Combined annual exploration report - Year 3 EL 3336 and EL 3338, 20 January 2007 to 19 January 2008

Abstract

This report details diamond exploration activity carried out by North Australian Diamonds Limited (NADL) over Exploration Licences EL 3336 and EL 3338 for the period 20 January 2007 to 19th January 2008. This period represents Year 3 of the licence. The licences have been granted and are currently held by De Beers Australia Exploration Pty Ltd (DBAE) with NADL as the operator. The licences are located on the North Australian Craton within a region that has tectonic and structural similarities with known kimberlite occurrences including the Merlin Kimberlite Field and recent Abner Range discovery. Previous diamond exploration within the region includes five stream gravel samples collected adjacent to the northern boundary of EL 3336 by DeBeers in 2001, which reported negative results for diamonds and indicator minerals. More intense diamond exploration has been undertaken within 50km of the licence with numerous chromites, microdiamonds and pyropes recovered from stream gravel samples collected by Normandy, Stockdale and DeBeers. These results provide encouragement and highlight the potential for a kimberlite source to exist in the region. NADL collected fifteen loam samples over EL 3336 during October 2007. The samples are currently at the Perth laboratory awaiting processing. In addition, an evaluation of the base metal and uranium potential for both licences was completed. No specific targets were generated however, this does not imply that the licences are not prospective for such mineralization as much of the licence contains surficial sand cover and the regional NTGS geophysical data was flown at 400m line spacing.