Union chasing Iranian Zinc...

Union chasing Iranian Zinc

http://www.minebox.com/story.asp?articleId=616



Brisbane-based Union Capital Ltd is making progress on its Mehdiabad Zinc project in Iran, with results now in from its latest testwork completed by Hydrometallurgy Research Laboratories in Brisbane and negotiations going well with 50% partner ~ the Iranian Government.

Metallurgical column leaching testwork on two representative composite samples of low grade oxidized zinc ore gave final zinc recoveries were 63% and 55% respectively leached over a period of 17 days.

Union Capital MD Rob Murdoch said “Upon development the project has the potential to be one of the lowest cost zinc, lead and silver producers at an operating cost of less than US20cents per pound of zinc metal produced.”

He added that while that while the recoveries figures from the latest testing could be optimized further, the results compared favorable with the zinc recovery used in the pre feasibility study of 55% for heap leaching.

The head grade of the two sample tested was only 2.9% Zn and 3.0% Zn respectively, and the samples were only crushed to minus l9mm. The kinetics of leaching were very rapid with approximately 50% of the zinc being leached within 24 hours. Acid consumption was very low, being 87kg/t and 43kg/t respectively. The zinc was extracted from the sample using solvent extraction.

Murdoch said the results are very encouraging for heap leaching of the low grade mineralisation in the range of 2-4% zinc and that there is a large quantity of mineralisation in this grade range over lying the higher grade mineralisation.

Union Capital Ltd originally held a 25% interest in the Mehdiabad Zinc Project located in Iran, but through dilution of one of its partners Itok GmbH, Union has effectively increased its interest to in excess of 30%, whilst Itok's economic interest has been diluted to below 20%.

The Iranian Government is a 50% partner in the project and it has recently undergone internal changes relevant to the project. The Ministry of Mines and Industry has been transformed from General Iranian Mining Company (GIMCO), which has been dissolved, to a new organization called Iran Mines and Mineral Industry Development and Renovation Organisation (IMMIDRO).

Murdoch said that Union understands that the change will make it easier for the Government partner to become a shareholder in the incorporated Joint Venture Company envisaged in the Foundation and Basic Agreements which were signed between the parties and the Ministry of Mines and Industry in 1999.

Talks are scheduled to commence in Tehran later this month to seek ways for IMMIDRO to become more involved in the Project within the framework of the existing agreements.

Murdoch said that from meetings that were held in Tehran last month with Ministry officials, Union understand that once the above round of meetings are satisfactorily concluded, and the Joint Venture Company is incorporated, then consideration will be given to granting the Exploitation Licence. The Licence will be granted to the Joint Venture Company in accordance with the Foundation Agreement.

He said: “The Exploitation Licence was applied for only recently, following completion of a $US3 million Pre Feasibility Study in July 2001. The Pre-Feasibility Study report showed Mehdiabad to be one of the largest undeveloped zinc projects in the world.

“The Joint Venture plans to commence the Bankable Feasibility Study upon the granting of the Exploitation Licence.”

Union Capital scrip was trading at 1.6c on January 11, 2002.


- 11 Jan 2002

Some points to note:
1. Our share price isn't much different now from that in Jan 2002
2. IMMIDRO appears to have been an acceptable successor to GIMCO then, but apparently not now.
3. We've not added much value to the project in terms of metal discovery (it was all known at the time of the prefeasibility study?)
4. It was our fault doing the BFS before the EL was transferred?

Other things I've noted:
1. Industry and Mines minister was sacked on 12/8/07 because he wouldn't allow key personnel to be changed by higher authority. (The Guardian newspaper had an article on it). (Don't know if the appointment of a temporary minister sets Dr. Reid's negotiations back to square one.

2. Iran has started to allow production sharing agreements in the oil industry. The Washington Post and also the Economist's Economic Intelligence Unit have commented on this recently. They compared Iran's declining oil production with that of another country with a sky-high political risk (Nigeria). The latter, despite all the kidnappings, etc., has managed to increase oil output through the use of PSA's, but Iran hasn't. Hence the reason to start adopting them in Iran? China's Sinopec grumbled about the terms of some oil deal in Iran recently?

Hopefully the change of policy in the oil industry will make it easier for us to get a mutually acceptable agreement on Mehdiabad. No guarantees of course.