Annual exploration report year 5 exploration licence 22101 10th September 2006 to 9th September 2007

Abstract

North Australian Diamonds Limited (NADL) over Exploration Licence EL 22101 for the period 10th September 2006 to 9th September 2007. This period represents year five of the licence. The licence 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. 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. During the current reporting period NADL processed a total of seven 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 98 blocks (ie approximately 50%). Details of the partial surrender will be included in a separate report to be submitted to DPIFM.