EL 24285 Abner South Annual report on exploration activities, year four of tenure, period ending 23 January 2009

Abstract

EL 24285 'Abner South' was granted to Gravity Diamonds Ltd (Gravity) on 24 January 2005. 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 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' allowed DMA to conduct exploration using Falcon with BHP Billiton retaining certain buy-in rights to major discoveries ? a right that expires in February of 2009. During 2004, Falcon data was acquired over tenements controlled by DMA immediately to the north of EL 24285. The survey covered approximately 267 square kilometres with 100m spacing, 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 yielded a number of kimberlite targets and drilling of these targets in late 2004 and 2005 resulted in the discovery of the diamond-bearing ABN21 kimberlite pipe. During the initial years of tenure available prior exploration data was compiled and reviewed, new colour aerial photography at 1:25,000 was flown over the tenement which was interpreted and integrated with historic sampling data and second order Falcon targets were inspected. Four gravel samples were collected within the tenement however results were poor. Re-evaluation of airborne photography, Landsat Imagery, geophysical datasets and geology mapping in the southeast of the tenement has highlighted a broad area of Cretaceous aged cover which may be the source of the Possum Point Yard historic anomalous indicator minerals. Also a sample taken in the drainage to the east of Possum Point yards has returned several possibly kimberlitic chromites (confirming historic sampling). Track access to the area was rehabilitated and drill rigs should now be able to travel from the McArthur Pastoral Station to the tenement area. Intense sampling was planned for the tenement for the 2008 season. A possible helicopter Falcon(r) gravity gradiometer survey was planned ? however a crash involving the helicopter system during 2008 (pilots safely rescued and unharmed) and the advancing global liquidity crisis, however, recently Gravity has recently reached an agreement with Legend International Holdings Inc which will facilitate an aggressive exploration programme going forward. Historically, Gravity Diamonds Limited has spent approximately $5.5m on diamond exploration in the Abner Range / McArthur Basin region since it took over management of the project under the exploration agreement with Ashton Mining Limited and others. A number of targets have been identified on tenement EL 24285, that increased funding will ensure adequate testing.