Cline Mining Corporation T.CMK

UMC Update

[calabinvest]

Morondava Uranium Project, Madagascar (indirect interest 16.5%): The processing and analysis of the

Medusa airborne radiometric data for both the Folakara and Makay tenements began in late 2007 and

continued in 2008. The base line data was reprocessed to produce colour images of the uranium channel and

stacked profiles of the uranium and uranium / thorium ratio. From this data, a total of 29 anomalies at

Folakara and 21 anomalies in the Makay tenements were identified as being of interest for field

investigation. Two periods of helicopter supported field work were undertaken. This programme involved

conducting initial ground radiometrics and spot surface sampling on the identified anomalies at Folakara and

Makay that were identified from the airborne data. The programme at Folakara was successful in locating 28

(of the 29) identified targets. Ground traversing with a spectrometer was undertaken in the vicinity of the

anomaly, indicative assays taken with the spectrometer and in several cases grab surface samples collected.

Outcomes of this work include: several additional sites of potential mineralisation have been located

warranting further testing; the mineralisation is more widespread than previously understood; the assays

(spectrometer and laboratory) of the areas of interest highlight a strong correlation with vanadium and low

levels of thorium which is characteristic of uranium deposits; the work supports the earlier thesis of

mineralisation (deposits) at a grade of several hundred ppm U3O8. The programme at Makay was successful

in locating 16 (of the 21) identified targets, as a mechanical failure with the helicopter required the premature

cessation of the programme. The same process as undertaken at Folakara was carried out at Makay.

Outcomes of this work include: a large area of potential mineralisation is indicated by 5 sites in the

north-east of the tenements over an area measuring approximately 50km x 10km, each of which has the

potential to host small/medium sized uranium deposits; mineralisation is of the right type with low thorium

and high vanadium; the occurrences are outcropping oxidised sandstones that lie above the water table; the

current assay results supports likely grades in the range of several hundred ppm U3O8.

The Group advanced $1,998,311to UMC Energy plc (which holds an 80% interest in the project) under loan

facility agreements, to assist that company to meet its working capital requirements. The loan bears a 3%

drawdown fee, interest at 15% per annum on funds drawn, is secured by a negative pledge over UMC

Energy’s equity interest in the Morondava uranium project and is repayable within 60 days following a

demand by the Group.

As there is currently no clear expectation that the cost of the investment incurred to date will be recouped

through the sale or successful development of the project, the directors have taken a prudent view and

impaired this asset, giving rise to a total expense of $5,408,057.