Annual report on exploration activities for EL 24634 'Matchbox Creek', year two of tenure, 25 November 2006 to 24 November 2007

Abstract

EL 24634 forms part of a major diamond exploration enterprise in the Northern Territory initiated by Gravity Diamonds (then Gravity Capital) in 2003. The foundation of this enterprise has been a farmin agreement between Rio Tinto Exploration Pty Ltd ('Rio Tinto') and Diamond Mines Australia Pty Ltd ('DMA', a 100%-owned subsidiary of Gravity Diamonds) covering numerous Rio Tinto-controlled tenements and applications in the Northern Territory. Under this agreement, DMA has conducted diamond exploration over the tenements utilising the recently-developed Falcon(tm) airborne gravity gradiometer system, which has been shown to be very effective in detecting kimberlite pipes. Gravity has also acquired a significant tenement holding in its own right in the NT. The initial Falcon(tm) programs in 2003 resulted in the discovery of a kimberlite pipe within the 'Abner Range' survey area, some 35 kilometres northeast of EL 24634, and this led Gravity to apply for a number of areas in proximity to the discovery. EL 24634 comprising 30 sub blocks was granted to Gravity on 25 November 2005. During the current year of tenure the company collected two gravel samples for Heavy Mineral Analysis from small streams draining a raised plateau area in the central portion of the licence. Attempts to obtain further stream samples from this plateau area were fruitless due to a lack of drainage.