Relinquishment report on blocks relinquished at the conclusion of year 4 of tenure 19 August 2006 to 18 August 2007 EL 23772 Cox River South

Abstract

During the first year of tenure, on the basis of encouraging historic diamond sampling data from nearby tenements, a Falcon airborne gravity gradiometer survey was flown over a substantial part of the Cox River South tenement and also over neighbouring tenements. The entire district survey was completed on September 27th, 2003 and acquired a total of 5153 linear kilometres of gravity gradiometer, magnetics, and laser scanner data. Approximately 9% of this survey was contained within EL 23772. The entire tenement area was flown. Data was processed by BHP Billiton's Falcon Operations Group and delivered to Gravity Capital in November 2003. Gravity Capital Limited changed its name to Gravity Diamonds Limited in October 2004 to reflect its exclusive focus on diamond exploration. Detailed interpretation, anomaly ranking and exploration targeting from the Falcon survey by Gravity Diamonds was completed during 2004. No highest priority targets were identified within EL 23772, however several 2nd and 3rd order targets were noted. Targets in adjacent EL's, currently being explored by Gravity, were rated more highly however the possibility of kimberlite pipes occurring on EL 23772 was still contemplated. Helicopter-supported field reconnaissance and sampling programs in 2005 and 2006 were conducted in the district, primarily focused on high priority Falcon(r) targets in licence areas adjacent to EL 23772. Lower ranking target areas within EL 23772 were visited during this program but none of these were assessed as warranting heavy mineral sampling by the relatively inexperienced crew assembled. During late 2006 the original Falcon gravity data was reprocessed by BHPB Falcon Operations with updated noise suppression algorithms that lowered the noise in the original data set from approximately 10 Eotvos to 3 Eotvos. Small kimberlites discovered by Gravity Diamond at Abner Range in 2005 were found to have a negative gravity response of 22 Eotvos - hence the lower noise range achieved increased the detectability of possible small kimberlite bodies. There were three (3) blocks relinquished from EL 23772 at the conclusion of Year 4. These blocks were on the southern end of the licence.