mehdiabad project

The Mehdiabad Zinc Project comprises a world-class zinc resource with associated grades and tonnages of lead and silver. The project is at the early Bankable Feasibility Study stage.
The Mehdiabad Zinc Project is located in central Iran, approximately 80 kilometres south east of the city of Yazd and approximately 550 kilometres directly south east of Tehran.
Mehdiabad is the world’s largest undeveloped zinc resources, with in ground zinc resources of 15.7 million tonnes. The resource is amenable to processing by acid leaching techniques. They will allow Mehdiabad, once in production, to be among the world’s lowest cost zinc producers.
Fully developed, Mehdiabad is expected to produce 500,000 tonne per annum of zinc metal.
The major shareholders are IMPASCO (Iranian Government), Itok GmbH (Private Iranian), and Union

Political risk insurance obtained for the Mehdiabad project

Listed Australian miner Union Resources Limited (ASX:UCL) has taken out a US$4.5 million (A$ 6.0 million) political risk insurance policy to protect the company's investment in the Mehdiabad Zinc Project in central Iran .

The Managing Director of Union Resources, Mr Rob Murdoch, said the policy would apply to Union Resources' investment in a bankable feasibility study and exploratory drilling at the site, with a policy review scheduled at the commencement of site construction.

Mr Murdoch said the policy, issued by the Export Finance and Insurance Corporation (EFIC), would be for an initial 18 month period effective from last Friday.

The Mehiabad deposit is the largest untapped zinc resource in the world and offers economies of scale that will allow extraction over the life of the mine at US$600 per tonne, which is half the current world zinc price.

The political risk insurance in relation to Union Resources' investment in Iran covers:

war damage
forced abandonment
expropriation.
The expropriation insurance will take effect from the date that Union Resources' application for an investment licence under the Iranian Foreign Investment Promotion and Protection Act (FIPPA) is approved by the Iranian Government.

“The FIPPA is Iranian legislation designed to provide protection from expropriation of foreign investment into Iran by a government authority. The FIPPA protection application was lodged in May 2005. Union Resources is uncertain at this time as to when the FIPPA protection will be granted,” Mr Murdoch explained.

Union Resources welcomes EFIC's agreement to provide political risk insurance in relation to the bankable feasibility study phase of the Project.

Mr Murdoch said it was prudent for Union Resources to take out such protection.

“The insurance cover is expected to reduce concerns the market may have regarding perceived political risk of investing in Iran ,” Mr Murdoch said.

EFIC advises that because of the unique nature of political risks, and their potential to expose an investment or project to significant losses, many investors, contractors and lenders operating overseas take out Political Risk Insurance from EFIC to cover them against financial losses resulting from specified political events.

For Further information please contact Rob Murdoch, Managing Director of Union Resources on (07) 3833 3833 / 0418 712 011 or Bob Lawrence of Jackson Wells Morris on (02) 9904 4333.