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Friday 16 March, 2007

Union Resources Ltd

Interim Results


                            Union Resources Limited                            

                          Interim Report and Accounts                          

Directors' report

Your Directors present their report on the consolidated entity consisting of
Union Resources Limited and the entities it controlled at the end of, or
during, the half-year ended 31 December 2006.

Directors

The names and details of the Directors of the Company in office during the
half-year and until the date of this report are:

J D Collins-Taylor (Chairman)

R B Murdoch (Managing Director)

K E Larsson

I W Ross

K-A Waplan

Mr I J Burton was Chairman from the beginning of the half-year until his
resignation on 31 October 2006. Mr J D Collins-Taylor was appointed Chairman on
his resignation.

Review of operations

During the half-year Union Resources Limited ("Union" or "the Company")
continued to focus on the advancement of the Mehdiabad Base metal project (the
"Project") located in Central Iran.

The Company invested a further US$1.3 million during the half-year ended
31 December 2006 on exploration and feasibility activities relating to the
Project. The total investment by Union up to 31 December 2006 was US$15.8
million.

This investment has been made based on a series of five agreements (the
Agreements) the Company and its related entities have signed with the Ministry
of Industry and Mines of the Government of the Islamic Republic of Iran, the
Iranian government partner's operating companies, Iranian Mines and Mining
Industries Development and Renovation Organisation ("IMIDRO"), Iranian Mines
Procurement and Supply Company ("IMPASCO") and private partner Itok GmbH. The
joint venture operates through an Iranian registered company, Mehdiabad Zinc
Company ("MZC"), of which Union holds 25% of the founder's equity of
US$160,000. Under the Agreements the investment made by Union by way of
additional loans which are subject to earn-in rights is to be converted to
equity in MZC. The investment made to date is sufficient to increase Union's
equity to in excess of 40%.

The exploration activities at Mehdiabad have included over 52,000 metres of
diamond drilling which has outlined a world class zinc (Zn), lead (Pb) and
silver (Ag) resource totalling 394 million tonnes at 4.2% Zn, 1.6% Pb and 36 g/
t Ag. This resource is in excess of 90% Measured or Indicated as defined in the
JORC Code. This is considered to be a high level of resource definition. There
is potential for the resource to grow as it is open to the north, over a width
in excess of 1km.

In addition, during the half-year Union announced a copper resource within the
material overlying the zinc resource, totalling 72 million tonnes at 0.54% Cu.

An extensive study into the development of the Project (the Study) was recently
completed by Aker Kvaerner Australia ("AKAU") to determine the "Optimum Mine
Plan" and "Optimum Process Route". The "Optimum Mine Plan" is defined in the
"Basic Agreement" as the most technically efficient and economical method of
mining the ore body, whilst the "Optimum Process Route" is defined as the most
cost efficient and profitable method of processing the ore to make mineral
products. The Optimum Mine Plan and Optimum Process Route are to be determined
by MZC and approved by the Ministry in accordance with the Iranian Mining Code.

The Study indicated that the "Optimum Mine Plan" is a major open pit mine,
measuring some 2.5 kilometres in length, 1.5 kilometres in width, and 400
metres in depth with a mine life of between 20 and 40 years.

The Study concluded that the "Optimum Process Route" was to process both the
oxide and sulphide ore in a large scale plant, involving acid leaching of oxide
ore and sulphide concentrate, followed by solvent extraction to remove
impurities and electrowinning to recover the zinc metal.

The analysis associated with the Study concluded that the most economical
production scenario, was 300,000 tonnes per annum (tpa) zinc metal produced at
site, with up to a further 100,000 tpa of zinc contained in zinc concentrates
for sale to zinc smelters and 100,000 tonnes of lead and 7 million ounces of
silver in a lead/silver concentrate for further processing to metal elsewhere.
This scenario had an operating cost of only US$290 per tonne of zinc metal
(after allowance for lead and silver credits) at a zinc price of US$1,700 per
tonne.

