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Wednesday 31 October, 2007

Union Resources LTD

Quarterly Report


news release

For immediate release: 31st October 2007

                            Union Resources Limited                            

                             A.B.N. 40 002 118 872                             

QUARTERLY ACTIVITIES STATEMENT FOR PERIOD ENDED 30 SEPTEMBER 2007

OVERVIEW OF THE MEHDIABAD PROJECT

Union Resources Limited (Union) is focused on the development of the Mehdiabad
Base Metal Project (Project) located in Central Iran.

Union has to date, invested in excess of US$15 million towards exploration and
feasibility activities relating to the Project in line with joint venture
arrangements, made in a series of five agreements signed between Union,
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
between 1999 and 2003 (the "Project Agreements"). The joint venture operates
through an Iranian registered company, Mehdiabad Zinc Company (MZC).

Exploration carried out in the area subject to the joint venture, utilising
funding and expertise provided by Union, outlined one of the largest
undeveloped Zinc resources in the world.

The Feasibility Study was accepted by the Board of MZC as bankable during the
quarter subject to the granting of the requisite licences, support from the
government sector and commitment of financing.

Union considers MZC's acceptance of the Feasibility Study Report to be a
significant development as Union has now completed its commitments under the
various Project Agreements and the project is ready to progress to development
once the purported termination of the agreements has been resolved (refer
below).

STATUS OF NEGOTIATIONS TO RESOLVE PURPORTED TERMINATION DISPUTE

Union received a letter from IMIDRO in December 2006, purporting to terminate
four of the five agreements relating to the joint venture and Project, namely
the Foundation Agreement, Basic Agreement, the Management Agreement and the
Engineering Agreement. Union is firmly of the view that the notice of
termination was invalid.

IMIDRO claimed that Union has breached Article 9.2.2 of the Basic Agreement
which requires MZC to deliver a Feasibility Study that determines the "optimum
mine plan" and "optimum process route" for the Project within two years of the
closing of the agreement, which would have been at the end of 2001. However,
Article 9.2.2 is subject to Article 5.2.4 which states that "if MZC has worked
continuously on the Project and for valid technical reasons needs more time to
complete the Study, then the parties will agree to a reasonable extension".

Union is firmly of the view that extensions have not only been given, but in
any case are technically justified given both the nature of the Project that
was discovered in the first two years of the joint venture and the complexities
of preparing a Study relating to the Project which would enable finance to be
raised.

Since receiving the letter of purported termination, Union has sought to
protect its investment and enforce its legal rights by invoking the dispute
resolution provisions contained in the Basic Agreement.

While there is a desire to resolve the issues, the position of the parties is
clear:

 a. Union requires IMIDRO to withdraw the termination letter, arrange for its
    wholly owned subsidiary IMPASCO to transfer the Exploitation Licence for
    the Project to MZC in accordance with the agreements and to allow MZC to
    proceed with the development of the Project.
   
 b. IMIDRO insists that IMPASCO retain the Exploitation Licence and undertake
    the mining. IMIDRO suggest that MZC build the process plant, and that
    IMIDRO provide MZC with a guaranteed supply of ore for the plant. IMIDRO's
    approach is not envisaged in the Agreements and in Union's view is not
    workable.
   
Further meetings to resolve the issues and investigate the viability of option
(b) above so that the Project can move to the next stage of development are in
process. If the issues are not able to be satisfactorily resolved, the
Agreements allow for International Chamber of Commerce arbitration hearings to
be held, in order to resolve the dispute.

APPOINTMENT OF LORD LAMONT

Subsequent to the end of the quarter, the Company announced that The Rt. Hon.
Lord Lamont of Lerwick ("Lord Lamont") has agreed to become a director of the
Company, subject to his appointment being approved by the Company's
shareholders.

Lord Lamont is a British citizen and lives in London in the United Kingdom. He
worked as an investment banker in London before entering Politics. He entered
the British Parliament in 1972 and became Parliamentary Under Secretary of
State in 1979 under Prime Minister Margaret Thatcher. He was appointed to the
British Cabinet in 1979 before serving as Chancellor of the Exchequer in the
John Major Government from 1990 to 1993. Lord Lamont is the current Chairman of
the British Iranian Chamber of Commerce and is a director of Balli Group Plc,
which has extensive interests in Iran. He is also a director of RAB Capital
Plc, Scottish Re Group Ltd, and is Chairman of the East European Food Fund.

