ALICE QUEEN LIMITED — Interim / Quarterly Report 2012

Mar 12, 2012

CALLABONNA URANIUM LIMITED ABN 71 099 247 408

AND ITS CONTROLLED ENTITIES

INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2011

CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

CORPORATE DIRECTORY

CORPORATE DIRECTORY

Directors

Peter Nightingale (Chairman) Phillip Harman Hyunsoo Kim Stephen McCaughey Michael Raetz

Company Secretary

Richard Edwards

Auditors

KPMG Level 16, Riparian Plaza 71 Eagle Street Brisbane QLD 4000

Bankers

Westpac Banking Corporation 275 George Street Sydney NSW 2000

Registered Office

Level 2 66 Hunter Street SYDNEY NSW 2000 Telephone: +61 2 9300 3366 Facsimile: +61 2 9221 6333 Email: redwards@callabonna.com.au Website: www.callabonna.com.au

Technical Office

6 Powlett Street East Melbourne VIC 3002 Telephone: +61 3 9417 2920 Facsimile: +61 3 9417 2728

Share Registry

Computershare Investor Services Pty Limited 117 Victoria Street West End Queensland 4101 Telephone: +1300 552 270 (within Australia) Telephone: +61 3 9415 4000 (outside Australia) Facsimile: +61 3 9473 2500

Stock Exchange Listing

Securities of Callabonna Uranium Limited are listed on the Australian Securities Exchange. ASX Code: CUU

CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

TABLE OF CONTENTS

CONTENTS

Directors’ Report Lead Auditor’s Independence Declaration 15 Condensed Consolidated Interim Statement of Comprehensive Income 16 Condensed Consolidated Interim Statement of Financial Position 17 Condensed Consolidated Interim Statement of Changes in Equity 18 Condensed Consolidated Interim Statement of Cash Flows 19 Notes to the Condensed Interim Financial Statements 20 Directors’ Declaration 24 Independent Auditor’s Review Report 25

CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

Your Directors have pleasure in submitting their report together with the consolidated financial report of the Group, being Callabonna Uranium Limited ('Callabonna' or the 'Company') and its controlled entities, for the half year ended 31 December 2011 and the review report thereon.

Directors

The names of the Directors of the Company in office during or since the end of the half year are:

Peter Nightingale - Non-Executive Chairman

Director since 24 September 2009.

Peter Nightingale graduated with a Bachelor of Economics degree from the University of Sydney and is a member of the Institute of Chartered Accountants in Australia. He has worked as a chartered accountant in both Australia and the USA.

As a director or company secretary Mr. Nightingale has, for more than 20 years, been responsible for the financial control, administration, secretarial and in-house legal functions of a number of private and public listed companies in Australia, the USA and Europe including Pangea Resources Limited, which acquired and developed the Pauper's Dream gold mine in Montana, USA, Timberline Minerals, Inc. which acquired and completed a feasibility study for the development of the MacArthur copper deposit in Nevada, USA, Perseverance Corporation Limited, which discovered and developed the Nagambie gold mine in Victoria, Valdora Minerals N.L., which developed the Rustler's Roost gold mine in the Northern Territory and the Ballarat East Gold Mine in Victoria, Mogul Mining N.L., which drilled out the Magistral and Ocampo gold deposits in Mexico and Bolnisi Gold N.L. which discovered and developed the Palmarejo and Guadalupe gold and silver mines in Mexico.

Mr. Nightingale is currently a director of ASX listed Augur Resources Ltd, Cockatoo Coal Limited, Planet Gas Limited, Sumatra Copper & Gold plc and unlisted public companies Equus Resources Limited and Nickel Mines Limited.

Phillip Harman - Non-Executive Director Director since 9 February 2009.

Mr. Harman is a professional geophysicist who spent more than 30 years working for BHP Billiton in minerals exploration in a broad number of roles including Chief Geophysicist, Manager Discovery of Technology, and Exploration Manager in both South America and Western Australia.

His experience in BHP spanned both technical and managerial roles here in Australia and overseas. He is broadly networked throughout the international mining business development and exploration community, has experience in creating and managing junior exploration companies and understands capital markets, having raised risk capital for exploration through the ASX and on AIM in London.

Mr. Harman was Managing Director of ASX listed Gravity Diamonds Limited from August 2002 until its acquisition by African miner Mwana Africa plc in May 2007 and is currently the Chairman of Gippsland Offshore Petroleum after being appointed to the role in November 2004.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

Hyunsoo Kim - Non-Executive Director

Director since 24 September 2009.

