Union Resources Limited
04 April 2006
For immediate release: 4 April 2006
UNION RESOURCES LIMITED
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
The new resource estimates at a cut off grade of 2% zinc are tabulated below.
Category Million Zinc Lead Silver Approximate Recovered Metal
Tonnes % % g/t 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 + 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
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
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
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.
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.
For further information:
Union Resources Limited (Tel: 00 61 7 3833 3833)
Rob Murdoch - Managing Director
Westhouse Securities LLP (Tel: 020 7601 6100)
Bankside Consultants (Tel: 020 7367 8888)
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
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
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.
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