The Company's Board of Directors is delighted that Lord Lamont has agreed to
serve as a director of the Company. The Board is of the view that Lord Lamont's
combined business, political and financial experience and acumen will be of
great benefit to the Company.

Lord Lamont will stand for election as a director of the Company at the
Company's annual general meeting to be held on 23 November 2007.

DUBAI OFFICE

The Company established an office in Dubai in the United Arab Emirates. The
Company's Managing Director, Dr Frank Reid, is based in the Dubai office.

The Dubai office is located in the Silicon Oasis Free Zone in Dubai. The
location of the office in a "Free Zone" provides certain financial and
logistical advantages to the Company.

The fact that Dr Reid is based in Dubai means that he will be in close
proximity to Iran where the Mehdiabad zinc-silver-lead deposit is located. This
will greatly assist in Dr Reid's ongoing negotiations with relevant Iranian
parties in order to progress the development of the Mehdiabad Project.

The Company will also maintain its office in Brisbane, Australia.

CAPITAL RAISING

During the quarter, the Company raised $2.4 million from the Share Purchase
Plan ($0.4 million) and placement of shares to RAB Capital Special Situations,
Lundin Mining AB and Kestrel Assets Limited. The placements were for a total
101,500,000 shares at an issue price of 2 cents per ordinary share to raise a
total of $2,030,000.

Based on the current level of activity, these funds should be sufficient to
fund the operations of the Company for the next twelve months.

The Company has made an offer of bonus shares to those shareholders who
participated in the Share Purchase Plan. This was in recognition of the higher

subscription price paid by participating shareholders compared to shareholders
who

participated in the later private share placement by the Company.

OUTLOOK

Union continues to negotiate to resolve the dispute relating to the purported
termination. Once the termination dispute is resolved and the exploitation
licence transferred to MZC, the Mehdiabad project is ready to proceed to
development.

If the dispute is not able to be resolved, the agreements call for arbitration
hearings in Tehran under International Chamber of Commerce rules.

The Company is preparing for both eventualities.

We are also evaluating other mineral investment opportunities that fit
strategically with Mehdiabad in respect of location and commodity.

Yours faithfully

UNION RESOURCES LIMITED

Dr Frank Reid

Managing Director

Enquires to:

Australia: Union Resources Limited

Dr Frank Reid - Managing Director

Phone:     +61 07 3833 3833

London: Hanson Westhouse Limited

Bill Staple or Martin Davison

          0207 7601 6100

Bankside Consultants

Simon Rothschild / Louise Mason

          0207 367 8888

                                                                       

Rule 5.3

                                  Appendix 5B                                  

                   Mining exploration entity quarterly report


Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity                                                                 
                                                                               
                            Union Resources Limited                            

ABN                                              Quarter ended ("current       
                                                 quarter")                     
                                                                               
        40 002 118 872                                 30 September 2007       

Consolidated statement of cash flows

Cash flows related to operating            Current quarter      Year to date   
activities                                                                     
                                                $A'000           (3 months)    
                                                                               
                                                                   $A'000      
                                                                               
1.1   Receipts from product sales and              -                  -                 
      related debtors                                                          
                                                                               
1.2   Payments for (a) exploration and            (464)              (464)             
      evaluation                                                               
                                                   -                  -                 
      (b) development                                                          
                                                   -                  -                 
      (c) production                                                           
                                                  (567)              (567)             
      (d) administration                                                       
                                                                               
1.3   Dividends received                            -                  -                 
                                                                               
1.4   Interest and other items of a                 26                 26                
      similar nature received                                                  
                                                                               
1.5   Interest and other costs of finance           -                  -                 
      paid                                                                     
                                                                               
1.6   Income taxes paid                             -                  -                 
                                                                               
1.7   Other (provide details if material)          51                 51                
                                                                               
      Net Operating Cash Flows                   (954)              (954)             
                                                                               
