MEHDIABAD PROJECT - UPDATE

    RNS Number : 2001K
  Union Resources Limited
  16 December 2008
   

    Union Resources Limited 

    16 December 2008


    MEHDIABAD PROJECT - UPDATE

    The Mehdiabad Project is carried on by Union Resources Limited ("Union"), Iranian Mines and Mining Industries Development and Renovation
Organization ("IMIDRO") and the company Itok GmbH ("Itok") through an incorporated Iranian joint venture company, Mehdiabad Zinc Company
("MZC"). Union has to date invested in excess of US$15 million on exploration and feasibility activities relating to the Project.  

    As previously advised, IMIDRO purported to terminate several agreements governing the Project in December 2006.  Union stated then, and
is still firmly of the opinion, that the agreements were invalidly terminated.  Since that time Union has been negotiating with the relevant
Iranian parties in an effort to resolve the impasse and progress the Project.  Recently, Union has held talks with its Iranian
counterparts.

    It has come to Union's attention that the Managing Director of IMIDRO's wholly owned subsidiary Iran Mines Procurement and Supply
Company ("IMPASCO") has been quoted in the international press as stating that an agreement has been reached for Union to build a zinc
production plant and for an official contract governing the matter to be signed within the next two months.



    As stated above, Union has been pursuing a resolution of the dispute. Following negotiations in May of this year Union and its Iranian
counterparts entered into a memorandum of understanding. A second memorandum of understanding was entered into on 10 December which expands
upon the first memorandum of understanding.

    The memoranda of understanding provide for MZC to build a plant to process Mehdiabad ore, receive priority supply of the ore, and deal
with related mining issues, with the Exploitation Licence to be held by IMIDRO or its nominee. Progress has been made in the negotiation of
this matter, but several key issues remain to be resolved before a final binding agreement can be concluded, the most important of which are
the transfer price of the ore and the effective control of the mining program. Possible solutions to these issues have been proposed and are
currently under review by Union. 

    Yours faithfully

    UNION RESOURCES LIMITED

    Dr Frank Reid
    Managing Director 

 For further information contact:

 Enquires to:
  
 Australia:                  Union Resources Limited 
                             Dr Frank Reid - Managing Director
                             Phone: [phone]

 London:                     Hanson Westhouse Limited 
                             Bill Staple or Martin Davison 
                             0207 7601 6100  

                             Bankside Consultants
                             Simon Rothschild / Louise Mason
                             0207 367 8888


This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
MSCVQLBFVLBBFBD