tuesdays announcement- upgrade in resources

Tuesday, April 04, 2006
Updated Resource Estimates

Union Resources Limited (Union) has pleasure in announcing new resource estimates for the Mehdiabad Zinc Project in Iran. These were completed by independent consulting geologists Hellman & Schofield Pty Ltd (“H&S”). The reporting of these new resource estimates is in accordance with the 2004 JORC Code.

The new resource estimates at a cut off grade of 2% zinc are tabulated below.

Category
Million Tonnes
Zinc %
Lead %
Silver g/t
Approximate Recovered Metal

Zn (mt)
Pb (mt)
Ag (m oz)

Measured
140
4.1
1.6
34
4.1
1.2
45

Indicated
222
4.2
1.6
36
6.5
1.9
78

Measured + Indicated
362
4.2
1.6
35
10.6
3.1
123

Inferred
32
4.5
1.4
38
1.0
0.2
11

TOTAL
394
4.2
1.6
36
11.6
3.3
134


mt = million tonnes, m oz = million ounces.

Whilst the in-ground metal associated with this estimate comprises 16.4 million tonnes of zinc, 6.2 million tonnes of lead and 460 million ounces of silver, not all of that metal content can be recovered by the planned metallurgical processing route.

The “Recovered Metal” has been calculated by using the following recoveries: 66% for oxide zinc; 72% for sulphide zinc/lead and 40% for sulphide silver. No recoverable lead or silver applies to the oxide mineralization.

The metallurgically recoverable metal within the resource is therefore estimated at 11.6 million tonnes zinc, 3.3 million tonnes lead and 134 million ounces of silver.

The zinc resource is made up of both oxide and sulphide mineralogy, that will be processed in one integrated processing plant.

The oxide resources for Measured, Indicated and Inferred are 36.4 mt, 47.7 mt and 8.7 mt, respectively, (above a 2% Zinc cut-off grade) with similar zinc, lead and silver grades to those tabulated (total oxide resource 92.8 million tonnes).

Approximately 25 % of the resource is oxide and 75% sulphide.

A 2% cut off zinc grade has been selected based on economic studies. However, in addition to the above resource, there is approximately a further 100 million tonnes of Measured and Indicated mineralization between 1% and 2% zinc that falls within a preliminary optimum pit. Whilst it is presently uncertain whether this material will contribute to the Project’s economics, it is likely to form a separate low grade stockpile for consideration for future processing.

The notes prepared by H&S that accompany the above estimate, are attached hereto, as Appendix 1. A plan of the location of the drill holes involved in the estimate is also attached or can be viewed on the Company’s website.

To view map, please click here


Now that the resource estimate has been obtained, other aspects of the Feasibility Report can be finalised, and further information will be released when it becomes available.


APPENDIX 1

Notes
The resource estimates were performed by Dr Phillip Hellman who is a Director of Hellman & Schofield Pty Ltd (“H&S”) and a Fellow of the Australian Institute of Geoscientists. He qualifies as a Competent Person under the meaning of the 2004 edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”). He has reviewed this announcement and consents to the inclusion of these estimates in this release in the form and context in which they appear.

Preliminary pit optimisation studies completed in December 2005 suggest that approximately 92% of the total resource and 93% of the Measured and Indicated resources fall within an optimum pit.

The estimates are based on approximately 18,000 assays from 203 diamond drill holes and 13 trench and adit samples. Samples from five drill holes completed between 1963 and 1966 have been excluded from resource estimation due to uncertainties associated with their interval depths. A number of trenches have also been excluded due to survey uncertainties. Estimation was by Ordinary Kriging within six mineralization domains defined on the basis of geochemistry, geology and attitude.

Confidence categorisation has been undertaken on the basis of a consideration of distance of data points to blocks, number of two metre composited assays, geology and reliance upon samples with poor core recovery. Measured blocks are derived from a search ellipsoid with dimensions of 100 x 100 x 25 metres; Indicated from a 150 x 150 x 50 metre search and Inferred from a 200 x 200 x 50 metre search. Minimum number of data are 8, 8 and 6 for the three categories, respectively. Blocks may only be classified as Measured and Indicated if they fall within 3D defined mineralisation envelopes. A model of core recovery was produced and blocks with estimates of recovery less than 50% were demoted to Inferred, Measured blocks with between 50 and 80% recovery were demoted to Indicated.

An extensive internal validation of the database has been undertaken by H&S with a long process of error detection and correction. H&S, however, has yet to undertake a complete verification of information such as a comparison of the physical core logs with those in the digital database. H&S has undertaken site visits and limited spot verification including GPS checking of collar locations.

Geological interpretations were modelled from interpretations supplied by Union contract geologists. This includes the modelling of the major rock types and bounding faults as well as the definition of major ore-types.

H&S initiated, in early 2004, a rigorous QA/QC program designed to monitor accuracy and precision of assays. No issues were found with the assays checked, corresponding to drill samples from 1999 to present. Core recovery is variable with an overall recovery of 92% within assayed intervals. Zones containing cavities, resulting from karstification, have an average recovery of 61%. These intervals have a higher grade (4.5% zinc) than intervals with higher core recovery (94%) which average 2.6% zinc. It has been recognized that these zones may contain black mineralised muds that are difficult to recover during drilling. It is likely that selective loss of mineralisation has occurred resulting in the understatement of grade in these areas. Drilling recoveries have improved during the life of the project and it has been recommended by H&S that a twin hole be completed alongside a hole with low core recoveries to help determine the extent of any grade upgrade, if any, that may result from better core recoveries.

3D modelling of areas subjected to cavity development have been completed by Union’s geotechnical consultants and used by H&S to assign reduced density values (1.5 & 1.8, depending on zone) for conversion of volumes to tonnages. 1603 density determinations (average of 3.08) have been used to create a model of density. Waxed densities have been compared to densities determined by callipering tray lengths of core. A close agreement between the two sets of results was achieved.


The current definition of oxide and sulphide mineralization requires more work in view of the occurrence of deep oxide mineralization below the current oxide/sulphide surface and sulphide above the surface. Recoverable metal has been estimated by using average recoveries from preliminary metallurgical variability testwork based on oxide samples (small scale shaking flask tests and leach tests on composite samples) for zinc and sulphide samples (flotation testwork for zinc, lead and silver).

Previous resource estimates reported by Union were performed by SRK (2001) using a different method of estimation (“nearest neighbour”) from that employed by H&S. Zinc grades estimated by H&S are lower by approximately 15% than those by SRK at a 4% zinc cut-off.

The resources are reported above a zinc cut-off grade of 2% on the basis of advice received from Mr Patrick Scott, consultant to Union Resources, that this is an approximate lower economic cut-off grade. Material between 1 and 2 % zinc may have a marginal impact on project economics. Mr Scott is a Director of PS Associates Pty Ltd and a Fellow of the AusIMM. He qualifies as a Competent Person under the meaning of the 2004 edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”). He has reviewed this announcement and consents to the inclusion of this statement in the form and context in which it appears.