2009 ASX releases

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24 December 2009
Twenty gem diamonds recovered; old workings located, Bingara

The Monte Christo bulk sampling pit MCR 26 at Bingara has been extended, revealing a network of tunnels continuing to the west and south, and shown below. Three tunnels are present in the far wall, and an old mined area supported by three vertical timber props in the right hand wall.

Old diamond mine exposed on Monte Christo Lease

Twenty gem quality diamonds weighing 3.74 carats were recovered from 49 tonnes of material extracted during this work. These diamonds occur in the shallowly dipping brown bed into which the tunnels have been driven, above the shallowly dipping base of the pit.

In total, sixty three diamonds and carbonados weighing 9.7 carats have recently been recovered by the Company from this old mine.

Diamonds recovered from Pit MCR 45

Wooden props in old mine workings

Old Tunnel (located behind stockpile in pit photo)

As the workings extend only to the south and west, it appears the pit is dug on the very edge of these former mine workings.

The Company is planning to extend the excavation to the south west, further down the diamond bearing bed and further into the old workings. We will attempt to locate deeper tunnels which may be in fresh rock, and still open, to assess the extent of this old diamond mine and perhaps to gain access to deeper working faces.

The nature of the diamond bearing rock, which has unusual sedimentary textures, and also the rock hosting the diamond bearing bed, is also being further clarified.

The information in this report that relates to exploration results is based on information compiled by Peter John Kennewell, who is a corporate member of the Australasian Institute of Mining and Metallurgy included in a list promulgated by the ASX from time to time. Peter John Kennewell is a full time employee of Cluff Resources Pacific NL and 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 “Australasian Code for Reporting of Exploration Results, Identified Mineral Resources, and Ore Reserves”. Peter John Kennewell consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Peter Kennewell
Managing Director

22 September 2009
Thirty diamonds recovered on Monte Christo lease, Bingara

Thirty diamonds have been recovered in the process of deepening Bulk Sampling Pit MCR 45 (over Hole MCR 26) to the interpreted second mining level at 13.5 metres. The diamonds came from the upper level, previously sampled but now exposed over a larger area, to further clarify what was mined. Unmined gravels from this level were extracted and processed, and the diamonds recovered are shown below.

The gravels were extracted from between the grey clay and the underlying brown sandstone, in the area between the two figures in the photograph below. They appear to be hardened gravels left by the former miners as a roof to the mined cavity, to support the overlying soft, pliable grey clay. The material processed contained about 30% of non diamond bearing overlying and underlying rocks.

The extracted material underlying these gravels still remains uncertain, but was probably less hardened gravels, and may have contained higher diamond grades. Old timber props demonstrate that the roof has now collapsed, as the roof has collapsed into the mined area and left these strong timber props protruding upward into the overlying clay.

The pit has now been deepened to 13.5 metres, showing very decomposed sandstone overlying a very fresh, very hard fine grained rock. This sandstone is not present in surrounding holes 20 metres away, and hence appears to be filling a depression. No old workings were present at the contact of these rocks, but a ten tonne sample of the basal material has been trucked to Copeton for processing to test for diamonds. Location of the pit is 0257343E 66905088N (GDA).

Peter Kennewell
Managing Director

29 July 2009
1 for 5 Rights Issue closes over $1 million oversubscribed

The Directors of the Company advise that the Non-Renounceable Rights Issue (‘the issue’),
which closed on 24 July 2009, attracted an unprecedented level of interest, and was oversubscribed by over $1 million.

Eligible Shareholders subscribed for 185,412,216 shares and two free attaching listed options (‘units’) under their 1 for 5 entitlements, which represented a takeup of 57.3%. This left a remaining number of 137,981,408 units available for over subscriptions up to the 323,393,624 unit offer limit.

The total number over oversubscriptions received was an extraordinary 400,117,178 units, meaning that the issue was over subscribed by 262,135,770 units, being a total value of $1,048,543.

Regrettably, there was no provision within the offer to accept over subscription monies beyond the total amount being raised ($1,293,574), and these over subscribed funds will be returned to unsuccessful applicants. As stated in the Offer Document, applications for over subscriptions were accepted on a first come, first served basis.

