EDN Elkedra

    Level 1, 130 Hay St, Subiaco, Western Australia 6008
                                     Telephone: +61-8-6380 2855
                                     Facsimile: +61-8-6380 1644
                                     P O Box 8035, Subiaco East, Western Australia 6008
                                     E-mail: elkedra@elkedra.com.au
                                     Web Site: www.elkedra.com.au
 
          Chapada processing plant
 
                       Listed on ASX and AIM (Code EDN)

                                QUARTERLY ACTIVITY REPORT
                                  FOR THE PERIOD ENDING
                                    30 September 2007


                                     HIGHLIGHTS
 
                                     CORPORATE
 
 - Shareholders to vote on merger with Canadian diamond company Vaaldiam Resources
                         Ltd (TSX: VAA) on 29 October 2007.
 
   - Pro rata in specie distribution to Elkedra shareholders of 25 million Uramet
                           Minerals Ltd shares completed.
 
                                       BRAZIL
 
                              Chapada Diamond Project
 
                - 4,341 carats of diamonds produced for the quarter
 
           - Revenue of US$1,810,695 generated from sales in the quarter.
 
OVERVIEW

1.0 CORPORATE

MERGER WITH VAALDIAM RESOURCES LTD

On 4 July 2007 the Company announced that it had received an offer from
Canadian listed diamond group Vaaldiam Resources Ltd (TSX:VAA) (Vaaldiam) to
acquire all of the outstanding shares of Elkedra in exchange for Vaaldiam
common shares by way of a Scheme of Arrangement. Under the proposed terms of
the Scheme, Vaaldiam will issue 0.52 of a Vaaldiam share for each Elkedra
share held by Elkedra shareholders. At the time of the announcement these
terms valued Elkedra shares at A$0.53, a 60% premium to the then ASX and AIM
trading share price.

The Directors of Elkedra believe there is considerable merit in the proposed
merger of the companies and their respective spread of complementary diamond
assets in South America and Canada and has unanimously agreed to recommend the
Vaaldiam offer to Elkedra shareholders, subject to no competing and more
favourable bid being received. The Scheme of Arrangement is subject to a
number of conditions, including absence of adverse material changes and
receipt of all necessary regulatory, shareholder and court approvals.

A notice of meeting together with a scheme booklet was despatched to all
Elkedra shareholders on 28 September 2007 providing full details of the Scheme
of Arrangement as required under the Corporation Act. The implementation of
the Scheme, if approved by shareholders at a meeting convened for Monday 29
October 2007, and subject to final court approval, would involve the transfer
of all Elkedra securities to Vaaldiam and the cancellation of Elkedra's
listing on the ASX and AIM Markets.

Important dates to note are:
 
Proxies to be received not later than 11:30am (Perth,      27 October 2007
Western Australia time)
 
Meeting of Elkedra shareholders to approve the Scheme      29 October 2007
of Arrangement
 
If Elkedra shareholders and the Court approve the Scheme, the EXPECTED
timetable is
 
Last day of AIM trading in Elkedra Shares                  7 November 2007
 
The Scheme becomes binding (Effective Date)                8 November 2007
 
Last day of ASX trading in Elkedra Shares                  8 November 2007
 
Record date for determining entitlements (Record           15 November 2007
Date)
 
Despatch of certificates for new Vaaldiam Shares and       23 November 2007
trading in new Vaaldiam Shares on the TSX commences
 
The merger of Elkedra and Vaaldiam will create a leading diamond production,
exploration and development company. The `new' Vaaldiam will have the ability
to substantially fund the consolidated group's advanced-stage kimberlite
exploration and development costs from cash flow, thereby reducing dilution to
its shareholders. The combined group will also have strong management
expertise and the financial capacity to realise the potential value of the
extensive exploration portfolio and to capitalise on future acquisition
opportunities.

Ken Johnson will continue as President and Chief Executive Officer of Vaaldiam
while Peter Marrone will continue as Chairman of Vaaldiam. Elkedra directors
Don Best and Sam Randazzo will join Vaaldiam's executive management team as
Vice President, Operations and Vice President, Business Development,
respectively. Sam Randazzo will also be appointed to the board of Vaaldiam.

URAMET MINERALS LIMITED

As was proposed in the June 2007 quarterly report Elkedra completed the in
specie distribution of 25 million Uramet shares to Elkedra shareholders on 19
September 2007.

2.0 BRAZIL

CHAPADA DIAMOND PROJECT - Elkedra 100%

PRODUCTION

Diamond production and key operating statistics for the 3 months ended 30
September 2007 are shown in the following table.

                        Production Statistics

Production Month             Average  Diamonds Recovered    Average
                                                          Stone Size
                   Plant      Grade                       (cts/stone)
                 Throughput (cts/bcm)
                   (bcm)1              Stones    Carats
                                       
September 07 Qtr  127,261     0.034     7,780     4,341      0.56


1. "bcm" means "bank cubic metre" of insitu gravel in mining benches and plant
throughput is based on total run of mine production including all under and
oversize material.

The average quarterly plant throughput and carat production achieved during
the year ended 30 June 2007 were 156,131 bcm and 5,423 carats respectively.

