Gravity Diamonds is launching a £3.5 million rights issue at 17.5p to fund drilling and exploration in Australia and Congo.

Anglo-Australian group BHP Billiton, the world's biggest mining company, has 9.6 per cent of AIM-quoted Gravity, also listed Down Under, which is offering shareholders one new share for every four held. If there is a shortfall, the company, run by ex-BHP geophysicist and exploration manager Phil Harman, will seek to place shares with new investors.

Advisers to Gravity say the company is making encouraging progress in Congo, where it is drilling in the Luebo area, on the same geological trend as the diamond-rich provinces of neighbouring Angola. In Australia, Gravity has a joint venture with Rio Tinto in the Northern Territory and two in Western Australia, with Blina Diamonds at Ellendale and with Striker Resources at North George.

Gravity's shares were introduced onto AIM in April at 35p and have lost ground since then. At 20.5p, down 0.5p this morning, they value the company at £24.4 million, but could have strong speculative recovery potential over the medium to long term.

Gravity Diamonds	AIM	0pm	p	p
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