It is anticipated that the allotment and issue of shares, and the dispatch of holding statements (and refund cheques where applicable) will take place on 31 July 2009.

The Directors are very pleased with the level of shareholder support given the current market conditions and wish to thank the Eligible Shareholders who participated in the Rights Issue. We look forward to utilising these funds to achieve some exciting results in the weeks and months ahead.

Scott Enderby
Company Secretary

23 July 2009
Old tunnels exposed on Monte Christo Lease, Bingara

Old tunnels with wooden roof supports and backfilled with waste rock from the mining operation have been exposed on the former Monte Christo mining lease (ML 16) beneath drill hole MCR 26. Early this month this hole was interpreted as penetrating old workings between 5.9 to 7.8 metres.

Bulk Sample Pit B MC 3 has been dug over this hole, and eleven gem quality diamonds have been recovered from a thirty tonne bulk sample). Total weight of diamonds recovered was 2.07 carats.

Interestingly, two black stones together weighing 2.48 carats and tentatively identified as carbonado, a finely crystalline, porous form of diamond, were also recovered. These stones stuck to the grease table and tested as diamonds with the “Presidium Gem Tester”, which measures thermal conductivity, but left a red streak on a porcelain tile. Carbonado has been previously reported from the Inverell Diamond Fields Mine at Copeton. Small pieces of sapphire and topaz were also recovered.

Diamonds and Carbonados recovered from Pit MC 3

The unmined remnants of the diamond bearing rocks were a poorly sorted sediment containing rounded polished jasper pebbles, fine sand, and several beds containing larger pieces of altered bedrock.

The sample processed was extremely contaminated. The tunnels had taken out most of the diamond bearing rock, and as the old workings were not clearly apparent until the excavation was complete, this rock was again contaminated with underlying and overlying rubble. It is estimated that 10 to 20% of the rock trucked was diamond bearing, hence a grade cannot be determined.

A deeper pit is planned to accurately sample this rock, and also to sample a lower level of workings, interpreted from Hole MCR 26 to be present in a 2.8 metre bed above the hard basement at 13.5 metres.

Figure 2: Mined Horizon, showing an old tunnel backfilled with rubble,
and the original unmined rocks. The pick is near the edge of the tunnel.

Peter Kennewell
Managing Director

2 July 2009
Underground mine identified on Monte Christo lease

An underground mine has been identified by Cluff’s drilling at the Monte Christo Mining Lease, on the Bingara Diamond Field. Whilst drilling at a depth of 5.9 metres (20 feet) the wire line core barrel dropped 1.8 metres, 0.9 metres through an open hole, and another 0.9 metres through very soft mud interpreted as soft rock shovelled into a cavity. The cavity is interpreted as old mine workings.

The hole (MCR 26) is located on the 20 acre Monte Christo mining lease, from which about 18,000 carats of diamonds were reported to have been produced at extremely high grades, initially at up to 5000 carats per hundred tones, but averaging 500 carats per hundred tones by 1903, according to NSW Mines Department records.

Figure 1 shows the location of drill hole MCR 26, fifty metres south of Cluff’s open cut from which 1,400 carats of diamonds were recovered in the 1990s. This open cut mined tunnels stated by the NSW Mines Department to be the Monte Christo Mine (NSW Dept Mines Annual Report, 1894), but grades recovered were not consistent with Captain Rogers’ world-renowned Monte Christo Mine. Information for the maps was supplied to the Mines Department by a third party, however, and is now considered by Cluff to describe earlier workings on the lease.

The hole was sited within a group of old shafts, to confirm that they were used for production. Intersection of an 1.8 metre high mining cavity in the drill hole indicates substantial production. Further drilling and pitting for bulk sampling is underway to determine whether this is the former Monte Christo Mine.

The Monte Christo Diamond Mine was worked underground on two near horizontal levels by shafts 30 feet (9 metres) and 50 feet (15 metres) deep. This cavity may be the upper level of this mine, worked from the nearby 50 foot shaft.

