large gem stones recovered

28 June 2006


ASX Announcement

Bateman DMS Plant Commissioned at Merlin and Large Gem Stones Recovered
_______________________________________________________________________________________

Production from the first 300 tonnes of Ywain kimberlite pipe at Merlin has produced two special gem quality diamonds. The large stones being a gem quality 10.54 carat white octahedral diamond (Figure 1) and a 8.73 carat white clivage diamond. Valuations for these stones are yet to be obtained.

Mr. Tom Reddicliffe, Technical Director, North Australian Diamonds Ltd said "These early production results are very encouraging and reaffirm Merlin kimberlites as producers of large gem quality diamonds. Strong demand in the retail market for such stones and the premium price they command bodes well for the expected average price per carat from Merlin."

Tom Reddicliffe, a full time employee of the company, has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

Tom Reddicliffe consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.