Hyunsoo (Hans) Kim graduated from Seoul National University with a Bachelor of Economics degree in 1991 and then earned an MBA degree from Duke University in 2002.

In 1994, Mr. Kim joined SK Energy Co. Ltd., the largest energy and petrochemical company in Korea. He had initially worked for Corporate Planning Division, where he participated in the activities such as strategic planning and corporate restructuring for the entire SK Group. Mr. Kim was assigned to the Office of the Board of Directors of SK Energy in 2004 and contributed to the significant improvement in corporate governance of the company.

Mr. Kim joined Coal & Mineral Resources Division in early 2008 and is currently the Managing Director of SK Networks Resources Australia Pty. Limited.

Stephen McCaughey - Director

Director since 14 July 2008. Managing Director until 30 June 2011.

Stephen is an Exploration Geologist with over 20 years experience including 14 years with BHP. Most recently he was Exploration Manager for Aura Energy where he led the exploration effort across Australia, Africa and Sweden and, in particular, specific uranium exploration programs.

Mr. McCaughey has a broad range of skills, with project experience ranging from strategic project generation and greenfields exploration through to development evaluations, feasibility of brownfield discoveries, joint venture negotiations and project acquisition due diligence.

Mr. McCaughey has worked in South America, throughout Australia, Africa and Europe and has experience with most mineralisation types and provinces. He has a proven track record of exploration success having led the exploration team responsible for several significant copper and gold discoveries in the Tintaya copper province of Peru.

Stephen is a first class Honours graduate in geology from Monash University and has an MBA from Melbourne Business School. He has spent time in strategy consulting with Booz Allen and in banking and finance with one of the major Australian banks, both of which add breadth and depth to his already considerable exploration experience.

Stephen is Managing Director of Andean Hydro Pty Limited, an Australian company developing renewable energy projects in South America.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

Michael Raetz - Director

Director since 24 September 2009.

Michael Raetz is an exploration geologist with over 35 years experience in exploration for base and precious metals and uranium. He worked for BHP Minerals Discovery from 1970 to 1999 in Australia and Indonesia. He gained mining experience as Senior Mine Geologist of the Cadjibut Zinc mine and contributed to the discovery of the Kapok ore body. Mr. Raetz was Program Leader and Principal Geologist for the BHP World Minerals Discovery Australian Reconnaissance Group from 1996 – 1999.

Between 1999 and 2006, he was a Senior Research Fellow in Economic Geology at Monash University, researching global Proterozoic base metals as part of the BHPB/Australian Research Council joint research project.

Mr. Raetz is founding director of PGN Geocience Pty Ltd, a successful international geological consultancy. He is a Member of the Geological Society of Australia and the Australian Institute of Geoscientists. He has been the Company’s Chief Operating Officer from 1 July 2011.

Richard Edwards - Company Secretary and CFO

Secretary since 24 September 2009.

Mr. Edwards graduated with a Bachelor of Commerce degree from the University of New South Wales and is a member of CPA Australia and the Securities Institute of Australia. Following eight years as an owner/manager of his own business Mr. Edwards has worked for over ten years providing financial reporting and company secretarial services to a range of publicly listed companies. He is also CFO and Company Secretary of ASX Listed Sumatra Copper & Gold plc.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

REVIEW OF OPERATIONS

OVERVIEW

• Callabonna’s resources will be focused on its Northern Territory uranium tenements and the gold potential of the Queensland projects.

• Northern Territory - Arunta Uranium Five Mile Creek prospect all permitting completed and planning for drilling advanced.

• South Australia - Curnamona project uranium assays received following completion of drilling program. Discussions to farm out these projects being undertaken.

• Queensland - Dagworth Uranium project EPM 18625 granted and the Neptune gold project advancing to plan. Drilling program conducted by JV partner at Delaney.

LOCATION

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES DIRECTOR’S REPORT

ARUNTA URANIUM PROJECTS, NORTHERN TERRITORY - (100% CUU)

Callabonna holds several leases in the Arunta Inlier of the Northern Territory. The Arunta Inlier is considered to be prospective and largely underexplored terrain. A number of advanced exploration/development projects including Energy Metal’s Bigrlyi (JORC 20.6 Mlb U3O8 at 500 ppm) and Arafura’s Nolans Bore (JORC 13.3 Mlb U3O8, 0.85 Mt 2.8% REO) lie within the region of Callabonna’s projects.

