Annual exploration report year 5 exploration licence 9893 10 September 2006 to 9 September 2007

Abstract

This report details exploration activity for diamond bearing kimberlite intrusives carried out by North Australian Diamonds Limited (NADL) over EL 9893 for the period 10 September 2006 to 9 September 2007. This period represents year five of the licence. The tenement is held under Merlin Diamonds Pty Ltd, which changed name from Bulgurri Diamonds. Merlin Diamonds Pty Ltd is a 100% wholly owned subsidiary company of NADL. During the current reporting period NADL processed a total of five loam samples collected during the previous reporting period. All samples returned negative results. In addition, NADL conducted a review of the EL to potentially host uranium and base metal mineralization. This review was conducted both internally and externally utilizing the services of an external consultant. This work is still in progress and will be reported in the next annual report. NADL intends to partially surrender the licence in accordance with the conditions of the licence with reduction of 8 blocks (ie approximately 50%). Details of the partial surrender will be included in a separate report to be submitted to DPIFM.