The lower level may also have been mined by this shaft. Clays drilled below this cavity contained chert pebbles in a 2.8 metre bed above the hard basement at 13.5 metres. As similar pebbles were recorded in the shaft waste dump, it is possible that the shaft also gave access to the lower level.

Additional drill holes are under way to confirm the best location for a pit to investigate the cavity, and bulk sample both the upper and lower levels. A bulk sampling pit is currently in progress near drill hole MRP 25 to test whether a fragmental rock penetrated between 5 and 7.5 metres carries diamonds.

The information in this report that relates to exploration results is based on information compiled by Peter John Kennewell, who is a corporate member of the Australasian Institute of Mining and Metallurgy included in a list promulgated by the ASX from time to time. Peter John Kennewell is a full time employee of Cluff Resources Pacific NL and 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 “Australasian Code for Reporting of Exploration Results, Identified Mineral Resources, and Ore Reserves”. Peter John Kennewell consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Peter Kennewell
Managing Director

25 June 2009
Rights Issue Documentation Released to ASX

A copy of the Offer Document for the 1 for 5 Non-renounceable Rights Issue may be viewed by clicking here.

9 June 2009
Thirty Six diamonds recovered from open cut mine, Bingara

Thirty six gem quality diamonds have been recovered from an 112.9 tonne bulk sample (B OD 9) from the former diamond open cut near the 1890s processing area of the Australian Diamond Mining Company. Total weight of diamonds was 6.73 carats.

This open cut forms a depression cut into the top of a low rise. The diamonds occur in a clay rich debris flow or hot spring deposit containing bedrock fragments, and small rounded jasper pebbles at the base.

These rocks have been extensively extracted in the past, and large quantities of barren backfill (demonstrated by the presence of rail tracks beneath backfill) and basement rocks were necessarily included in the sample, resulting in a non-systematically taken sample, from which a grade cannot be calculated.

Small pieces of blue & red sapphire and small pieces and flakes of gold were also recovered on the grease table.

Location is 0256469E 6692337N (GDA 95). Eight out of ten 2mm tracers were recovered.

B OD 9 Wall at western edge of excavation

Sampling was by excavator. The samples were trucked to Copeton for crushing to 10 mm, processing was through the Company’s trommel and jig plants, using a screen size of 1.2 mm. Separation from concentrate was by grease table.

Diamond Drilling Resumes

In order to resolve a hundred year old mystery, our drilling rig has commenced coring close to the 154 feet (47 metre) deep shaft sunk by the Australian Diamond Mining Proprietary Company Limited in the early 1890s.

In 1897 local miners, some with South African experience, considered they were tunnelling within a “pipe”, and “a petition signed by all local respectable professionals, business people, miners and labourers was sent to our local member (Mr S. W. Moore) for presentation to the Minister for Mines, to send a competent man up to report on the diamond pipe on the Australian D. M. Coy.’s ground” (Australian Mining Standard, 1897). The Mines Department’s reply is shown in the figure below.

The hole aims to determine, in modern terms, the nature of this material, reported by the Mines Department to be carrying diamonds.

The cores recovered will be investigated for indicator minerals that may have originated within the earths mantle under similar pressure and temperature conditions to diamonds, indicating that the rocks containing them have potential to also carry diamonds.

1 June 2009
Chairman's address to the Annual General Meeting

FRIDAY, 29 MAY 2009

Cluff has had another turbulent year.

Cluff's Share Price
In line with the market generally Cluff's share price fell steadily late last year. I was asked to join the Board in November 2008 at a time when there were few people putting up their hands to help. Mr Barrow had made it known for some time that he was unable to continue because of other commitments, and that is not to demean Peter's contribution over many years which you should all appreciate. Peter had other priorities and Cluff did not fit his future commitments, but he remained on the board for several months longer than he intended.

Unfortunately Cluff was at an almost all time low. Confidence was low, the share price was low, cash was very low and the existing projects and opportunities had all but stalled or evaporated.

Below is the ASX chart for the share price for the company for the 6 months prior to 22 May 2009. It is not a pretty sight and except for what appears to be a hiccup in late March we are certainly not where we would like to be.