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- Mt Denison Uranium Project Five Mile Creek Prospect

The Mt Denison project (EL 27181) lies some 250 kilometres northwest of Alice Springs in the Northern Territory. The project contains known uranium mineralisation related to granitic intrusives and altered country rock and is prospective for both primary granitic and secondary sedimentary uranium deposits.

During the half year the Company announced the discovery of the Five Mile Creek uranium prospect by a large Mobile Metal Iron (‘MMI’) survey. The regional MMI survey has delineated an extremely well attenuated zone of uranium anomalism within the Five Mile Creek prospect area which is interpreted to extend at least 4 kilometres along the axis of a modern drainage system and includes uranium response ratios exceeding ~150 times background. Importantly, the anomaly is constrained by multiple highly anomalous samples that define a well formed coherent geochemical anomaly within lower background values. Waters draining through the Five Mile Creek prospect are shed from the uranium enriched Wangala Granite.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

During the half year, the proposed drilling and access plan was submitted to the Aboriginal Area Protection Authority (‘AAPA’) for approval (see map below). Officers of the AAPA have recently issued a permit without any exclusions that will allow the drilling to proceed as planned. .

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Proposed drilling and access plan of the Five Mile Creek prospect area.

Mt Hay Uranium Project

The Mt Hay uranium project (EL 26006) is located 50 kilometres north east of Alice Springs. A series of north to north west palaeochannels have been interpreted from an earlier AEM survey conducted in 2009.

During the half year, an MMI survey consisting of 117 samples was conducted along the axis of the interpreted channels. The best result was only 3.5 times background uranium response ratio peak (compared to 150 at Mt Denison). These results do not justify ongoing investment in this area and consequently the tenement will be relinquished.

Moonlight Uranium Project

The Moonlight uranium project (EL 28253) tenement area will be reduced following a reconnaissance mapping and sampling survey during the half year. The area to be retained for further investigation is in the south west of the licence where indications of a shear zone exist with anomalous uranium of around 100 ppm and some iron oxide zones in an area of radiometric anomalies.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES DIRECTOR’S REPORT

CURNAMONA URANIUM PROJECTS, SOUTH AUSTRALIA - (100% CUU

During the half year, Callabonna completed drilling of 26 holes at the Company’s Curnamona South uranium project in the Frome Embayment (EL 4586) and 3 more holes on the Curnamona North project (EL 3844).

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Of these recently drilled holes several intersections that were anomalous on gamma logs have been confirmed anomalous in uranium by chemical assays, and at similar levels. However these amounts are not at levels indicative of economic mineralisation, but certainly the process of uranium capture. Callabonna concluded organic rich clay is trapping elevated amounts of uranium. The anomalous results were as follows:

• In the Curnamona South area CUS012 (426448E 6588354N WGS84) intersected from 109.5 metres to 111.0 metres, 1.5 metres @ 67 ppm eU308. The assay was 50 ppm uranium. The intersection was in a markedly dark, partly clayey, interval in the Eyre Formation sands that was also geologically anomalous.

• In the Curnamona North area CUN055 (412963E 6682237N WGS84) intersected from 100.5 metres to 102 metres, 1.5 metres @ 28 ppm eU308. The assay was 20 ppm uranium. The interval was in a geologically unusual section of several 1 metre thick alternating very dark clays with 1 metre thick grey sands.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

The Company believes the changes noted to more oxidised conditions in the Namba Formation and in the underlying Eyre Formation to nearer basement sources in EL 4586 suggest a possibility of a regional REDOX front heading into the adjoining EL 4585.

Significant parts of the Company’s large tenement areas have had very few holes drilled and remain prospective and open to new ideas and more drilling. To that end, the Company has approached a number of other parties that have expressed interest in the uranium potential of the Callabonna sub-basin (Frome Embayment). One of these parties has signed a confidentiality agreement and is presently reviewing the data.

The Company, having now drilled 101 holes has developed the most cost efficient operating procedures in the basin.

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GEORGETOWN PROJECTS, QUEENSLAND - (100% CUU)

Callabonna holds 12 exploration permits (6 now granted) in the Georgetown region of north Queensland. The latest licence to be granted during the half year is EPM 18625 Dagworth. These projects are prospective for uranium, gold, base metals and Rare Earth Elements (‘REEs’). The six granted areas are Hatch (includes the Delaney gold prospect), Oak River, Huonfels, Gilbert River, Neptune and now Dagworth.

Caldera Projects with Gold and Uranium Potential

Five of the Company’s tenements cover caldera locations, effectively volcanic centres with gold potential of the epithermal style. Epithermal gold deposits have potential to be much larger than vein gold deposits in the basement (like Delaney). The five caldera areas are:

• Neptune/Dagworth (the caldera that also host Cornucopia gold and Dagworth uranium prospects).

