EL 23959 Abner NE McArthur River Region NT annual report on exploration activities year four of tenure and final report to period ending 6 May 2008

Abstract

EL 23959 ('Abner NE') was granted to Gravity Diamonds Ltd ('Gravity') on 6 May 2004. Gravity, through its wholly owned subsidiary, Diamond Mines Australia Ltd (DMA), had an agreement with BHP Billiton to utilise BHP Billiton's Falcon airborne gravity gradiometer system in diamond exploration in Australia between 2003 and 2007, this agreement is currently being renegotiated. The Falcon' system has proven effective in detecting kimberlite pipes in Canada, Africa and in Australia with Gravity discovering the ABN021 and Satellite Pipe on an adjoining tenement, SEL 9779 during 2004 / 2005 utilising this technology. The BHP Billiton's DMA 'Falcon Agreement' allows DMA to conduct exploration using Falcon and BHP Billiton retains certain buy-in rights to major discoveries. During the initial years of tenure historic exploration data has been reviewed, Falcon airborne data was acquired over approximately 14.9 km of EL 23959 on 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 that required follow up field assessment via heavy mineral samples geochemical samples. New detailed aerial photography of EL 23959 was commissioned at 1:25000 scale and a detailed helicopter-borne HoistEM survey was commissioned covering an additional 6.4 km2 within the tenement at a line spacing of 80 metres (~68 line kilometres). Several indicator mineral samples (gravel and loams) were collected, however several HoistEM and Falcon targets were deemed to be poorly drained and requiring drill testing. Track work was undertaken through an adjoining Gravity Diamonds Limited tenement to enable the passage of drillrigs from the Abner Range Plateau to the 'North Valley' area of EL 23993 and thence on to EL 23959. Helicopter assisted sampling and target testing within EL 23959 was carried out during 2007, predominantly following up targets generated from re-assessment of the airborne EM survey with a total of 4 large volume gravel samples collected. Although the results of this sampling was negative, sample concentrate weights were variable and as mentioned above several prime gravity, EM and magnetic targets were not adequately tested due to a general lack of drainage in the vicinity of the targets. During September 2007 a decision was made to apply to incorporate EL 23959 and SEL 9779 into a single tenement as contiguous targets from the geophysical surveys carried out tend to indicate that the tenement sits along strike of a prospective corridor of kimberlite geophysical anomalies with similar characteristics to those in the recently discovered ABN021 kimberlite located within SEL 9779 only 4.4 km to the south west. This new tenement application, SEL 26397, was granted on the 26th March 2008.