The annual report was received on 29/11/96. During the first year it was confirmed that spat are likely to be abundant enough in the vicinity of Gizo and Noro to support village based farms for blacklip pearl oysters, and that the best collections are made during summer. Survival rate of spat on collectors was improved, and ways to reduce the cost of constructing the most effective type of spat collectors were identified. The research also yielded other important observations about the collection of spat: 1) Longlines at inshore sites produce good catches of spat prior to the wet season, but are not productive once there is heavy runoff. Conversely, longlines placed further from land at clearwater sites with moderate currents produce good numbers of spat throughout summer. 2) The longer collectors are left in the water after 3 months, the fewer live spat they produce. By comparison, spat removed from collectors at 3 months survive well in intermediate culture, provided fouling on grow-out systems is controlled and predators are removed regularly. Hypotheses stemming from these observations will be tested during the second year of Phase 2.