mehdiabad zinc deposit

Union Resources secures licence for Iran prospect

MINING investment company Union Resources has been granted a licence by the Iranian government protecting its investment in a zinc deposit there.

The Brisbane explorer said it could spend as much as $US682 million ($903 million) on the Mehdiabad deposit in central Iran.

The company has a 50-50 joint venture with the Iranian government in the project, which it said was the largest undeveloped zinc deposit in the world.

Union was granted an exploitation licence for the site last month, allowing it to be mined for the next 25 years.

Managing director Rob Murdoch said the foreign investment licence gave the company the same rights and protections as local investors.

This included protection from expropriation by any political forces, which tended to worry investors, he said.

"The licence permits Union Resources to invest up to $US682 million into the Mehdiabad Zinc Project … under the full protection of Iran's Foreign Investment Promotion and Protection Act," Mr Murdoch said.

"It means our shareholders are fully protected."

Iran would have to pay the company the international value of the asset if it ever sought to reclaim the site, he said, but ruled out the likelihood of such an event.

Mr Murdoch said the project could take up to three years to generate cash flow. A bankable feasibility study is due for release in the next five months.

The first two phases of the study showed it would cost about $US600 per tonne over the life of the mine to produce a tonne of zinc metal, the company said.

Zinc last traded at $US2061.50 per tonne in London.

Union has so far spent about $US10 million on the project, 550 kilometres south-east of Tehran.

The licence also lets the company export at least 75 per cent of zinc it mines from the fifth year of operation.

17 Tuesday January 2006 18:51