However, due to limited power and water infrastructure, AKAU has proposed that
a production of 200,000 tonnes of zinc metal per annum, being made up of 50,000
tonnes of zinc metal per annum from oxide ore and 150,000 tonnes of zinc metal
per annum from sulphide ore (50:150k option) represents the optimised flowsheet
for the Project. The total capital cost of the 50:150k option was estimated by
AKAU to be US$1.3 billion.

Union believes that the 50:150k option represents the "Optimum Mine Plan" and
"Optimum Process Route", and is highly attractive economically. However, Union
is also of the view that financing of a development of this size in Iran would
be very difficult at this particular time as a consequence of the current
uncertain foreign investment environment in Iran, due to outside political
factors. Hence the development of the optimum project may need to await more
attractive investment conditions.

As a result Union has conducted studies into lower capital cost options that
may be able to be financed at this time while maintaining the long term
viability of the site under the "Optimum Case". These options include
processing the oxide ore by heap leach. The results of these studies to date
have been very encouraging.

A letter dated 28 November 2006 was received on 5 December 2006 from IMIDRO, an
Iranian government partner in the Mehdiabad Zinc Project purporting to
terminate four of the five agreements under which Union maintains its interest
in MZC.

Union is of the opinion that it has complied with all of its obligations under
the agreements and that no grounds exist for the purported termination. The
Board continues to take urgent steps to clarify and resolve the situation and
ascertain the impact of the letter on its investment in the project.

IMIDRO's subsidiary company IMPASCO, which currently holds the exploitation
licence, has been called upon by MZC to transfer the Exploitation Licence to
MZC as required under the agreements and to date has failed to do so.

Union is currently preparing to resolve the dispute through negotiation and, if
required, ultimately by arbitration hearings to be held by the International
Chamber of Commerce. The Company is preparing for both eventualities.

The Company is pleased to advise that on 16 January 2007 it received advice
from the Ministry of Economics and Finance in Iran that Union's investment in
the Project up to March 2006, totalling US$14 million, has been independently
reviewed and approved by the Ministry of Economics and Finance and is now
protected in Iran from expropriation under the Foreign Investment and
Protection Act.

The loss attributable to members of Union for the half-year ended
31 December 2006 was $1,059,263 (December 2005: loss $2,088,446).

Geophysical Research Pty Ltd, a company controlled by the Managing Director, Mr
Murdoch, and which provides certain services to the Company, including the
services of Mr Murdoch as Managing Director, has given three months notice of
the intention to terminate the agreement under which the services are provided.
The termination is to take effect on 29 April 2007. The Company is currently
seeking to recruit a Managing Director with the skills and expertise to take
the Project to the next stage of development.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C
of the Corporations Act 2001 is set out on page 7.

Rounding of amounts

The Company is of a kind referred to in Class Order 98/100, issued by the
Australian Securities and Investments Commission, relating to the ''rounding
off'' of amounts in the Directors' report. Amounts in the Directors' report
have not been rounded off in accordance with that Class Order to the nearest
thousand dollars, but to the nearest dollar.

This report is made in accordance with a resolution of Directors.

J D Collins-Taylor R B Murdoch

Chairman Managing Director

16 March 2007

                   Auditor's Independence Declaration to the                   

                     Directors of Union Resources Limited                      

In relation to the half-year independent review for the six months to 31
December 2006, to the best of my knowledge and belief there have been:

 i. No contraventions of the auditor independence requirements of the
    Corporations Act 2001
   
ii. No contraventions of any applicable code of professional conduct
   
PITCHER PARTNERS

R J St Clair

Partner

Brisbane, 16 March 2007

Consolidated income statement

For the half-year ended 31 December 2006

                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                         Notes               $              $
                                                                             
Revenue from continuing operations         3           129,014        103,380
                                                                             
Other income                               4             4,690          4,100
                                                                             
Expenses, excluding finance costs          5       (1,191,568)      (834,451)
                                                                             
Finance costs                                          (1,399)          (658)
                                                                             
Profit/(loss) before income tax                    (1,059,263)      (727,629)
                                                                             
Income tax benefit                                           -              -
                                                                             
Profit/(loss) from continuing operations           (1,059,263)      (727,629)
                                                                             
Profit/(loss) from discontinued            11                -    (1,424,063)
operations                                                                   
                                                                             
