5 October 2009

ASX RELEASE

AGREEMENT TO CREATE MAJOR PLAYER IN ROCK PHOSPHATE

 Joint effort to advance rock phosphate projects in the Northern Territory

 Dedicated and separately funded vehicle to be new major player in the sector

 Northern Uranium to remain focused on advancing its uranium projects

Northern Uranium Limited (ASX: NTU) is pleased to advise its has entered into a non-binding Heads of Agreement (?HOA?) with Korean based fertiliser exploration and trading company FSL Resources Limited (FSL) to combine and advance their rock phosphate projects.

Under the agreement, the two companies will combine their respective phosphate interests into a single and dedicated corporate vehicle, with more than 38,000km² of prospective phosphate licences in the Northern Territory.

The combination will create a new major player in rock phosphate in Australia, and allow Northern Uranium to remain focused on advancing its uranium projects, and in particular the Gardiner-Tanami Project.

FSL established an Australian subsidiary FSL World Holdings Pty Ltd (FSLWH) in 2005 to identify prospective rock phosphate exploration and development opportunities in the Northern Territory. FSLWH had the advantage of moving early in the search for rock phosphates in the region and was successful in acquiring approximately 32,000km² of exploration licences in the Northern Territory some of which cover ground with historical records of phosphate rock exploration.

The areas were selected on the basis of historical rock phosphate exploration results and a more recent Northern Territory Geological Survey compilation of data from numerous water bores identifying areas with enriched phosphatic sedimentary units. The most advanced of FSLWH’s projects is the Barkly Project comprising two granted exploration licences approximately in the centre of the Georgina Basin and immediately north of Minemakers Wonarah deposit (Figure 1). Historical drilling confirms the phosphate potential of these tenements.

Northern Uranium began acquiring tenements for phosphate exploration in the Northern Territory in 2008, having recognised the potential for phosphate mineralisation in the Kurundi Project tenements. Northern has now assembled a large phosphate exploration package comprising 14 exploration licences covering a total of 6,400km² within the Georgina Basin and the Amadeus Basin (Figure 1).

Under the terms of the HOA Northern Uranium will, subject to due diligence, vend into FSLWH its phosphate rock tenement and intellectual property interests in return for shares. Upon completion, Northern Uranium will hold approximately 30% of the issued capital of FSLWH and two directors from Northern Uranium will be appointed to FSLWH’s Board. Following due diligence a binding agreement is expected to be finalised by the end of the December quarter.

If the transaction proceeds, Northern Uranium will contribute $65,000 of seed capital to FSLWH, and current FSLWH shareholders will co-invest $65,000 for working capital and for a small drilling program on the highly prospective Barkly tenements. FSLWH will then raise additional funds independent of Northern Uranium which will focus on its uranium exploration activities.

Commenting on the proposed business combination Northern Uranium’s Executive Chairman Mr Kevin Schultz said:

FSLWH through its Board of Directors brings experience and strong relationships in the fertiliser industry to the proposed business combination and Northern Uranium sees this transaction as an excellent way for our Company to derive value from non-core phosphate exploration tenements.

We look forward to working with FSLWH’s Board and Management to create a new force in rock phosphate exploration and development, Mr Schultz said. Northern Uranium remains committed to uranium exploration with our key focus being the Gardiner-Tanami Project, and the proposed phosphate transaction reinforces that strategy.

About Northern Uranium

Northern Uranium Limited is primarily a uranium exploration and development company and holds large and prospective projects in Western Australia and the Northern Territory.

The Company has a strategic alliance with the French nuclear group, Areva NC, via its wholly owned subsidiaries, Areva NC Australia Pty Ltd (Areva) and Afmeco Mining and Exploration Pty Ltd (Afmex). Areva, which has a substantial shareholding in Northern Uranium, is the operator, through Afmex, of uranium exploration and development of the Gardiner-Tanami Project, and will also market any uranium produced by Northern Uranium.

Northern Uranium recently completed a share right issue to raise approximately $2.2 million to fund ongoing exploration at the Gardiner-Tanami project.

For Further Information Contact:

Northern Uranium Executive Chairman                                  

Kevin Schultz                                                                                      

(+61) 409108977                                                                               

Northern Uranium General Manager

Robin Wilson

(+61) 08 9481 2344

Figure 1  Map showing the Proposed Combined Tenement Package

Competent Person Declaration

The information in this report accurately reflects information prepared by competent persons (as defined by the Australasian Code for Reporting of Mineral Resources and Ore Reserves). It is compiled by Mr K Schultz, an employee of the Company who is a Fellow of The Australasian Institute of Mining and Metallurgy with the requisite experience in the field of activity in which he is reporting. Mr Schultz has sufficient experience which is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he is undertaking to qualify 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 Schultz consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.