EL 23931 Abner (Tanaburs) Annual report on exploration activities year 6 of tenure 3 February 2009 to 2 February 2010

Abstract

EL 23931 'Abner (Tanaburs)' (previously known as Batten) was granted to Gravity Diamonds Ltd ('Gravity') on 3 February 2004. The immediate region is under an exploration agreement between Rio Tinto group companies and Diamond Mines Australia (DMA), a 100%-owned subsidiary of Gravity. In 2009, Gravity entered into an agreement with Legend International Holdings who are operating an extensive diamond exploration program in the region. The transfer is yet to be finalised but Legend is committed in continuing exploration. 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 km. Sampling in the tenement has included sampling in the drainage that previously reported chromite occurences. The chromites historically were reported of ambiguous chemistry, however they match well with results from sampling in JV ground outside the boundary of EL23931 that are of possible kimberlitic origin. The most recent sampling recovered one chromite and one microdiamond spurring continued interest in the area. 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. The zone is generally covered by thick sheetwash alluvium making it is unsuitable for both drainage and loam sampling. Reassessment and modelling of airborne gravity and magnetic data by both Gravity and Legend geophysicists has highlighted zones that are consistently anomalous and require further field evaluation. An EM34 Survey was conducted late last year highlighting a few targets that will be revisited this year. Ground gravity and further EM surveys are planned for the upcoming field season with a view to drilling in the near future. 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 primary targets on tenement EL 23931 remain valid and are encouraged by recent positive results from sampling.