EL 23931 Batten Annual report on exploration activities year 5 of tenure, 3 February 2008 to 2 February 2009

Abstract

EL 23931 'Batten' was granted to Gravity Diamonds Ltd ('Gravity') on 3 February 2004. The EL lies within a general area where Gravity is operated a broad diamond exploration program, much of which was under an exploration agreement with Rio Tinto group companies and Diamond Mines Australia (DMA), a 100%-owned subsidiary of Gravity. During 2003 and 2004, DMA had an exclusive arrangement with BHP Billiton to deploy the Falcon airborne gravity gradiometer system in diamond exploration in Australia. The Falcon system has proved effective in diamond exploration since its development by BHP Billiton in the late 1990's. During the initial years of tenure Falcon data was acquired over the entire area of EL 23931 including gravity gradient data, high resolution magnetics and accurate elevation data. Coverage was obtained over the entire tenement, an area of 23 km2. Sampling in the tenement has included a sampling in drainage that that previously reported chromite. The further sampling also recovered chromite. The chromites historically obtained were reported of ambiguous chemistry, however they match well with results from sampling in JV ground outside the boundary of EL 23931 that are of possible kimberlitic origin. The results of the new probe data spurred an intensive mapping campaign in the south east of the tenement aimed at discerning the provenance of these grains and their possible relationship to a major airborne gravity feature centred only 1.5km south of the tenement and other clustered anomalies possibly extending into the tenement area. The zone was extensively mapped and is general covered by thick sheetwash alluvium and is unsuitable for both drainage and loam sampling. Reassessment and modelling of airborne gravity and magnetic data by staff geophysicists highlighted three targets in this zone that could only be resolved by auger or percussion drilling. Intense sampling was planned for the tenement for the 2008 season. A proposed helicopter Falcon gravity gradiometer survey was planned at a significant increased resolution level - 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. The three primary targets and targets identified on the margin of tenement EL 23931 remain valid, increased funding will ensure adequate testing.