Year eight annual exploration report for MLN 1154 Merlin 15 June 2005 to 14 June 2006

Abstract

This report details exploration activity for diamond bearing kimberlite intrusives carried out by North Australian Diamonds Limited (NADL) over MLN 1154 for the period 15 June 2005 to 14 June 2006. NADL acquired 100% of MLN 1154 in November 2004 from Rio Tinto. During the reporting period NADL was registered with Australian Securities and Investment Commission (ASIC) as Striker Resources NL. The company name was changed to North Australian Diamonds Limited on 23 August 2005. The tenement is held under Bulgurri Diamonds, which is a 100% wholly owned subsidiary company of NADL. Exploration completed during the reporting period included the collection of 273 loam samples as follow-up to existing indicator mineral anomalies. Results for these samples are pending. A total of 192 soil geochemical samples were collected across the lease to further define indicator mineral anomalies. A total of 7.58 line kilometers of ground magnetic data was collected across several areas of the lease as follow-up to identified indicator mineral anomalies. A line spacing of 50m was used with a station spacing of 5m or 10m. Interpretation of the data is yet to be undertaken. Brownfields exploration included resource delineation drilling at pipe Tristram that increased the inferred resource from 410,000t to 740,000t. Wide diameter drill samples were also collected and processed to recover 36 tonnes for a grade of 6 carats per hundred tonnes. Wide diameter drill samples were also collected at a previously untested breccia pipe located 400m to the south of Excalibur pipe. This pipe, named Perceval, reported a grade of 56 carats per hundred tones and is comprised of hyperbyssal kimberlite being similar to pipe Ywain in both size and nature.