The following press release while not definitive is very optimistic regarding the identification of a possible second mine not far from from Merlin.

This all represents additional upside of LGDI.

14 December 2009 - ASX ANNOUNCEMENT

Lancelot Prospect Exploration Update

The first stage of scout drilling has been completed at the Lancelot and Lancelot extended prospects located approximately 40km south of the Merlin diamond pipes with 77 holes drilled for a total of 2,753 metres.

The program was aimed at identifying the source for high concentrations of kimberlitic indicator minerals and associated microdiamonds and macrodiamonds. The Company believes the focused occurrence of both indicator minerals and diamonds is strong evidence for the presence of a kimberlite field in this area unrelated to Merlin.

The drilling has been successful in identifying a possible secondary source with eluvial clays and gravels of varying thicknesses up to several metres being found to be associated with these high concentrations of indicator minerals and diamonds. Trenching and sampling of these eluvial deposits is currently being undertaken with a view to confirming whether they may be sourcing the kimberlitic indicator minerals and diamonds and represent part of a dispersion train associated with the primary source rocks.

The deposits are eluvial in nature and near sourced.

The samples will be processed for their heavy mineral content through the Company’s diamond laboratory located in Perth.