Profit/(loss) for the half-year                    (1,059,263)    (2,151,692)
                                                                             
Profit/(loss) for the half-year is                                           
attributable to:                                                             
                                                                             
Members of Union Resources Limited                 (1,059,263)    (2,088,446)
                                                                             
Minority interest                                            -       (63,246)
                                                                             
                                                   (1,059,263)    (2,151,692)
                                                                             
                                                         Cents          Cents
                                                                             
Profit/(loss) per share for profit from                                      
continuing operations attributable to                                        
the ordinary equity holders of the                                           
company:                                                                     
                                                                             
Basic loss per share                                    (0.14)         (0.08)
                                                                             
Diluted loss per share                                  (0.14)         (0.08)
                                                                             
Profit/(loss) per share for profit                                           
attributable to the ordinary equity                                          
holders of the company:                                                      
                                                                             
Basic earnings per share                                (0.14)         (0.24)
                                                                             
Diluted earnings per share                              (0.14)         (0.24)

The above consolidated income statement should be read in conjunction with the 
                              accompanying notes.                              

Consolidated balance sheet

As at 31 December 2006

                                                     December           June
                                                                            
                                                         2006           2006
                                                                            
                                        Notes               $              $
                                                                            
ASSETS                                                                      
                                                                            
Current assets                                                              
                                                                            
Cash and cash equivalents                           3,156,701      5,337,971
                                                                            
Trade and other receivables                           128,322        102,721
                                                                            
Available-for-sale financial assets     7             234,849              -
                                                                            
Current tax assets                                      9,193          9,193
                                                                            
Total current assets                                3,529,065      5,449,885
                                                                            
Non-current assets                                                          
                                                                            
Available-for-sale financial assets                         -        315,985
                                                                            
Other financial assets                                 65,260         65,260
                                                                            
Exploration and evaluation              8          20,095,988     20,930,191
                                                                            
Property, plant and equipment                          40,605         47,937
                                                                            
Total non-current assets                           20,201,853     21,359,373
                                                                            
Total assets                                       23,730,918     26,809,258
                                                                            
LIABILITIES                                                                 
                                                                            
Current liabilities                                                         
                                                                            
Trade and other payables                              557,457        503,124
                                                                            
Provisions                                            303,384         24,501
                                                                            
Total current liabilities                             860,841        527,625
                                                                            
Non-current liabilities                                                     
                                                                            
Provisions                                              8,692         16,331
                                                                            
Total non-current liabilities                           8,692         16,331
                                                                            
Total liabilities                                     869,533        543,956
                                                                            
Net assets                                         22,861,385     26,265,302
                                                                            
EQUITY                                                                      
                                                                            
Contributed equity                                 88,852,987     88,857,141
                                                                            
Reserves                                  10      (1,519,341)        821,159
                                                                            
Accumulated losses                               (64,472,261)   (63,412,998)
                                                                            
Total equity                                       22,861,385     26,265,302

  The above consolidated balance sheet should be read in conjunction with the  
                              accompanying notes.                              

Consolidated statement of changes in equity

For the half-year ended 31 December 2006

                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                                             $              $
                                                                             
Total equity at the beginning of the                26,265,302     21,982,868
half-year                                                                    
                                                                             
Divested assets, net of tax                                  -    (1,537,495)
                                                                             
Exchange differences on translation of             (2,590,500)              -
foreign operations                                                           
                                                                             
Net income recognised directly in equity           (2,590,500)    (1,537,495)
                                                                             
Profit/(loss) for the half-year                    (1,059,263)    (2,151,692)
                                                                             
Total recognised income and expense for            (3,649,763)    (3,689,187)
the half-year                                                                
                                                                             
Transactions with equity holders in                                          
their capacity as equity holders:                                            
                                                                             
Contributions of equity, net of                              -      7,377,734
transaction costs                                                            
                                                                             
Option premium, net of transaction costs               245,846              -
                                                                             
Total equity at the end of the half-year            22,861,385     25,671,415
                                                                             
Total recognised income and expense for                                      
the half-year is attributable:                                               
                                                                             
Members of Union Resources Limited                 (3,649,763)    (3,625,941)
                                                                             
Minority interest                                            -       (63,246)
                                                                             
                                                   (3,649,763)    (3,689,187)

    The above consolidated statement of changes in equity should be read in    
                   conjunction with the accompanying notes.                    

