EPM 15540

Palmer

North Queensland

Annual and Final Relinquishment Report

For the Year Ending

2nd March 2009

Prepared and Submitted by:

George Ross

Geologist

MKY Resources

Data Presented in

GDA 94 Datum

Distribution:

QLD Department of Mines and Energy

Queensland Uranium Ltd

May 2009

SUMMARYThe Palmer tenement (EPM 15540) was granted to Queensland Uranium Ltd on the 2nd of March 2007. The lease was pegged as a northern extension to the company controlled “Wally 2” lease, located directly adjacent to the south. Fifty percent of the lease was relinquished on the 2nd March 2009 at the request of the Queensland department mines.

A change in company management has since led to the decision for complete relinquishment of the lease. No work has been carried out on the lease since 2nd of March 2009.

TABLE OF CONTENTSSUMMARY.....................................................................................................................2

TABLE OF CONTENTS.............................................................................................3

LIST OF FIGURES.....................................................................................................3

LIST OF TABLES.......................................................................................................3

INTRODUCTION...........................................................................................................4

TENEMENT DETAILS..................................................................................................4

GEOLOGY......................................................................................................................5

WORK COMPLETED....................................................................................................6

2007/2008 ................................................................................................................... 6

2008/2009 ................................................................................................................... 7

CONCLUSION............................................................................................................8

LIST OF FIGURESFigure 1 - Palmer lease extent and sub blocks.....................................................................4

Figure 2 - Geology of the Palmer Lease (EPM 15540).......................................................5

Figure 3 - Comparison of Uranium Channel and U/Th Ratio Radiometrics.......................7

LIST OF TABLESTable 1 - Tenement Details (post 02/02/2009)....................................................................4

Table 2 - Geochemistry assay results..................................................................................6

INTRODUCTIONThis report documents work completed by Queensland Uranium Ltd on EPM 15540, “Palmer” during second year of tenure from 02/03/2008 to 01/03/2009. The report also summarises work carried out during the life of the lease.

EPM 15540 is located approximately 60km south west of Laura in the Mesoproterozoic to Palaeozoic aged Coen Inlier. Access is via the Burke development road and various station tracks. The primary target for exploration was hard rock and alluvial uranium mineralisation.

TENEMENT DETAILSEPM 15540 was granted as six blocks to Consolidated Exploration NQ Pty Ltd on the 2nd of March 2008 for a period of five years. Consolidated Exploration NQ Pty Ltd is a wholly owned subsidiary of MKY Resources Ltd. Tenement Details are summarised below in Table 1.Table 1 - Tenement Details (post 02/02/2009)

EPMNo.

EPMName

No. Sub- blocks

Individual Sub-blocks Grant Date Expiry

15540 Palmer 8 MITC3456C,MITC3456D,MITC3456J, MITC3456KCOOK3385B,COOK3385C, COOK3385F, COOK3385G

02/03/2007 01/03/2012

Figure 1 - Palmer lease extent and sub blocks

GEOLOGYThe lease lithology is dominated by the Mesoproterozoic aged Yambo Metamorphics containing high grade meta-sedimentary and meta-igneous rocks including pelitic to psammitic schist, quartzite, calc silicate and rare marble. The Mesoproterozoic Kintore Supersuite Orthogneiss intrudes the Yambo Metamorphics along the western flank of the tenement.

Recent Quaternary aged unconsolidated sediments overly the Yambo Metamorphics, these are also overlayed by mesas of Tertiary and Jurassic formations. The Quaternary units were interpreted as being prospective for alluvial heavy minerals sands and economic accumulations of loveringite float.

The Wally 1 Lease (EPM 13966) is located 10km to the south west of EPM 15540 and shares similar geology. Wally 1 is host to refractory uranium mineralisation in the form of sheeted vein loveringite. The Wally prospects were the initial focus for company exploration in the region, however disappointing drilling and costeaning results led to abandonment of exploration activities. Subsequently the prospectivity of Palmer was downgraded and exploration efforts ultimately abandoned.

Figure 2 - Geology of the Palmer Lease (EPM 15540)

WORK COMPLETEDThe Palmer lease was initially pegged due to its proximity to the Wally 1 and Wally 2 prospects located directly the south west. An exploration model was generated to test the prospectivity of younger sediments as hosts for heavy mineral deposits and alluvial loveringite. Exploration into the lease was impeded by very poor access conditions resulting in use of helicopters for sampling and reconnaissance exploration.

2007/2008During the first tenure period, company reports from previous exploration ventures n the area were acquired and reviewed for relevant information. It was revealed that the majority of work in the area had focused upon alluvial gold exploration with minor investigation into copper and tungsten occurrences. It turned out there was little of interest in the previous exploration with the exception of regional geophysics surveys which were acquired and analysed by the then tenement managers, North Queensland Mining Services.

Based on the reprocessed airborne radiometric data an initial helicopter supported program was undertaken where geologists and field assistants were transported around the area with hand-held scintillometers for several days in search of uranium mineralisation in the field that could be associated with the airborne radiometric anomalies (U Channel – total counts).

Nine 12” mesh sifted pan concentrate samples were collected during the tenure period, these were tested for abundance by SGS-Townsville using XRF analysis. The results for these tests are listed in Table 2. High uranium values are consistent with the observed abundance of monazite and other heavy minerals in sampled sediments

Table 2 - Geochemistry assay results

Sample ID

Latitude (GDA94)

Longitude (GDA 94) Comment

U (ppm) XRF

FHU3 -15.937239 143.991179Black sand+; Pyroxenite minor; Monazite minor; Ilmenite++ 2520

FHU4 -15.923394 143.953962 Monazite+; Ilmenite minor 2410

FHU5 -15.924473 143.952298 Monazite++ 1630

FHU6 -15.921502 143.944425 Monazite++; Black sand+ 3160

FHU7 -15.922151 143.943193 Monazite++; loveringite pieces? 3450

FHU8 -15.923272 143.929798 Monazite+; black minerals fine 3470

FHU9 -15.928302 143.983776Garnet++; Monazite++; Black Minerals minor 2620

FHU10 -15.923870 143.975172Garnet+; Monazite+++; Black Minerals minor 1620

TC1 -15.944529 143.952339Garnet+++; Monazite+; Black Minerals+; Ilmenite? 354

2008/2009In the 2008-2009 field season wet weather hampered exploration efforts limiting time devoted to field work. Limited Helicopter based field reconnaissance was directed into the tenement with the use of hand held scintillometers for exploration targeting.

In early 2009 the “RadMap09” radiometrics composite imagery dataset was released by Geoscience. This data was reprocessed to better understand alluvial distribution of radiogenic heavy mineral sands. Company staff reprocessed data relevant to the area and generated U/Th ratio imagery for entire region. The U/Th imagery revealed that areas previously prospected in detail were the only areas which showed uranium enrichment relative to thorium, on this basis the areas prospectivity was downgraded and finally the decision was made to relinquish the lease.

Figure 3 - Comparison of Uranium Channel and U/Th Ratio Radiometrics

CONCLUSIONGround mapping and geochemistry sampling has not encountered mineralisation deemed worth of further expenditure. The company has made the decision to fully relinquish EPM 15540 and concentrate exploration efforts elsewhere.