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Thursday 27 October, 2005

Union Resources Ltd

Oxide Pilot Plant Test Work

Union Resources Limited
27 October 2005

UNION RESOURCES



27 October 2005


Re:  Metallurgical Testwork Update:

Oxide Pilot Plant test work program successfully completed



METALLURGICAL UPDATE:



Union Resources Limited ('Union') advises the following metallurgical update for
the Mehdiabad Project.



•        Oxide Pilot Plant:  The oxide ore pilot plant program has been
satisfactorily completed.  The main issue arising from the program related to
filtration, which has been subsequently addressed by test work preformed by
equipment manufacturers.



•        Oxide Zinc Recovery Variability Testwork: 250 separate composite
samples of oxide ore have now been leach tested to determine the variability of
zinc and manganese recovery and acid consumption over the oxide resource and the
results to date have averaged the target overall recovery of 70%. It is intended
to test around 1000 samples in total to provide a very high level of confidence
on the recovery, with each test representing a composite of 5 metres of
mineralised oxide drill core.



•        Sulphide Zinc Recovery Variability Testwork: 30 separate composite
samples of oxide ore have also been flotation tested to determine the
variability of zinc recovery in the sulphide concentrate.  The results are
awaited.



•        Planned Comminution / Sulphide Testwork: Metallurgical drilling was
completed in September specifically to provide several tonnes of samples for
comminution and further sulphide batch testing.  The samples are en route to
Australia and testing will commence upon arrival.



OXIDE PILOT PLANT:



The Pilot Plant tests were conducted by Tecnicas Reunidas ('TR') in Madrid,
Spain. TR successfully developed the solvent extraction technology for zinc
leachate purification, which has been used at the successful Skorpion Zinc Oxide
Mine in Namibia.



The Pilot Plant tests were not designed to determine zinc recoveries, which will
come instead from the oxide variability testing. The purpose of the Pilot Plant
was to evaluate the stability and robustness of the proposed flowsheet and
obtain data on the physical characteristics of the leach products for plant
design and equipment selection and sizing.



A series of three Pilot Plant runs were conducted.

(a)    A preliminary test of two potential leach circuits to identify the
optimum leach circuit flowsheet.

(b)   Followed by separate tests of seven tonnes of bulk sample from the western
side and seven tonnes from the eastern side of the deposit.



The first run established that the optimum oxide plant flowsheet for the
subsequent tests was a combination of:

(a) Two stage counter current leaching circuit as determined in a series of
testwork carried out in 2004 at HRL Laboratories in Brisbane.

(b)   TR's solvent extraction technology to purify the zinc leachate prior to
electrowinning the zinc onto cathodes.



The optimum circuit involved fresh ore being contacted at pH 2.0 for two hours
with the acidic leach solution from the second stage leach. The partially
leached residue was separated from the solution in a thickener, with the leach
solution overflow pumped to the neutralisation stage.  The underflow containing
the primary leach residue was pumped to the second stage leach, where it was
leached at pH 1.0 for two hours using a mixture of raffinate and make-up
sulphuric acid.  The acidic residue was settled and filtered.  The solution from
the pH 2.0 leach was neutralised over 4 hours to pH 4.0 using limestone.



It was found that the leaching and settling characteristics of both the leach
residue and the neutralised residue was good. However, the filtration
characteristics and the washing rate of the filter cake were slow. The
filtration problems were caused by about 0.5g/L silica as a very fine gel in the
solutions.



To solve the filtration problem counter-current decantation ('CCD') was
successfully used to flush the silica away from the leach residue. This was
found to be very effective, increasing the primary filtration rate by a factor
of four.



Filter manufacturers have completed tests on the filtration characteristics of
the residues. It was found that the CCD aided filtration, and neutralisation of
the leach residue after a simulated counter-current decantation process also
improved the filtration rate. The equipment suppliers have advised that they
have sufficient information to determine the number and size of filters and
thickener required.



Aker Kvaerner Australia ('AKAU') are currently reviewing the Pilot Plant report.



Samples of residues from the continuous pilot plant leach tests have been sent
to Australia for chemical characterisation for environmental evaluation.



For further information:

Union Resources Limited (Tel: 00 61 7 3833 3833)

Rob Murdoch - Managing Director

www.unionresources.com.au

Westhouse Securities LLP (Tel: 020 7601 6100)

Bill Staple
Richard Morrison






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