Consolidated statement of cash flows

For the half-year ended 31 December 2006

                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                                             $              $
                                                                             
Cash flows from operating activities                                         
                                                                             
Receipts from customers                                      -        266,486
                                                                             
Payments to suppliers and employees                (1,033,064)      (910,991)
                                                                             
Goods and services tax refunded                         92,192              -
                                                                             
Interest received                                      115,062         80,271
                                                                             
Interest paid                                          (1,399)              -
                                                                             
Net cash (outflow) from operating                    (827,209)      (564,234)
activities                                                                   
                                                                             
Cash flows from investing activities                                         
                                                                             
Payments for property, plant and                      (11,694)              -
equipment                                                                    
                                                                             
Payments for exploration and evaluation            (1,331,727)    (5,918,230)
                                                                             
Net cash (outflow) from investing                  (1,343,421)    (5,918,230)
activities                                                                   
                                                                             
Cash flows from financing activities                                         
                                                                             
Proceeds from issue of ordinary shares                       -      8,259,409
and options                                                                  
                                                                             
Share issue costs                                     (10,640)      (110,053)
                                                                             
Net cash (outflow) inflow from financing              (10,640)      8,149,356
activities                                                                   
                                                                             
Net (decrease) increase in cash and cash           (2,181,270)      1,666,892
equivalents                                                                  
                                                                             
Cash and cash equivalents at the                     5,337,971      1,896,566
beginning of the half-year                                                   
                                                                             
Cash and cash equivalents at end of the              3,156,701      3,563,458
half-year                                                                    

 The above consolidated statement of cash flows should be read in conjunction  
                         with the accompanying notes.                          

Notes to the consolidated financial statements

 1. Summary of significant accounting policies
   
This general purpose financial report for the interim half-year reporting
period ended 31 December 2006 has been prepared in accordance with Accounting
Standard AASB 134 - Interim Financial Reporting and the Corporations Act 2001.

This report does not include all the notes of the type normally included in an
annual financial report. Accordingly, this report is to be read in conjunction
with the annual report for the year ended 30 June 2006 and any public
announcements made by Union Resources Limited during the interim reporting
period in accordance with the continuous disclosure requirements of the
Corporations Act 2001.

The accounting policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period.

 2. Going concern
   
The financial statements are prepared on a going concern basis. This financial
report does not include any adjustments relating to the recoverability and
classification of recorded asset amounts or to the amounts and classification
of liabilities that might be necessary should the consolidated entity not
continue as a going concern.

The consolidated entity has the ability to continue as a going concern so long
as it is not materially affected by any adverse change in the external
environment in which it operates. This would include, but not be limited to,
its ability to raise sufficient capital to finance its exploration and
development commitments on the Mehdiabad Zinc Project and ongoing operational
expenditure and the impact of the letter purported to terminate four of the
five agreements under which it maintains its interest in the Mehdiabad Zinc
Company (refer note 8).

 3. Revenue from continuing operations
   
                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                                             $              $
                                                                             
Interest                                               129,014         93,380
                                                                             
Administration income                                        -         10,000
                                                                             
                                                       129,014        103,380

 4. Other income
   
Foreign exchange gain (net)                             4,690          4,100

 5. Profit/(loss) for the half-year
   
                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                                             $              $
                                                                             
Expenses, excluding finance costs,                                           
included in the income statement                                             
classified by nature                                                         
                                                                             
Audit fees                                              43,795         28,360
                                                                             
Consulting fees                                        231,245        182,744
                                                                             
Director related expenses                                                    
                                                                             
- Board fees                                            81,666         64,175
                                                                             
- Board committee fees                                  31,250              -
                                                                             
- reimbursable expenses                                 30,036              -
                                                                             
                                                       142,952         64,175
                                                                             
Depreciation and amortisation expense                   18,387          6,815
                                                                             
Employee benefits expense                               72,530         59,402
                                                                             
Foreign exchange losses                                      -         13,124
                                                                             
General administration expenses                         92,738         63,152
                                                                             
Insurance                                                                    
                                                                             
- Directors & officers indemnity                        34,234         16,099
insurance                                                                    
                                                                             