• Huonfels/Ant Hill (the caldera that relates to Maureen uranium deposit).

• Oak River (with known uranium).

• Mt Darcy (with defined polymetallic potential).

• Athena.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

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Whilst these areas were all taken up for the uranium potential of the Streltsovskoye style of western Russia, there is a growing realisation of the gold potential of these areas. So much so that the Company will be seeking involvement of major gold companies to fund exploration by joint venture, particularly via induced polarisation ('IP') surveys to probe for deep structures.

Neptune/Dagworth - (100% CUU)

This is the most advanced of the five caldera projects, with granted tenements. During the half year, assays of reconnaissance mapping samples were received and further compilation of the previous exploration over the Neptune licence (EPM18028) revealed more about the gold potential here, and by inference, the other caldera areas.

For example, the previous work on the Cornucopia gold prospect in the heart of the Newcastle Range (referred to in open file CR 19699). This area was originally explored in the late 1980s, following up -80 mesh and bulk leach gold stream sediment sampling. Epithermal quartz and anomalous gold was found in soils and rock chips, along with a large arsenic anomaly on a north south trend. Also found was the classic bladed calcite (now quartz), all the usual indications of an epithermal system. Drilling (14 holes) encountered relatively shallow (<100 metres) true depth gold values including 2 metres @ 0.76 ppm, 4 metres @ 1.22 ppm, 6 metres @ 2.79 ppm, 2 metres @ 0.19 ppm, 4 metres @ 0.72 ppm (including widespread mineralisation 0.3 to 0.5 throughout hole) and 2 metres @ 1.62 ppm.

These are encouraging results and reconnaissance surface sampling conducted during the half year recovered 5 ppm gold in rock float from an interesting structural complexity that warrants mapping in detail. Also significantly the old (1980s) drainage anomalies have been reinterpreted to a more westerly source.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

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During the half year, the Company also obtained Aboriginal heritage clearances to build a road into the most prospective area, up onto the Newcastle range over the escarpment to the west of Cornucopia, thereby removing one of the major obstacles to past exploration. The plan is to do more mapping and sampling here followed by IP surveys and more drilling including the major airborne uranium anomaly.

Huonfels/Ant Hill Project, North Queensland - (100% CUU)

EPM 18699 Huonfels and EPMA 18898 cover the caldera adjacent to the Maureen uranium deposit. Callabonna’s main focus is the 'Maureen caldera'.

Mt Darcy Project, North Queensland - (100% CUU)

The Mt Darcy project is situated 10 kilometres west of Georgetown. EPMAs 18700 and 18752 cover the Mt Darcy caldera and this area is one of the most interesting because it has copper - gold potential. The zoning of geochemistry is thought to be prospective for gold and copper deposits typical of the transitional zone between shallow epithermal gold deposits and deeper porphyry copper deposits.

Both the Mt Darcy and Maureen caldera’s remain covered with post volcanic sediments, an important feature for preservation of copper porphyry deposits.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

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Delaney, Central and Oak River Gold Projects in Joint Venture with Planet Metals Limited

During the half year Callabonna entered into a farm-in agreement with Planet Metals Limited ('Planet') covering three Georgetown gold exploration tenements.

The key terms of the farm-in agreement are:

• Planet can earn a 51% interest in all three tenements (Hatch EPM 18181 – Delaney prospect, Oak River EPM 17945 & Central EPMA 18699) by spending $750,000 in total over a period of 2 years and 10 months. Planet’s interest will cover all minerals for EPM 18181 and EPMA 18699 whereas for EPM 17945, Planet’s interest covers only gold, precious and base metals, but excluding REEs and uranium.

• A minimum of $150,000 must be spent on exploration within 10 months of signing the agreement, including a 1,000 metre drill program. Planet has the option to withdraw from the agreement after this minimum expenditure requirement has been met.

• After satisfying this minimum expenditure requirement, Planet may elect to earn-in to the tenements by spending $600,000 within a further 2 years, of which a minimum $200,000 must be spent in the first year.

During the half year, Planet drilled 6 holes for 1,086 metres and spent an amount in excess of its minimum commitment. The holes were drilled on EPM 18181 south of the old Delaney workings at the Torchlight prospect where sampling by Callabonna had defined gold in soil anomalies. Four out of the eight holes proposed to cover the gold soil anomalies were drilled without significant results, the best assay being 0.17 g/t Au. The highest part of the soil anomaly where four more holes were intended could not be accessed due to rain and remain to be drilled.

