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
UCL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