      Cash flows related to investing                                          
      activities                                                               
                                                                               
1.8   Payment for purchases of: (a)               -                  -                 
      prospects                                                                
                                                  -                  -                 
      (b) equity investments                                                   
                                                  -                  -                 
      (c) other fixed                                                          
                                                                               
      assets                                                                   
                                                                               
1.9   Proceeds from sale of: (a)                  -                  -                 
      prospects                                                                
                                                  -                  -                 
      (b) equity                                                               
                                                  -                  -                 
      investments                                                              
                                                                               
       c. other fixed                                                          
                                                                               
      assets                                                                   
                                                                               
1.10  Loans to other entities                     -                  -                 
                                                                               
1.11  Loans repaid by other entities              -                  -                 
                                                                               
1.12  Other (provide details if material)         -                  -                 
                                                                               
      Net investing cash flows                    -                  -                 
                                                                               
1.13  Total operating and investing cash        (954)              (954)             
      flows (carried forward)                                                  

1.13  Total operating and investing cash        (954)              (954)             
      flows (brought forward)                                                  
                                                                               
      Cash flows related to financing                                          
      activities                                                               
                                                                               
1.14  Proceeds from issues of shares,           2,405              2,405             
      options, etc.                                                            
                                                                               
1.15  Proceeds from sale of forfeited             -                  -                 
      shares                                                                   
                                                                               
1.16  Proceeds from borrowings                    -                  -                 
                                                                               
1.17  Repayment of borrowings                     -                  -                 
                                                                               
1.18  Dividends paid                              -                  -                 
                                                                               
1.19  Other (provide details if material)         -                  -                 
                                                                               
      Net financing cash flows                  2,405              2,405             
                                                                               
      Net increase (decrease) in cash           1,451              1,451             
      held                                                                     
                                                                               
1.20  Cash at beginning of quarter/year         1,626              1,626             
      to date                                                                  
                                                                               
1.21  Exchange rate adjustments to item             1                  1                 
      1.20                                                                     
                                                                               
1.22  Cash at end of quarter                    3,077              3,077   
          

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related
entities

                                                                 Current quarter   
                                                                               
                                                                     $A'000            
                                                                               
1.23   Aggregate amount of payments to the parties included            256               
       in item 1.2                                                             
                                                                               
1.24   Aggregate amount of loans to the parties included in             -                 
       item 1.10                                                               
                                                                               
1.25   Explanation necessary for an understanding of the transactions          
                                                                               
       Salaries and directors fees                                             

Non-cash financing and investing activities

2.1   Details of financing and investing transactions which have had a material
      effect on consolidated assets and liabilities but did not involve cash   
      flows                                                                    
                                                                               
      Nil                                                                      

2.2   Details of outlays made by other entities to establish or increase their 
      share in projects in which the reporting entity has an interest          
                                                                               
      Nil                                                                      

Financing facilities available

Add notes as necessary for an understanding of the position.

                                          Amount available   Amount used       
                                                                               
                                          $A'000             $A'000            
                                                                               
3.1   Loan facilities                        -                  -                 
                                                                               
3.2   Credit standby arrangements            -                  -                 

Estimated cash outflows for next quarter

                                                    $A'000                     
                                                                               
4.1   Exploration and evaluation                      108                        
                                                                               
4.2   Development                                      -                          
                                                                               
      Total                                           108                        

Reconciliation of cash

Reconciliation of cash at the end of the           Current quarter   Previous quarter  
quarter (as shown in the consolidated                                          
statement of cash flows) to the related               $A'000             $A'000       
items in the accounts is as follows.                                           
                                                                               
5.1   Cash on hand and at bank                         1,077                626                
                                                                               
5.2   Deposits at call                                 2,000             1,000              
                                                                               
5.3   Bank overdraft                                     -                 -                  
                                                                               
5.4   Other (provide details)                            -                 -                  
                                                                               
      Total: cash at end of quarter (item              3,077             1,626              
      1.22)                                                                    

Changes in interests in mining tenements

                                               Tenement      Nature of interest     Interest          Interest 
                                               reference        (note (2))          at beginning      at end of
                                                                                    of quarter        quarter
                                                  
                                                                             
                                                                        
                                                                               
6.1   Interests in mining                          -                  -                -                 -
      tenements                                                                
      relinquished,                                                            
      reduced or lapsed                                                        
                                                                               
6.2   Interests in mining                         -                    -               -                 -
      tenements acquired                                                       
      or increased                                                             

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights
together with prices and dates.