The Company looks forward to the granting of the Central EPMA 18699 because this area contains many old gold workings, and together with EPM 18181 the two areas host about 16 kilometres strike extent of the Delaney fault zone (the regional control on gold veins in the basement in this region). There is considerable potential along this fault trend to use modern exploration geochemistry like MMI sampling and IP geophysics to locate new sulphide gold resources at depths. In the past, only the shallow oxide resources have been exploited because of the refractory nature of the deeper sulphide resources.

During the half year Planet also spent an estimated $30,000 on Callabonna’s EPM 17945 focused entirely on an extension of a structure known to host gold (Mt Borium prospect) in their neighbouring EPMA 19015.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

Callabonna retains 100% rights to uranium and REEs in EPM 17945.

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- Gilbert River Rare Earths Project, North Queensland (100% CUU)

The Company’s Gilbert River exploration permit (EPM 16256) is located approximately 80 kilometres south of the Georgetown township and is situated on the Gilbert River station. Access to the project area is limited and the Gilbert River serves as access to the areas of interest.

The area is very remote wilderness and the Company has been advised by the Department of Environment and Resource Management that the three pastoral properties (Gilbert River Lot 4638, Killarney Station Lot 2570 and Rungulla Lot 4957) on which the Company’s EPM and EPMAs sit will be included in a proposed new national park. As a result, the Company will relinquish EPM 16256 and the surrounding applications (EPMAs 16293, 16294 and 18991).

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

BROKEN HILL WEST PROJECTS, NSW - (100% CUU)

The Company holds ELs 7684, 7685, 7686 and 7687 west and northwest of Broken Hill against the South Australian border. During the half year open file data on all four tenements were reviewed in detail. Based on that review it was decided to farm out one tenement to a local operator. Agreement has been reached with Silver City Minerals Limited whereby they may earn 51% equity in EL 7684 by meeting statutory commitments over a two year period, subject also to $20,000 minimum spend and the flexibility to reduce the licence area and review the statutory commitment with Industry and Investment NSW. The status of the other three tenements is being reviewed in light of the NSW Government’s proposed legislation changes to end a 26 year ban on exploration for uranium in NSW.

CAPE YORK BAUXITE INTERESTS

During the half year Callabonna signed an agreement with McKay Brook Resources Pty Ltd (‘McKay Brook’) to transfer its interests in three Cape York tenements (EPM 17836 and EPM Applications 17835 and 17843) to McKay Brook. The tenements are located near Aurukun and Weipa on the Cape York Peninsula in Northern Queensland and cover ground that is prospective for bauxite mineralisation.

Key terms of the agreement are as follows:

• an initial payment to Callabonna of $50,000;

• a second payment of $100,000 to Callabonna following the registration of title with McKay Brook of EPMs 17843 and 17836; and

• a success fee of $2,000,000 payable to Callabonna upon completion of a pre-feasibility study on any of the tenements at any time in the future.

McKay Brook is a Queensland based explorer that has mineral and coal interests throughout central/north Queensland.

The disposal of the Company's interest in these bauxite tenements will enable the Company to focus its financial and human resources on the Company's uranium projects, in South Australia, the Northern Territory and Queensland as well as developing new opportunities in other commodities.

CORPORATE

In December the Company undertook a Security Purchase Plan and in January announced the allotment of 2,263,843 new fully paid ordinary shares at $0.038 per share.

A further payment of $100,000 will be received from the sale of the Queensland bauxite tenements upon successful transfer of tenements.

The Board has decided to make its priority the drilling of the uranium anomaly at Mt Denison and make Georgetown gold projects drill ready. Commitments on other projects will be reduced, where possible by joint venture or sale.

The Company, through its Directors, staff and access to technology, has the skill and experience to make mineral exploration assessments in Australia and overseas. To this end, during the half year, four mineral properties have been evaluated for investment opportunity. This process is ongoing.

Competent Person Statement

The information in this report that relates to Exploration Results is based on information compiled by Michael Raetz, a Director of the Company. Mr. Raetz 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. This qualifies Mr. Raetz as a Competent Person as defined in the 2004 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Raetz consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTOR’S REPORT

Events Occurring after the Balance Sheet Date

There has not arisen in the interval between the end of the half-year and the date of this report any item, transaction or event of material or unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.

Lead Auditor's Independence Declaration

The lead auditor’s independence declaration is set out on page 15 and forms part of the Directors’ Report for the half year ended 31 December 2011.