- political risk insurance                              31,130         13,132
                                                                             
- other                                                  4,175          2,574
                                                                             
                                                        69,539         31,805
                                                                             
Marketing and promotion expenses                        15,919         21,126
                                                                             
Occupancy expenses                                      13,449         14,062
                                                                             
Recruitment costs                                       72,623              -
                                                                             
Share registry / meeting costs                          67,755        103,256
                                                                             
Telephone                                               11,730         23,747
                                                                             
Travel                                                  29,308         42,716
                                                                             
Termination of Geophysical Research Pty                273,061              -
Ltd agreement                                                                
                                                                             
Diminution of asset values                              36,537        179,967
                                                                             
                                                     1,191,568        834,451

Geophysical Research Pty Ltd, a company controlled by the Managing Director, Mr
Murdoch, and which provides certain services to the Company, including the
services of Mr Murdoch as Managing Director, has given three months notice of
the intention to terminate the agreement under which the services are provided.
The termination is to take effect on 29 April 2007. Provision for the amount of
the payment required, as at 31 December 2006, on termination of the agreement
as been made during the half-year.

 6. Segment information
   
The Company operates primarily in one business segment being the exploration
for and evaluation of base metal resources.

 7. Current assets - Available-for-sale financial assets
   
                                                      December           June
                                                                             
                                                          2006           2006
                                                                             
                                                             $              $
                                                                             
Investment in Jab Technologies Limited                 182,672              -
                                                                             
Investment in Gold Aura Limited                         52,177              -
                                                                             
                                                       234,849              -

The investment in Jab Technologies Limited, a company listed on the National
Stock Exchange of Australia, has been restated to its fair value. The fair
value is based on the takeover offer from VentureAxess Capital Limited.

 8. Non-current assets - Exploration and evaluation expenditure
   
                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                                             $              $
                                                                             
Balance 1 July                                      20,930,191     15,111,175
                                                                             
Expenditure incurred                                 1,684,046      5,951,703
                                                                             
Effects of movement in exchange rates              (2,518,249)              -
                                                                             
Disposal of subsidiary                                       -    (2,916,691)
                                                                             
Balance 31 December                                 20,095,988     18,146,187

Capitalised exploration and evaluation expenditure relates to the Mehdiabad
Project which operates as an incorporated joint venture through Mehdiabad Zinc
Company ("MZC"). The Group holds 25% of the issued shares in MZC and when loans
convertible to equity in MZC are added, has a beneficial interest in excess of
40%. Contributions made to the joint venture are capitalised as exploration and
evaluation expenditure.

As at 31 December 2006 only US$7.3 million (A$9.2 million) of the US$14.1
million (A$17.9 million) contributions subject to earn-in rights made to MZC
have been entered into the accounts of MZC as loans to be converted to equity.
In accordance with Iranian corporate practice, Union expects at least a further
US$0.6 million of the above expenditure to be approved around July 2007. As at
the date of this report, it is not possible to estimate when the remainder of
the outstanding expenditure will also be entered into the accounts of MZC as
loans to be converted to equity, or when the shareholders of MZC shall approve
the conversion of the loans to equity. The Group is of the view that MZC and
some of its shareholders are breaching the agreements through which the Group
maintains its interest in MZC by not supporting the procedures required under
Iranian law to enable MZC to enter the outstanding expenditure into the
accounts of MZC as loans to be converted to equity, in accordance with the
agreements. Supporting Union's view is confirmation received from the Ministry
of Economics and Finance in Iran received on 16 January 2007 that the Group's
investment in the Project up until March 2006, totalling US$14 million, has
been independently reviewed and approved by the Ministry and is now protected
in Iran from expropriation under the Foreign Investment and Protection Act.

A letter dated 28 November 2006 was received on 5 December 2006 from the
Iranian Mines and Mining Industries Development and Renovation Organization
("IMIDRO"), an Iranian government partner in the Mehdiabad Zinc Project
purporting to terminate four of the five agreements under which the Group
maintains its interest in MZC.