SALES

During the quarter three monthly sales were completed as follows:

                         Diamond Sales
 
           Date            Carats  Average    Total
                   No. of           Value     Value
          (2007)   Stones            US$       US$
 
          25 July  3,394   1,763     353     623,097
 
          22 Aug   2,534   1,531     443     677,641
 
          19 Sept  2,244   1,281     398     509,957
 
           Total   8,172   4,575     396   1,810,695
 
Since start up in July 2006 to the end of September 2007, the Chapada project
has sold a total of 25,699 carats (48,898 stones) for a total value of
US$10,049,826.

Diamonds falling into the specials category during the September 2007 quarter
are as follows:

                   Stones in 10+ Carat Specials Category
 
     Valuation           Average   Total                  Stone Sizes
       Date     No. of    Value    Value
      (2007)    Stones     US$      US$
 
      25 July     3       1,058    46,508         19.16 cts, 12.32 cts, 12.48 cts

 
      22 Aug      4       2,091   181,913     33.44 cts, 22.77 cts, 16.41 cts, 14.39 cts

 
      19 Sept     2       2,454    66,249             16.23 cts, 10.76 cts
 

 
The 33.44 carat diamond sold in August valuation is the largest diamond
recovered at Chapada to date. This diamond was valued at US$3,000/carat giving
a total value of US$100,320.


Fig. 1 33.44 carat diamond

There were no project development activities undertaken during the quarter.

PEBA LAGOINHA TENEMENT

On 19 June 2007, Sema, the environmental authority for the state of Mato
Grosso in Brazil, issued an installation licence which allows the Company to
undertake development activities on the Peba Lagoinha deposit located
immediately adjacent to the Quilombo mine currently in operation. The DNPM
(Mines Department) are still to issue the mining license for this tenement but
this is expected within the next month. Current planning is that the Peba
Lagoinha deposit should be ready for mining within the first quarter of 2008.

EXPLORATION TENEMENTS

In addition to the existing Quilombo mine and Peba Lagoinha tenement, Elkedra
holds a further seven granted exploration tenements covering some 270 km2
within the surrounding Chapada basin region. Historical exploration activities
have shown these areas to also contain diamondiferous gravel deposits. If
ongoing exploration work indicates economic resources in these tenements, then
low capital cost satellite mining operations can be established at the
tenements providing a gravel concentrate back to the Chapada process plant for
final diamond recovery.

No tenements were applied for or relinquished in Brazil during the quarter.

                                    Fig. 2

Exploration - Brazil

During the quarter test pitting has continued on the Casca tenement in areas
were access agreements with land owners are already in place. This test
pitting work has been focused on determining volume of gravels, the depth of
overburden and bedrock profile within the Casca tenement.

During September, drilling and test pitting has also commenced at the Quilombo
tenement to test for new extensions of the known existing gravel terraces that
are currently being mined.

The proposed merger with Vaaldiam Resources Limited should allow the
exploration campaign at Chapada to be accelerated. Vaaldiam has several drill
rigs and exploration personnel in Brazil and following completion of the
merger, 2 drill rigs and support staff are expected to be relocated to the
Chapada project to advance the exploration programme.

3.0 AUSTRALIA

AUSTRALIAN EXPLORATION

Fig. 3 Current Tenement Plan - Australia. Tenements in blue transferred to
Uramet Minerals Ltd. Tenements in red retained by Elkedra Diamonds NL.

As reported in the June 2007 quarterly report, Elkedra's granted tenement
holdings in the southern Georgina Basin region of the Northern Territory (Mt
Skinner and Altjawarra Project Areas) were transferred to Uramet Minerals Ltd
(Uramet) (see Fig. 3). Elkedra retains the rights to diamond exploration on
these NT tenements. Three tenements in the Mt Skinner Project area (EL25573,
EL25574 and EL25610) were granted during the quarter and are in the process of
being transferred to Uramet. Elkedra has retained its Queensland tenements but
Uramet holds the rights to explore for commodities other than diamonds.
Elkedra has retained a 100% interest in all minerals on tenement applications
on the Tiwi Islands (Fig. 3).

Remaining tenements held by Elkedra in the NT and Queensland total 6,411 km2,
including both granted tenements and pending applications. Tenements in the NT
now held by Uramet Minerals Ltd in which Elkedra retains the diamond rights
total 6,378 km2.

No Australian exploration activities were carried out during the quarter.

4.0 CORPORATE

SECURITIES

During the quarter 2,370,699 new shares were issued for 2,370,699 warrants
exercised at 12 pence. A total of 363,745 warrants expired on 31 August 2007
and were cancelled. There are no warrants on issue as at 30 September 2007

The total number of issued shares of the Company as at 30 September 2007 was
106,966,910.

As at 30 September 2007 a total of 12,133,334 unlisted options exercisable at
between A$0.35 and A$1.20 are on issue.

The Company regularly updates its Web Site at www.elkedra.com.au

For and on behalf of the Board

M.D.J. Cozijn
Director/Company Secretary
24 October 2007


The geological information on the Australian projects is based on information
compiled by and reported upon by Dr Wayne Taylor, Elkedra's Chief
Mineralogist, who is a member of the Australian Institute of Geoscientists and
qualifies as a Competent Person as defined in the JORC Code. Dr Taylor
consents to the inclusion in this report of the matters in the form and
context in which it appears.




END

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