The chart of daily prices over 6 months for security CFR

New Board of Directors from December 2008
Despite the trends downward and the very apparent problems I did join the board in December 2008 along with Mr Ian Johns.

I commend to all shareholders Mr Johns who without him we simply would have no viable company. Ian has been a long time shareholder and a very important supporter for some time and particularly lately and without Ian's cash support of the company it could not have continued to operate. But Ian brings much more to Cluff than his financial support. Ian is a very successful businessman with enormous energy and a very entrepreneurial spirit who has committed many hours of his time over the past 6 months to his role as a non-executive director.

I also commend all shareholders to all the directors who have contributed their own cash in recent times to keep the company operating. When I joined the board it was very clear that I would not be required to provide such assistance but it was simply necessary.

Both Ian and I joined the board and agreed to take no cash remuneration but to be allocated some options or shares as compensation. This arrangement reflected the poor cash position of the company. This is very responsible and generous position to have adopted by us. To assist the company and confirm our commitment to a policy of improving the share price we have both only accepted options.

I believe I bring to the board a different perspective. I am interested in the projects of the company in the past and I am enthusiastic about the projects and prospects for the future whilst maintaining an objective mindset in respect to all these matters.

Since our appointment we have both devoted a substantial amount of time and effort to our positions which I am sure would have amounted to permanent part time job in any other field of endeavour. I am not here seeking your thanks but I wish to make it clear that despite the fact that we are not paid any moneys for our services we have both devoted a substantial amount of time and effort to the role for your benefit.

Our position has however been made substantially worse by the recent Federal government budget changes which seeks to assess these possible benefits up front and require us to pay tax on these alleged benefits. Both Ian and I saw our role to increase the share price for the mutual benefit of all shareholders and when we are successful we could elect to sell some of our holdings only after exercising the options and paying cash to the company for the privilege and thereafter paying capital gains tax on the benefit if the sale price exceed the option price. Ian and I have agreed to maintain and support the current proposals which are likely to be our substantial financial detriment and to review our position over the next 12 months. We remain hopeful that the Business Council of Australia and other organisations, will demonstrate to the satisfaction of the government that this change was misconceived; however I am much less optimistic about succeeding on that front than other more immediate issues for Cluff. I note of course that this week the Treasurer and Finance Minister have agreed to review some of the provisions.

I have known Peter Kennewell and Scott Enderby for some years and respect both of them as professional resource company executive directors. I have never doubted their honesty, professionalism, expertise and work ethic for the benefit of Cluff and all its shareholders.

But I believe Ian and I bring a different focus and different direction to the Board.

Tin and Gold Prices over the Past 6 months
The past 12 months have seen some opportunities explored and abandoned, particularly the iron ore venture in India and some ventures put on hold, such as tin in NSW and to an extent the gold in Victoria, although the company's tin prospects still represent a substantial opportunity for the future and gold in my opinion represents the best possible sustainable project of any metal commodity in the near future. Although Cluff is re-assessing the problems of its Victorian gold joint venture we as a board remain interested in examining gold opportunities.

Whatever happens on the world markets over the coming year it is more likely than not that the current price of gold will continue to increase. Gold has traditionally been safe haven for investors in times of economic downturn. The current market does not necessarily follow the historical trends but gold has steadily risen in value since October last year.
Below is a chart of the spot price over the past 8 months.

The company will continue to preserve its interest in its Victoria gold venture.

The following table is extracted from the London Metals Exchange this week in relation to tin.

The company remains interested in tin in the long term and is committed to maintain its tin tenements. Tin has we believe finally turned the corner and prices are now recovering to a more viable level. We will continue to monitor these developments over the coming months.

Diamonds in Northern NSW
The major opportunity for Cluff over the coming year which is immediate is the Cluff diamond prospects in northern NSW.

