Annual exploration report year 5 exploration licence 9768 10 September 2006 to 9 September 2007

Abstract

This report details exploration activity carried out by North Australian Diamonds Limited (NADL) over exploration lease EL 9768 for the period 10th September 2006 to 9th September 2007. This period represents year five of the licence. The exploration licence is located on the Bauhinia Downs (SE53-03) 1:250,000 map sheet and the Glyde (6164) 1:100,000 sheet. Access to the licence is via a formed gravel access track from the Carpentaria Highway, the turn-off is approximately 6 kilometres south-west of the McArthur River Mine turn-off. The licence is held under Merlin Diamonds Pty Ltd, which is a subsidiary company of NADL and has changed name from Bulgurri Diamonds Pty Ltd. During the current reporting period NADL processed a total of seven 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 22 blocks (ie 50%). Details of the partial surrender will be included in a separate report to be submitted to DPIFM.