation yielded a number of kimberlite targets and drilling of these targets in late 2004 and 2005 resulted in the discovery of the diamond-bearing ABN21 kimberlite pipe. During the first year of tenure of EL 24285, available prior exploration data was compiled and reviewed and field work planning commenced. New colour aerial photography at 1:25,000 was flown over the majority of the tenement and this was interpreted and integrated with prior sampling data. Limited field reconnaissance was also carried out. During Year 2 a total of two (2) gravel samples were collected within the relinquished portion of EL 24285 as part of a more regional diamond exploration program around the Abner Range. Results from the gravel samples collected were disappointing with both samples reporting a negative result. At the conclusion of Year 2, a compulsory 50% reduction was effected.