EL 23959 Abner East McArthur River Region NT annual report for year 3, ending 6 May 2007

Abstract

EL 23959 Abner East was granted to Gravity Diamonds Ltd (Gravity) on 6 May 2004. Gravity, through its wholly owned subsidiary, Diamond Mines Australia Ltd (DMA), has an agreement with BHP Billiton to utilise BHP Billiton's Falcon airborne gravity gradiometer system in diamond exploration in Australia and Gravity has established a number of diamond projects in northern Australia using this technique. The Falcon system has proven very effective in detecting kimberlite pipes in Canada, Africa and in Australia. The BHP Billiton - DMA 'Falcon Agreement' allows DMA to conduct exploration using Falcon and BHP Billiton retains certain buy-in rights to major discoveries. During the initial year of tenure, Falcon airborne gravity data was acquired, processed and interpreted. The survey covered approximately 15 square kilometres of the EL 23959 tenement area with 100m spaced, north south oriented flight lines, flown at a mean terrain clearance of 80m. Gravity gradiometer, magnetics, and laser scanner data were gathered and compiled. Interpretation identified a number of targets requiring follow up field assessment. A review of historic exploration data, including surface sampling focussed on diamonds, was also conducted by Gravity and a number of anomalous results were noted in and around EL 23959. During the second year of tenure, exploration undertaken within EL 23959 were limited to the acquisition of detailed aerial photography, which covered the entire tenement at 1:25,000 scale (~20 km). Targets previously identified within the EL from the Falcon survey were downgraded as historic indicator mineral samples collected by Ashton Mining in this area were predominantly negative for kimberlite indicator minerals. Exploration activities undertaken during the third year of tenure comprised the acquisition of 80 m line spaced Hoistem data over approximately one third of the license (6 km2). No anomalies suggestive of a concealed kimberlite intrusive were noted within the portion of the Hoistem survey within EL 23959, however, a single gravel sample was collected within EL23959 to test the kimberlite potential of a Hoistem EM anomaly in adjacent SEL 9779. Results for this sample were not available at the time of writing of this report and will be detailed in the next annual report. EL 23959 lies within an area generally held to be prospective for diamonds. Low counts of chromite and microdiamonds have previously been recorded in the area now covered by EL 23959. Check sampling proposed to confirm historic positive sample results has yet to be completed. At the conclusion of year 3 of tenure, an application for waiver with respect to statutory 50% reduction of EL 23959 was lodged with DPIFM.