The Group is of the opinion that it has complied with all of its obligations
under the agreements and that no grounds exist for the purported termination.
The Board continues to take urgent steps to clarify and resolve the situation
and ascertain the impact of the letter on its investment in the project.

IMIDRO's subsidiary company IMPASCO, which currently holds the exploitation
licence, has been called upon by MZC to transfer the Exploitation Licence to
MZC as required under the agreements and to date has failed to do so.

The Group is currently preparing to resolve the dispute through negotiation
and, if required, ultimately by arbitration hearings to be held by the
International Chamber of Commerce.

The ultimate recovery of the carrying value of the capitalised exploration and
evaluation expenditure is primarily dependent upon the successful development
and commercial exploitation, or alternatively, the realisation of the relevant
areas of interest at amounts in excess of their book values.

If the notice of termination is held to be valid, it may impact the ability of
the Group to recover the carrying value of capitalised exploration and
evaluation expenditure through successful development and commercial
exploitation.

The Group held a political risk insurance policy in respect of its investment
with the Australia Government Export Finance and Insurance Corporation (EFIC)
and has notified EFIC and the Ministry of Economic Affairs and Finance,
Organisation for Investment Economic and Technical Assistance to Iran of the
letter received from IMIDRO. The maximum recovery under the insurance policy
with EFIC is US$5 million. As noted above, on 16 January 2007 Union received
advice from the Ministry of Economics and Finance in Iran that its investment
of US$14 million as at the end of March 2006 was now protected in Iran from
expropriation under the Foreign Investment and Protection Act.

 9. Equity securities issued
   
90,000,000 options with a strike price of 7.5 cents were issued on 23 August
2006 to RAB Special Situations LP for no consideration.

10,000,000 options with a strike price of 10 cents were issued on 23 August
2006 to Societe Generale Australia Branch as part consideration for their
services to act as financial advisor to the Company in connection with the
Mehiabad Zinc project. As the market value of the services provided was not
able to be reasonably determined the amount recognised is based on the fair
value of the options at the time of issue.

The issue of these options was approved by a general meeting of the Company on
10 August 2006.

10. Reserves
   
                                                      December           June
                                                                             
                                                          2006           2006
                                                                             
                                                             $              $
                                                                             
Option premium reserve                               1,071,159        821,159
                                                                             
Foreign currency translation reserve               (2,590,500)              -
                                                                             
                                                   (1,519,341)        821,159

Movements:

                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                                             $              $
                                                                             
Option premium reserve                                                       
                                                                             
Balance 1 July                                         821,159        821,159
                                                                             
Fair value of options issued to Societe                250,000              -
General                                                                      
                                                                             
Balance 31 December                                  1,071,159        821,159
                                                                             
Foreign currency translation reserve                                         
                                                                             
Balance 1 July                                               -              -
                                                                             
Currency translation differences arising           (2,590,500)              -
during the half-year                                                         
                                                                             
Balance 31 December                                (2,590,500)              -

Nature and purpose of reserves

Option premium reserve

Proceeds from the issue of options are taken to the option premium reserve.

Foreign currency translation reserve

Exchange differences arising on translation of the foreign controlled entity
are taken to the foreign currency translation reserve. The reserve is
recognised in the profit and loss when the net investment is disposed of.

11. Discontinued operations
   
(a) Description

With effect from 13 September 2005, the Company completed an in specie share
distribution of Gold Aura Limited shares to eligible Union shareholders. The
division disposed of is reported in this financial report as a discontinued
operation.

Financial information relating to the discontinued operation for the period to
the date of disposal is set out below.

(b) Financial performance and cash flow information

The financial performance and cash flow information presented are from 1 July
to 13 September 2005.