The managing director will speak of the details of these prospects a little later. However I would like to confirm to all shareholders of the significant work undertaken by Peter Kennewell in the analysis of the area. Cluff has a history of an interest in the Inverell area for many years. It has a wealth of historical information on much of the old workings particularly from the late 19th century. Peter is an expert in this material whilst at the same time being a practical over and in the ground geologist. Peter has worn out many a boot walking over these dusty hills, although over the past couple of weeks they were also boggy and wet hills.

On Peter's recommendation this Board determined to focus upon an exploration program at Bingara just to the west of Inverell over the past several months. The exact location of the famous Captain Roger's mine which had been recorded as producing hundreds of thousands of carats of diamonds in the later 19th century has never been re-discovered. Peter re-examined all the data in Cluff's possession and determined to examine different areas of the tenement not previously examined in detail in many years. The results of the past three weeks are testament to the success of this analysis and work over the previous months. We still cannot confirm that we may have re-discovered the old Captain Rogers mine but we have certainly obtained grades of rough diamonds that indicate a major find and a potential economic project. We still need to do substantial additional work before large scale production could be justified, but because of Cluff's existing infrastructure already located nearby we have been able to test, sample and process numerous sites to which Peter had directed our crews. The results over the past month are very encouraging. I hesitate to say exciting until we have undertaken some more work but I am excited by the prospects to date.

I would just like to remind our shareholders of the potential of the industry. Unlike precious metals such as gold or platinum, gem diamonds do not trade as a commodity: there is a substantial mark-up in the sale of diamonds, and there is not a very active market for resale of diamonds. One hallmark of the trade in gem-quality diamonds is its remarkable concentration: wholesale trade and diamond cutting is limited to a few locations. This is both an advantage and disadvantage. Any long term shareholder of Cluff would be aware of similar statements concerning the ruby development at Ellerston some years ago. The distinct advantage with diamonds over rubies is the underlying inherent value of diamond as compared to ruby.

Rough diamonds are sorted based on characteristics such as shape, size, colour, cuttability and quality. The majority of diamonds fall within a range of standard colours from colourless to faint yellow or brown tints. A perfectly transparent diamond with no colour or hue is considered to be the purest. The Diamond Trading Company which is part of De Beers sorts, values and sells around half of the world’s rough diamonds – selling in excess of $6 billion worth of diamonds a year.

A number of the diamonds recently found by Cluff at Bingara do show some yellow tinting which should make them very attractive to the Asian market.

New York, along with the rest of the United States, is where almost 80% of the world's diamonds are sold. Also, the largest and most unusually shaped rough diamonds end up in New York.

"Diamonds Remain a Girls Best Friend" is still a catch cry of most women in 2009. Marriage in Australia appeared under attack over the past 40 years and indeed the proportion of unmarried adults as compared to married adults appeared to be rising in the 1980s and early 1990s. But the last census in Australia did not confirm this trend and indeed indicated a reversal and the revival of marriages as the preferred option for couples.

Diamonds on a girl's third finger left hand is still valued socially and indeed is seen as part of the tradition of marriage. This position is reflected worldwide.

Along with the resurgence of this tradition we have the growth of affluence in Asia and India and the adoption of "western" trappings by the economic successful young people of China and elsewhere. The growth in the sale of diamond rings in China is now the focus of the largest marketing efforts being expended by the diamond wholesaling industry.

The De Beers diamond advertising campaign is acknowledged as one of the most successful campaigns in history. This coordinated campaign has lasted decades and continues today; it is perhaps best captured by the slogan "a diamond is forever". I understand this program is to be embraced in China.

All producers and marketers benefit from this program. As I said in my report in the Annual Report, diamonds remain a primary object and indication of an intention to marry.

Processing takes place in 30 countries but is concentrated in five locations: Antwerp, Johannesburg, Mumbai, New York and Tel Aviv. India processes 55% by value of the world’s diamonds. China and Thailand are increasingly active centres.

Interestingly our relationships being developed in India in respect to the projects on the sub-continent may lead to other opportunities with diamonds discovered and mined in NSW.

The marketing of diamonds remains an issue as de Beers still controls half the market, but there is still a large part unregulated and Australian producers who can demonstrate a resource are looked upon very favourably because of the security of the supply. There is no doubt that if the company is able to prove up the resource and demonstrate a cost effective mining plan that diamonds from northern NSW are not only a viable business but a very attractive business for Cluff over the coming years.