Signed at Sydney this 13[th] day of March 2012

in accordance with a resolution of the Board of Directors:

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Michael Raetz Director

Member of the Australian Institute of Geoscientists

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LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

To the Directors of Callabonna Uranium Limited:

I declare that, to the best of my knowledge and belief, in relation to the review for the half year ended 31 December 2011, there have been:

• (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• (ii) no contraventions of any applicable code of professional conduct in relation to the review.

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KPMG

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S.J. Board Partner

13 March 2012

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Notes Other income Administration and consultants expenses Directors’ remuneration Exploration expenses incurred – pre-licence costs Impairment of mining tenements 7 Depreciation Results from operating activities Financial income Financial expense Net financing income Loss before income tax Income tax expense Loss for the period Other comprehensive income for the period Total comprehensive loss for the period Basic loss per share attributable to ordinary equity holders 4 Diluted loss per share attributable to ordinary equity holders 4	31 December 2011 $ 31 December 2010 $ 50,000 25,000 (321,957) (366,455) (92,424) (234,216) (61,562) (120,403) (9,225,566) (161,860) (9,619) (8,049)
	(9,661,128) (865,983) 21,079 52,011 (533) (861)
	20,546 51,150
	(9,640,582) (814,833) - -
	(9,640,582) (814,833) - -
	(9,640,582) (814,833)
	(15.67) cents (1.33) cents
	(15.67) cents (1.33) cents

The condensed consolidated interim statement of comprehensive income should be read in conjunction with the accompanying notes.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011

Notes Current assets Cash and cash equivalents Other receivables Other assets Total current assets Non-current assets Plant and equipment Exploration and evaluation expenditure 7 Other non-current assets Total non-current assets Total assets Current liabilities Borrowings Trade and other payables Employee benefits Total current liabilities Non-current liabilities Borrowings Total non-current liabilities Total liabilities Net assets Equity Issued capital 5 Reserves 6 Accumulated losses Total equity	31 December 2011 $ 30 June 2011 $ 714,215 1,457,357 9,207 9,389 72,635 67,822
	796,057 1,534,568
	52,677 62,296 381,215 9,027,959 34,076 99,386
	467,968 9,189,641
	1,264,025 10,724,209
	7,745 6,844 168,843 72,105 19,722 15,339
	196,310 94,288
	2,456 6,692
	2,456 6,692
	198,766 100,980
	1,065,259 10,623,229
	42,467,334 42,392,334 392,814 790,585 (41,794,889) (32,559,690)
	1,065,259 10,623,229

The condensed consolidated interim statement of financial position should be read in conjunction with the accompanying notes.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2011

For the half year ended 31 December 2011

		Option	Share based
	Issued	premium	payments	Accumulated	Total
	capital	reserve	reserve	losses	equity
	$	$	$	$	$
Balance at 1 July 2011	42,392,334	405,383	385,202	(32,559,690)	10,623,229
Total comprehensive income for
the period
Loss for period	-	-	-	(9,640,582)	(9,640,582)
Transfer to retained earnings		(405,383)	-	405,383	-
Other comprehensive income	-	-	-	-	-
Transactions with owners,
recorded directly in equity
Contribution by and distributions
to owners
Share application money received	85,000	-	-	-	85,000
Costs of issue	(10,000)				(10,000)
Share based payments	-	-	7,612	-	7,612
Balance at 31 December 2011	42,467,334	-	392,814	(41,794,889)	1,065,259
For the half year ended 31 December 2010
			Share
		Option	based
	Issued	premium	payments	Accumulated	Total
	capital	reserve	reserve	losses	equity
	$	$	$	$	$
Balance at 1 July 2010	42,392,334	405,383	346,529	(31,137,901)	12,006,345
Total comprehensive income for
the period
Loss for period	-	-	-	(814,833)	(814,833)
Other comprehensive income	-	-	-	-	-
Transactions with owners,
recorded directly in equity
Contribution by and distributions
to owners
Share based payments	-	-	38,672	-	38,672
Balance at 31 December 2010	42,392,334	405,383	385,201	(31,952,734)	11,230,184

The condensed consolidated interim statement of changes in equity should be read in conjunction with the accompanying notes.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Cash flows from operating activities Cash payments in the course of operations Cash used in operations Interest paid Interest received Net cash flows used in operating activities Cash flows from investing activities Payments for exploration and evaluation Proceeds from transfer of tenement title Refund of security deposits Payments for property, plant and equipment Net cash flows used in investing activities Cash flows from financing activities Proceeds from share applications Net cash flows provided by financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the half year Cash and cash equivalents at the end of the half year	31 December 2011 $ 31 December 2010 $ (358,258) (441,119)
	(358,258) (441,119) (533) - 21,079 51,150
	(337,712) (389,969)
	(590,430) (761,142) 50,000 - 50,000 - - (3,790)
	(490,430) (764,932)
	85,000 -
	85,000 -
	(743,142) (1,154,901) 1,457,357 3,282,425
	714,215 2,127,524

