Annual report on exploration activities, year one of tenure, period ending 22 May 2009, EL 26404 Abner North

Abstract

The tenement was applied for in 27 August 2007 and granted in May 2008. Gravity had the aim of carrying out field evaluation on the first year with a view to conducting airborne geophysics to generate drill targets. Granting of the tenement coincided with a downturn in capital markets and a refocussing of Gravity's parent company, Mwana Africa, away from its Australian activities. Nevertheless the Australian management of Gravity Diamonds remained confident that it would be able to find a new owner for the Australian programmes that would re-invigorate exploration and entered into advanced negotiations with a potential new owner. The market crash of late 2008 effectively 'torpedoed' this arrangement. At the same time Mwana Africa was approached by Legend International Holdings Inc to acquire all of the Australian interests of Gravity Diamonds Limited. An agreement was signed in early 2009 dependent on a third party agreement that involved a number of the tenements operated by Gravity. Completion of this process has taken much longer then anticipated but it will lead to a re-invigoration of the total programme. The limited funds available meant that only desk studies were possible in year 1. These included a review of available geophysical, geological and sample data EL. This confirmed the potential for diamondiferous kimberlites to be located within the McArthur River region along a hypothesised structural corridor trending north from the ABN021 discovery.