India
For many years Cluff has had a substantial interest in opportunities in India. Cluff has had business connections with Indian venturers and Indian government experts in natural resources in India for the past 15 years. Despite having a population of over 1.3 billion people the vast majority of the Indian sub-continent remains relatively unexplored for minerals and to large extent relatively free of people. Of course India is vast rural community but there are enormous parcels of land in India that are very sparsely populated that are very prospective from a natural resource company perspective. There has been little modern exploration techniques and technology applied to the sub-continent and Cluff's expertise has allowed the company to maintain the relationships with a view to entry into some very prospective joint ventures.

The new Board has resolved to further support the company's efforts in India. But we have established time lines and strict budgets and strategies and plans. Ian has assumed some of these roles and indeed travelled to India with Peter Kennewell in early March to further these goals. The opportunities remain and I remain confident but cautious that some of these will be converted into ventures in the near future. We have nothing to say today but let me assure you we are all working hard to produce a viable venture in India this year.

It has on occasion been said to me that India is not worth the trouble but I disagree. I think Cluff is about to turn the corner in major way and through hard work and little bit of good fortune may just be in the right place at the right time and in the frame of mind to benefit from that positioning. Peter Hartcher in writing in the Sydney Morning Herald on 19 May this year made some very interesting points concerning the recent federal election in India and the return to the government of Manmohan Singh for another five years with what he called a "massive mandate".

Most commentators were predicting the fall of the government or at best the continuation of a coalition of parties with all the problems of management, but the Congress party and Singh have won the right to govern on their own.

Singh is not a market fundamentalist. He has spent five years as a consistent champion of "inclusive development". He took India to consistent economic growth of 9 per cent until the global recession and, even today, India is growing at 6 per cent. At the same time he has always stressed measures to deal with poverty. Although India has made progress in shrinking the proportion of its population living below the poverty line from 60 per cent in 1981 to 42 per cent today, it still is home to one-third of the world's poorest people.

At same time India has a professional middle class of between 30 to 50 million people.

His theory? "Downturn or not, no party could tell India's 714 million voters there was anything more important than their aspirations - of better jobs and education, more political power, better social respect and overall a more dignified life."

Manmohan Singh has gained a mandate to improve Indians' lives by freeing the inherent power of a billion people in a market economy.

Cluff has built relationships at state level that places it in a unique position as a foreign investor resource company to utilise this on-going commitment of the Indian federal government to promote development.

Peter Kennewell, Ian Johns and our consultants are actively pursing these opportunities and we hope to have some further positive news in relation to these matters over the next 3 months.

Confidence in the Future
I am confident of the future of the company and in support of my confidence I have provided funds that very required for working capital over the past several months. All directors have participated and all directors join with me in this expression of confidence for the future.

We cannot also not escape from the obvious problems of Cluff and that is a lack of sufficient working capital to realise the opportunities I have spoken about. The company is also considering some funding options which we will subsequently be putting to you.

The board has brought focus to Cluff for the immediate future. We have very good diamond prospects at Bingara and Copeton and the board is confident of the immediate prospects at Bingara. The company proposes to raise funds to further develop and explore the Bingara prospect with a view to producing a diamond mine at Bingara.

Cluff has a flexible team who are always looking for opportunities. We have a presence and are well respected.

We are going to focus on Bingara (diamonds) and India for the next 6 months. We are hopeful of having a producing viable long term project which is our goal.

As always I also need to caution you in relation to investments in Cluff or indeed any public company. Cluff remains essentially a speculative investment and you must make up your own mind on the basis of the material we will distribute to you in relation to the future fund raising. I recommend your continued investment in Cluff but I certainly cannot guarantee any investment.

We invite you along.

Peter Ashcroft
Chairman
Cluff Resources Pacific NL

28 May 2009
Former diamond open cut mine identified at Bingara

Six gem quality diamonds have been recovered from an eight tonne bulk sample from a former diamond open cut near the 1890s processing area of the Australian Diamond Mining Company.