                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                                             $              $
                                                                             
Revenue                                                      -          2,974
                                                                             
Expenses, excluding finance costs                            -       (91,756)
                                                                             
Finance costs                                                -          (257)
                                                                             
Profit before income tax                                     -       (89,039)
                                                                             
Income tax expense                                           -              -
                                                                             
Profit after income tax of discontinued                      -       (89,039)
operations                                                                   
                                                                             
Loss on measurement to fair value less                       -    (1,335,024)
costs to sell included in expenses                                           
                                                                             
Income tax expense                                           -              -
                                                                             
Gain on sale of the division after                           -              -
income tax                                                                   
                                                                             
Profit from discontinued operations                          -    (1,424,063)
                                                                             
Net cash inflow from operating                               -      (165,607)
activities                                                                   
                                                                             
Net cash inflow (outflow) from investing                     -       (34,050)
activities                                                                   
                                                                             
Net cash (outflow) from financing                            -        600,501
activities                                                                   
                                                                             
Net increase in cash generated by the                        -        400,844
division                                                                     

(c) Carrying amounts of assets and liabilities

The carrying amount of assets and liabilities as at 13 September 2005 (2005
column) were:

                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                                             $              $
                                                                             
Cash assets                                                  -        557,617
                                                                             
Trade receivables                                            -         30,008
                                                                             
Exploration and evaluation                                   -      4,180,382
                                                                             
Property, plant and equipment                                -         51,165
                                                                             
Other assets                                                 -        178,126
                                                                             
Total assets                                                 -      4,997,298
                                                                             
Trade creditors                                              -       (75,264)
                                                                             
Accruals                                                     -       (23,066)
                                                                             
Provisions                                                   -       (53,118)
                                                                             
Total liabilities                                            -      (151,448)
                                                                             
Net assets                                                   -      4,845,850

(d) Details of the sale of division

                                                          Half-year          
                                                                             
                                                          2006           2005
                                                                             
                                                             $              $
                                                                             
Consideration received or receivable:                                        
                                                                             
In specie distribution to Union                              -        912,849
Resources Limited shareholders                                               
                                                                             
Total disposal consideration                                 -        912,849
                                                                             
Carrying amount of net assets sold                           -      2,247,873
                                                                             
Gain/(loss) on sale before income tax                        -    (1,335,024)
                                                                             
Income tax expense                                           -              -
                                                                             
Gain/(loss) on sale after income tax                         -    (1,335,024)

12. Contingent assets
   
In accordance with the Escrow Agreement executed in November 2005 between
Australian Gigahertz International Pty Ltd ("AGI"), ISM Communications
Corporation ("ISM"), A.G.N. Philippines Inc. ("AGNP") and Union Management Pty
Ltd ("UML"), an amount of US$500,000 was retained from the settlement proceeds
from the sale of Eastern Telecommunications of the Philippines Inc ("ETPI") to
cover any potential tax liabilities that may have been incurred and not paid or
remitted to the Filipino Bureau of Internal Revenue ("BIR") by AGNP or AGNI as
of the date of the sale of ETPI ("Tax Retention Moneys").

Union Management Pty Ltd (a wholly owned subsidiary of Union Resources Limited)
is entitled to receive a 54.8% share of the Tax Retention Money plus any
interest earned on such funds less any amounts deducted from such funds
including:

a) any amount of an assessment order provided by the BIR to AGNP regarding
unpaid taxes of AGNP prior to the closing date (to date there have been no such
assessment notices provided);

b) any agreed fees payable to the escrow agent; and

c) agreed fees of US$14,801 in respect of professional fees in relation to the
completion of this matter and obtaining the necessary certificates from BIR.

Union Management Pty Ltd's share of the Retention Monies of approximately
A$360,541 has not been recognised as a receivable at 31 December 2006 as the
amount of Tax Retention Monies earned is dependent upon an investigation of the
potential BIR liabilities that may have been incurred and cannot be reliably
measured at this stage. Any amounts forthcoming will be recognised as revenue
when received.

Directors declaration

In the Directors' opinion:

 b. the financial statements and notes set out on pages 8 to 19 are in
    accordance with the Corporations Act 2001, including:
   
 i. complying with Accounting Standards, the Corporations Regulations 2001 and
    other mandatory professional reporting requirements; and
   
ii. giving a true and fair view of the consolidated entity's financial position
    as at 31 December 2006 and of its performance, as represented by the
    results of its operations, changes in equity and its cash flows, for the
    half-year ended on that date; and
   
 c. there are reasonable grounds to believe that Union Resources Limited will
    be able to pay its debts as and when they become due and payable.
   