The condensed consolidated interim statement of cash flows should be read in conjunction with the accompanying notes.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

1. Reporting entity

Callabonna Uranium Limited (the 'Company') is a company domiciled in Australia. The consolidated interim financial report of the Company as at and for the half year ended 31 December 2011 comprises the Company and its subsidiaries (together referred to as the ‘Group’).

The consolidated annual financial report of the Group as at and for the year ended 30 June 2011 is available upon request from the Company’s registered office at Level 2, 66 Hunter Street, Sydney, NSW, 2000 or at www.callabonna.com.au.

Statement of compliance

The half year condensed consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and Accounting Standard AASB 134: 'Interim Financial Reporting'.

The half year report does not include full disclosures of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2011 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.

Going concern

The interim financial report has been prepared on a going concern basis which contemplates the realisation of assets and settlement of liabilities in the ordinary course of business.

The Group has accumulated losses of $41,794,889 as at 31 December 2011. The Group has cash on hand of $714,215 at 31 December 2011 and used $928,143 of cash in operations, including payments for exploration, for the half year ended 31 December 2011.

These conditions give rise to a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern. The ongoing operation of the Group is dependent upon:

• the Group raising additional funding from shareholders or other parties; and/or

• the Group reducing expenditure in-line with available funding.

The Directors have prepared cash flow projections that support the ability of the Group to continue as a going concern. These cash flow projections assume the Group obtains sufficient additional funding from shareholders or other parties. If such funding is not achieved, the Group plans to reduce expenditures significantly.

In the event that the Group does not obtain additional funding and/or reduce expenditure in-line with available funding, it may not be able to continue its operations as a going concern and therefore may not be able to realise its assets and extinguish its liabilities in the ordinary course of operations and at the amounts stated in the interim financial report.

Significant accounting policies

The accounting policies applied by the Group in this consolidated interim financial report are the same as those applied by the Group in its consolidated financial report as at and for the year ended 30 June 2011.

Significant accounting judgments and key estimates

The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Except as described below, in preparing this half year report, the significant judgements made by management in applying the accounting policies of the Group and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report for the year ended 30 June 2011.

During the six months ended 31 December 2011 management reassessed its estimates in respect of:

• Note 1 – Going concern

• Note 6 – Share based payments

• Note 7 – Impairment of mining tenements

2. Segment information

The sole segment of the Group is mineral exploration in Australia.

3. Dividends

No dividends have been paid or provided for during the half year.

4. Loss per share

Basic loss per share has been calculated using: Net loss for the half year Weighted average number of ordinary shares and potential ordinary shares	31 December 2011 $ 31 December 2010 $ 9,640,582 814,833
	61,527,915 61,306,764*

• The above comparative information has been adjusted to reflect the consolidation of capital on a 1 for 20 basis which occurred during the half year ended 31 December 2010.

5. Issued capital

Share capital Ordinary shares on issue at 1 July – fully paid Issue of shares Ordinary shares on issue at 31 December – fully paid	31 December 2011 31 December 2010 Number of Shares Number of Shares* 61,527,915 61,277,915 - 250,000 61,527,915 61,527,915

• The above comparative information has been adjusted to reflect the consolidation of capital on a 1 for 20 basis which occurred during the half year ended 31 December 2010.

During the half year ended 31 December 2011 there were no ordinary shares issued, however the Company undertook a Share Purchase Plan (‘SPP’) which closed on 22 December 2011. Under the SPP 2,236,843 new fully paid ordinary shares were applied for raising $85,000. The shares were allotted on 9 January 2012. Costs of issue are estimated to be $10,000.

21

CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

During the half year ended 31 December 2010:

• The Company issued 250,000 ordinary shares for no consideration to the then Managing Director Stephen McCaughey as per his services agreement. The Fair Value was calculated by reference to the closing share price on the date of issue. There were no issue costs.

• Following shareholder approval at the Company’s Annual General Meeting the Company undertook a consolidation of capital on a 1 for 20 basis. The number of shares on issue was reduced from 1,225,561,495 to 61,277,915.