The diamonds occur in a clay rich debris flow or hot spring deposit containing bedrock fragments, which is present as relicts of the material mined. These are preserved over a thickness of 1.5 metres in the wall of the open cut. The grade of this sample is 13.9 carats / 100 tonnes.

The sample is similar in grade, nature and occurrence to the recently taken Sample B BH 1 from Big Hill, 400 metres to the north, and demonstrates the presence of an ancient, near horizontal depositional surface on which similar rocks formed throughout the district.

The open cut has mined the deposit from within a shallow depression twenty by twenty five metres. A 0.5 to 1 metres thickness of similar rocks, containing sparse small rounded pebbles, is preserved on the base of the pit, and is now being sampled to determine the quality of the diamonds mined, and the grade at the base of the deposit.

The likely total thickness of the diamond bearing deposit was at least 2.5 metres, as the open cut has removed the crest of a small rise capped by gravels, and as one metre of similar material was preserved within the centre of the depression.

The diamonds found are shown above. Also recovered on the grease table were some small non-commercial pieces of blue sapphire and flakes of gold. Location is 0256485E 6692333N (GDA 95). Eight out of ten 2mm tracers were recovered.

Sample B OD 8 was taken from the pit edge at centre right.
Note the railway tracks (centre) oriented towards the washing dam.

Sample B BH 9

Six white gem quality diamonds totalling 1.4 carats, the largest weighing 0.78 carats, were recovered from Pit B BH 9 on Big Hill, (0256669E 6692588N, GDA 95) from basal conglomerates, overlying the ancient erosion surface mentioned above, at a grade of 9.9 carats per hundred tonnes. Two very small stones were not included in the photograph.

Based on recent exploration results, it is likely that the diamonds were contained within the clayey band crossing the centre of the photo below, and similar in occurrence to those in B OD 8. As this band is about 0.4 metres thick within a total sample thickness of 2.4 metres, the grade of this narrow band may be higher than reported. All tracers were recovered.

Base of Sample B BH 9 above (at top of shovel blade)

Additional Samples
Eight additional samples testing different exploration models yielded no diamonds.

Sampling was by backhoe and excavator. The samples were trucked to Copeton for crushing to 10 mm, processing through the Company’s trommel and jig plants, using a screen size of 1.2 mm. Separation from concentrate was by grease table.

31 March 2009
Ten gem diamonds (2.42 carats) recovered at Bingara

Ten gem quality diamonds have been recovered from a twelve tonne sample of hill slope or debris flow deposit containing bedrock fragments, together with underlying weathered bedrock, in the Big Hill area of the Company’s Bingara Diamond Field, in northern NSW. The grade of this sample is 20.2 carats / 100 tonnes.

The Company is now focussed on discovering the source from which this anomalously rich diamond bearing material originated. The diamonds found are shown below. Five stones are yellow in colour, and five are white.

The present bulk sampling and drilling program is applying our Copeton model, refined by recent drilling, to reassess the Bingara Field. If economic grades of diamonds were present at Bingara, the shallower depths expected may make open cut mining possible, and establishment of a mine faster.

Sampling was by excavator over a vertical interval of 1.5 metres. Location is 0256631E 6692545N (GDA 95). The sample was trucked to Copeton for crushing to 10 mm, processing through the Company’s trommel and jig plants, using a screen size of 1.2 mm. Nine out of ten tracers were recovered. Separation from concentrate was by grease table. Weight of sample was determined by weighbridge.

Sample B-BH-1 was taken from the upper portion of the pit.

Recent drilling or deepening of seven cored holes in the area of the Company’s 60 metre deep shaft on the Copeton Diamond Field, 50 kilometres east, has been completed. This has allowed refinement of the model for occurrence of the Copeton diamond deposits. The Company’s rig has been moved to Bingara, and is now drilling there.