                                                Total number     Number quoted        Issue price     Amount paid up 
                                                                                      per security    per security   
                                                                                      (see note 3)    (see note 3)   
                                                                                       (cents)        (cents)        
                                                                               
7.1   Preference +                                                             
      securities                                                               
      (description)                                                            
                                                                               
7.2   Changes                                      -                -                     -              -              
      during                                                                   
      quarter                                      -                -                     -              -              
                                                                               
      (a) Increases                                                            
      through                                                                  
      issues                                                                   
                                                                               
      (b) Decreases                                                            
      through                                                                  
      returns of                                                               
      capital,                                                                 
      buy-backs,                                                               
      redemptions                                                              
                                                                               
7.3   +Ordinary                                792,284,766     792,284,766               Fully paid     Fully paid     
      securities                                                               
                                                                               
7.4   Changes                                  101,500,000   101,500,000                  2.00           2.00           
      during                                                                   
      quarter                                  15,111,239    15,111,239                   2.70           2.70           
                                                                               
      (a) Increases                               800           800                       10.00          10.00          
      through                                                                  
      issues                                       -             -                         -              -              
                                                                               
      (b) Decreases                                                            
      through                                                                  
      returns of                                                               
      capital,                                                                 
      buy-backs                                                                
                                                                               
7.5   +Convertible                               -             -                           -              -              
      debt                                                                     
      securities                                                               
      (description)                                                            
                                                                               
7.6   Changes                                    -             -                          -              -              
      during                                                                   
      quarter                                    -             -                          -              -              
                                                                               
      (a) Increases                                                            
      through                                                                  
      issues                                                                   
                                                                               
      (b) Decreases                                                            
      through                                                                  
      securities                                                               
      matured,                                                                 
      converted                                                                
                                                                               
7.7   Options                                                          Exercise price           Expiry date  
      (description                                                             
      and                        246,040,340      246,040,340               9.82                31 March 2009 
     conversion
      factor)                        UCLOA         UCLOA 
                                   
                                 264,428,911   264,428,911                  10.00               31 March 2009 
                                                                               
                                    UCLOB         UCLOB                      
                                                                             7.50               31 March 2009
                                 90,000,000          -                                                                                                         
                                  Unlisted                                                   
                                                                               
7.8   Issued during                    -             -                         -                      -              
      quarter                                                                  
                                                                               
7.9   Exercised                       800           800                      10.00                   10.00          
      during                                                                   
      quarter                                                                  
                                                                               
7.10  Expired                         -             -                           -                       -              
      during                                                                   
      quarter                                                                  
                                                                               
7.11  Debentures                      -             -                                            
                                                                               
      (totals only)                                                            
                                                                               
7.12  Unsecured                       -             -                                            
      notes(totals                                                             
      only)                                                                    

Compliance statement

1 This statement has been prepared under accounting policies which comply with
accounting standards as defined in the Corporations Act or other standards
acceptable to ASX (see note 4).

2 This statement does give a true and fair view of the matters disclosed.

Print name: Dr Frank Reid (Director) Date: 31 October2007

Notes

1 The quarterly report provides a basis for informing the market how the
entity's activities have been financed for the past quarter and the effect on
its cash position. An entity wanting to disclose additional information is
encouraged to do so, in a note or notes attached to this report.

2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of
interests in mining tenements acquired, exercised or lapsed during the
reporting period. If the entity is involved in a joint venture agreement and
there are conditions precedent which will change its percentage interest in a
mining tenement, it should disclose the change of percentage interest and
conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not
required in items 7.1 and 7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive
Industries and AASB 1026: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International
Accounting Standards for foreign entities. If the standards used do not address
a topic, the Australian standard on that topic (if any) must be complied with