Police confirmed Mr Palmer, 41, had been fishing with a friend when the two men fell into the water, becoming separated from the vessel in rough conditions.
“It is believed the men were standing at the back of their boat when a wave knocked it, causing them to fall overboard at around midnight,” a police spokesperson said.
“Prevailing conditions didn’t allow the men to swim back to their boat.”
Police said the two men had attempted to swim back to the mainland together, but were separated in the darkness.
Passersby on a commercial fishing vessel rescued the man’s 45-year-old companion north-east of Sandfly Creek, but Mr Palmer could not be found.
After five days of extensive searching, the boat was located this afternoon on a reef north-east of Cairns.
The driver of a passing boat spotted the Quintrex coast runner capsized and immediately notified authorities.
“A helicopter was sent to investigate and confirmed it was the boat belonging to the missing fisherman,” a police statement read.
The boat has been recovered and transported to Cairns.
Searches for Mr Palmer which included Maritime Safety Queensland, the Australian Maritime Safety Authority (AMSA), Coast Guard, Volunteer Marine Rescue, Surf Lifesaving Queensland and QGAir have now been scaled back.
Mr Palmer’s family has been advised that the boat has now been located.