This declaration is made in accordance with a resolution of the Directors.

J D Collins-Taylor

Chairman

16 March 2007

Independent review report to the members of

Union Resources Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Union Resources
Ltd, which comprises the condensed balance sheet as at 31 December 2006, and
the condensed income statement, condensed statement of changes in equity and
condensed cash flow statement for the half-year ended on that date, a statement
of accounting policies, other selected explanatory notes and the directors'
declaration.

Directors' Responsibility for the Half-Year Financial Report

The directors of Union Resources Ltd, are responsible for the preparation and
fair presentation of the half
year financial report in accordance with Australian Accounting Standards
(including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility
includes designing,
implementing and maintaining internal control relevant to the preparation and
fair presentation of the half
year financial report that is free from material misstatement, whether due to
fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates that
are reasonable in the
circumstances.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report
based on our review. We conducted our review in accordance with Auditing
Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report
Performed by the Independent Auditor of the Entity, in order to state whether,
on the basis of the procedures described, we have become aware of any matter
that makes us believe that the financial report is not in accordance with the
Corporations Act 2001 including: giving a true and fair view of the Union
Resources Ltd's financial position as at 31 December 2006 and its performance
for the half-year ended on that date; and complying with Accounting Standards.

A review of a half-year financial report consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with Australian Auditing
Standards and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements
of the Corporations Act
2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the half-year financial report of Union
Resources Ltd, is not in accordance with the Corporations Act 2001 including:

(a) giving a true and fair view of the Union Resources Ltd's financial position
as at 31 December 2006 and of its performance for the half-year ended on that
date; and

(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and
Corporations Regulations 2001.

Inherent uncertainty regarding continuation of going concern

Without qualification to the statement expressed above, attention is drawn to
the following matter:

As a result of the matters described in Note 2 to the financial statements, the
consolidated entity has the ability to continue as a going concern so long as
the entity is not materially affected by an adverse change in the external
environment in which it operates. This would include, but not be limited to,
its ability to raise sufficient capital to finance its exploration and
development commitments on the Mehdiabad Zinc Project and ongoing operational
expenditure and the impact of the purported letter of termination of four of
the five agreements through which it holds its interest in the Mehdiabad Zinc
Company (refer note 8). The financial report does not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
to the amounts and classification of liabilities that might be necessary should
the consolidated entity not continue as a going concern.

Inherent uncertainty regarding capitalised mineral exploration costs

Without qualification to the statement expressed above, attention is also drawn
to the following matters referred to in Note 8 of the financial report:

(a) of total exploration and development costs, approximately $17.9 million is
subject to earn in rights. The consolidated entity has been issued with "Board
Certificates" for an amount of $9.2 million.

It is not possible to estimate when further certificates will issue, how much
they will be for or when they will convert to shares.

(b) a letter dated 28 November 2006 was received on 5 December 2006 from the
Iranian Mines and Mining Industries Development and Renovation Organization
("IMIDRO"), an Iranian government partner in the Mehdiabad Zinc Project
purporting to terminate four of the five agreements under which the Group
maintains its interest in MZC.

IMIDRO's subsidiary company IMPASCO, which currently holds the exploitation
licence, has been called upon by MZC to transfer the Exploitation Licence to
MZC as required under the agreements and to date has failed to do so.

The Group is of the opinion that it has complied with all its obligations under
the agreements and that no grounds exist for the purported termination. The
Group has received confirmation from the Ministry of Economics and Finance in
Iran on 16 January 2007 that the Group's investment in the Project up until
March 2006, totalling US$14 million, has been independently reviewed and
approved by the Ministry and is now protected in Iran from expropriation under
the Foreign Investment and Protection Act.

The Group is currently preparing to resolve the dispute through negotiation
and, if required, arbitration hearings to be held by the International Chamber
of Commence. If the notice of purported termination is held to be valid, it may
impact the ability of the Group to recover the carrying value of capitalised
exploration and evaluation expenditure through successful development and
commercial exploitation.

PITCHER PARTNERS R J St Clair

Brisbane 16 March 2007