6. Options and reserves

Options

The following options were on issue at 31 December 2011, each exercisable to acquire one fully paid ordinary share:

Grant date Expiry date Exercise Price Post Consolidation 27/11/08 31/05/12 40 cents 27/11/08 31/05/12 80 cents 27/11/08 31/05/12 $1.20 27/11/08 31/05/12 20 cent 23/09/09 23/09/11 50 cents 15/02/10 15/02/15 34 cents	Balance at start of the half year Granted during the half year Expired during the half year Balance at end of the half year Exercisable at end of the half year Number Number Number Number Number 250,000 - - 250,000 250,000 250,000 - - 250,000 250,000 250,000 - - 250,000 250,000 1,500,000 - - 1,500,000 - 3,000,000 - (3,000,000) - - 1,400,000 - - 1,400,000 466,667
	6,650,000 - - 3,650,000 1,216,667

During the half year ended 31 December 2011 no options were issued.

During the half year ended 31 December 2010 no options were issued.

• Following the end of the half year ended 31 December 2011 2,250,000 options issued to Stephen McCaughey were cancelled.

Expenses arising from share-based payment transactions

Total expenses arising from share based payment transactions recognised during the half year ended 31 December 2011 as part of share based remuneration expense was $45,905 (2010 - $122,935).

At each reporting date, the Group revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.

Nature and purpose of reserves

The option premium reserve arises pursuant to an issue of options for consideration pursuant to a capital raising.

The share based payments reserve arises pursuant to an issue of shares or options as consideration for a service or an acquisition transaction.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

7. Mining tenements

Opening balance at beginning of period Additions Impairment Closing balance at end of period	31 December 2011 $ 30 June 2011 $ 9,027,959 8,546,977 578,822 646,436 (9,225,566) (165,454)
	381,215 9,027,959

During the half year ended 31 December 2011, the Directors impaired the carrying value of exploration and evaluation expenditure totaling $9,225,566 associated with the Arunta project ($526,338), the Broken Hill project ($4,725), the Cape York project ($21,207), the Curnamona projects ($8,623,711) and the Georgetown project ($49,585).

During the year ended 30 June 2011, the Directors impaired the carrying value of exploration and evaluation expenditure totaling $161,860 associated with the Group’s Callabonna Energy project following the decision of the Group to relinquish the six exploration permits that made up the project. In addition, the Directors impaired the carrying value of exploration and evaluation expenditure totalling $3,594 associated with the Group’s Curnamona project following the decision to relinquish one exploration permit that formed part of the project.

The ultimate recoupment of these costs is dependent on the successful development and exploitation, or alternatively sale of the respective areas of interest.

8. Events occurring after the balance sheet date

There has not arisen in the interval between the end of the half year and the date of this report any item, transaction or event of a material or unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.

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CALLABONNA URANIUM LIMITED AND ITS CONTROLLED ENTITIES

DIRECTORS’ DECLARATION

In the opinion of the Directors of Callabonna Uranium Limited:

• (a) the financial statements and notes set out on pages 16 to 23:

• (i) give a true and fair view of the Group’s financial position as at 31 December 2011 and of its performance for the half year ended on that date; and

• (ii) comply with Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Regulations 2001; and

• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Directors.

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Michael Raetz Director

13 March 2012

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF CALLABONNA URANIUM LIMITED

We have reviewed the accompanying interim financial report of Callabonna Uranium Limited, which comprises the condensed consolidated interim balance sheet as at 31 December 2011, condensed consolidated interim statement of comprehensive income, condensed consolidated interim statement of changes in equity and condensed consolidated interim statement of cash flows for the half year ended on that date, a description of significant accounting policies and other selected explanatory notes 1 to 8, and the Directors’ Declaration of the Group comprising the Company and the entities it controlled at the half year’s end or from time to time during the half year.

Directors’ responsibility for the interim financial report

The directors of the Company are responsible for the preparation and fair presentation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the interim financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s financial position as at 31 December 2011 and its performance for the half year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Callabonna Uranium Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Callabonna Uranium Limited is not in accordance with the Corporations Act 2001, including:

• a) giving a true and fair view of the Group’s financial position as at 31 December 2011 and of its performance for the half year ended on that date; and

• b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

25

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF CALLABONNA URANIUM LIMITED

Material uncertainty regarding continuation as a going concern

Without qualifying our conclusion, we draw attention to note 1, “Going Concern” in the interim financial report. The conditions disclosed in note 1, including raising additional funding from shareholders or other parties, indicate the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the interim financial report.

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KPMG

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S.J. Board Partner

13 March 2012

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