The information in this report that relates to exploration results is based on information compiled by Peter John Kennewell, who is a corporate member of the Australasian Institute of Mining and Metallurgy included in a list promulgated by the ASX from time to time. Peter John Kennewell is a full time employee of Cluff Resources Pacific NL and 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 "Australasian Code for Reporting of Exploration Results, Identified Mineral Resources, and Ore Reserves". Peter John Kennewell consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Peter Kennewell
Managing Director

23 March 2009
Directors provide short term funding

At a recent Board meeting, Cluff directors resolved to provide short-term funding to the Company to a total of $380,000. The Cluff Board was mindful of the need to provide working capital to enable the continuation of exploration programs and the completion of confidential negotiations.

Recent investigations have been made via our financial advisers as to the appetite of the market and of sophisticated investors to provide suitable funding. However, considering the best interests of all stakeholders it was felt that whilst there are difficult prevailing market conditions and incomplete information available to present to the market on the Company’s current activities, that it was not the right time to initiate these processes.

Directors’ funds have been provided in the form of commercial loans to the Company, with an interest rate of 10% applicable where interest is payable quarterly. It is furthermore proposed that at the next General Meeting of the Company, approval will be sought from shareholders to convert these funds into convertible notes, together with options (specific details below).

The Board are mindful of the considerable risks involved in committing these funds at this point in time, however they are confident that the Company will in due course complete the necessary activities to enable the Company to proceed forward with renewed focus.

To summarise, the funds provided are considered to be a commercial loan to the Company, until the Company receives approval from shareholders to convert them into converting notes having the terms and conditions described below, together with the issue of options. With reference to ASX Listing Rule 6.1, the creation of this new form of security has been approved by the ASX, however shareholder approval will be required in order to finalise the arrangement. If shareholder approval is not granted, the funds will continue to be classified as loans to the Company.

The motions which will be put to the shareholders at the next General Meeting with regard to funding from Directors will be as follows:

MOTION 1:
That with respect to funds already provided to the company by Mr Ian Johns by way of loan to a total of $120,000 it is RESOLVED that the company will issue converting notes in amounts of $5000 each being a total of 24 notes which shall be converted at $0.003 per ordinary share (being 1,666,667 shares per note) and to which interest of 15% pa is payable quarterly in arrears on daily rests but if interest is paid quarterly on time the interest rate will be 10% and in any event all interest will be payable on conversion.

Subject to approval of the notes and the following options by the company in general meeting, each note shall also entitle the noteholder to be issued with 500,000 unlisted options for ordinary shares in the company at $0.005 per ordinary share and such options must be exercised in amounts of 500,000 options on or before 31 December 2009 and further each note shall also entitle the noteholder to be issued with 500,000 unlisted options for ordinary shares in the company at $0.01 and such option must be exercised on or before 31 December 2009. Conversion of each note is to take place within 2 months of the approval of the note by the company in general meeting or at any time at the request of the noteholder. If the notes and options are not approved by the company in general meeting the noteholder shall be entitled to call for repayment of the loan plus interest upon 60 days notice.

MOTION 2:
That upon each of the directors arranging or providing additional funds to the company by way of loan in a sum of $65,000 each being a total of $260,000 it is RESOLVED that the company will issue converting notes in amounts of $5000 each being a total of 52 notes which shall be converted at $0.003 per ordinary share (being 1,666,667 shares per note) and to which interest of 15% pa is payable quarterly in arrears on daily rests but if interest is paid quarterly on time the interest rate will be 10% and in any event all interest will be payable on conversion.

Subject to approval of the notes and the following options by the company in general meeting, each note shall also entitle the noteholder to be issued with 500,000 unlisted options for ordinary shares in the company at $0.005 per ordinary share and such options must be exercised in amounts of 500,000 options on or before 31 December 2009 and further each note shall also entitle the noteholder to be issued with 500,000 unlisted options for ordinary shares in the company at $0.01 and such option must be exercised on or before 31 December 2009. Conversion of each note is to take place within 2 months of the approval of the note by the company in general meeting or at any time at the request of the noteholder. If the notes and options are not approved by the company in general meeting the noteholder shall be entitled to call for repayment of the loan plus interest upon 60 days notice.

Peter Kennewell
Managing Director