ann out: small option study for project

Good announcement IMO.

Cheers


24 October 2006
Company Announcements Office
Australian Stock Exchange Limited
20 Bridge Street
SYDNEY NSW 2000
Dear Sir
Union Resources Limited (Union) advises that the company has now, in association with its
financial advisors, completed a review of the potential to finance the “Optimum Case”
development of the Mehdiabad Zinc Project in Iran, which is one of the largest untapped zinc
deposit in the world.
The “Optimum Case” development, recommended in the Feasibility Study Report received in
May 2006 from Aker Kvaerner Australia (AKAU), involves the construction of a major open cut
mine and a very large integrated plant capable of processing sufficient oxide and sulphide ore
to produce up to 400,000 tonnes per annum of zinc metal, 100,000 tonnes per annum of lead
metal and 7 million ounces per annum of silver, over a mine life of 20-40 years.
AKAU estimated that the total capital cost of this “Optimum Case” will be in the order US$1.6
billion.
The attractiveness of the “Optimum Case” development is the indicative long term operation
cost of only US$290 per tonne of zinc, after lead/silver credits.
However, the review has indicated that the capital cost required could be difficult to finance at
this time in Iran.
Therefore, the Company is considering whether the best way to develop the Project is to
stage the development, thereby reducing the initial capital cost of the Project.
Towards this objective, Union has commenced a scoping study into a number of potential first
stage options for the development of the Project.
The objective of the scoping study is to identify the option that offers the best financial return,
and at the same time would substantially reduce capital costs.
Union is mindful that the option chosen should also maintain the longer term economic
viability of the Project, and not negatively impact the long term potential of this major project.
The scoping study will involve a number of consultants, and Union will advise on the progress
of the studies as they proceed.
Yours Faithfully
UNION RESOURCES LIMITED
Rob Murdoch
Managing Director