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Union Resources LTD (URL)

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Thursday 31 July, 2008

Union Resources LTD

Quarterly Report

                            Union Resources Limited                            



Union Resources Limited ("Union" or "the Company") is focused on:

 1. the development of the Mehdiabad Base Metal Project ("the Mehdiabad
    Project") located in Central Iran; and
 2. assessment of the Sandpiper Submarine Phosphate Project ("the Sandpiper
    Phosphate Project") located off the coast of Namibia.
 A. Mehdiabad Base Metal Project
The Mehdiabad Project is carried on by Union, Iranian Mines and Mining
Industries Development and Renovation Organization ("IMIDRO") and the company
Itok GmbH ("Itok") through an incorporated Iranian joint venture company,
Mehdiabad Zinc Company ("MZC"). Union has to date invested in excess of US$15
million on exploration and feasibility activities relating to the Project.

As previously advised, IMIDRO purported to terminate several agreements
governing the Project in December 2006. Union stated then, and is still firmly
of the opinion, that the agreements were invalidly terminated. Since that time
Union has been negotiating with various Iranian parties in an effort to resolve
the impasse and progress the Project. At the same time, Union has been
exploring the possibility of resolving the matter through arbitration and has
made initial preparations for instituting arbitration proceedings should that
become necessary.

During the quarter Union continued to hold discussions with the relevant
Iranian parties in an effort to resolve the Project dispute and progress the

 B. Sandpiper Submarine Phosphate Project
In June 2008 the Company signed a contract to acquire Namibian company Sea
Phosphates (Namibia) Pty Limited ("SPL"). SPL holds two Exclusive Prospecting
Licences nos. 3414 and 3415 ("the EPLs") issued by the Namibian Ministry of
Mines and Energy for Phosphates and Precious Stones. The EPLs lie approximately
60km offshore from the coast of Namibia between Walvis Bay and Luderitz. The
combined total area of the EPLs is 200,000 ha.
 B.1 Significant Points:

  * The EPLs cover the heart of the central enriched phosphate area off the
    Namibian coast.
  * The area has been subjected to significant past exploration, and SPL has
    collated the pre-existing database which will accelerate future evaluation
    of the prospect.
  * Previous work has shown that phosphate occurs over an area of at least
    1,000 sq. km with drilled P2O5 (phosphate) grades on average in the range
Such an area could contain a large deposit if further drilling establishes
continuity of the phosphate horizon, but currently it is not possible to
estimate resources. However the drill pattern and results do suggest that the
deposit is large because there are positive holes (without intervening negative
holes) over a large proportion of the drilled area. Of the holes drilled only
15% contain no phosphate.

  * Analysis of the previous exploration and assay data is currently being
    conducted by an independent expert to bring it up to the standards required
    under the JORC Code, and this work will hopefully be completed in the next
    two months.
  * Significant work on previous samples exists on the behaviour of the
    material in phosphoric acid production, and there is no reason to believe
    that the material will not be a suitable feedstock for standard phosphoric
    acid plants. A sample has been submitted for further verification.
  * A desktop study has been undertaken which has indicated that subsea
    recovery should be technically viable and economically cost effective.
  * The deposit of peletal phosphorite occurs as unconsolidated sediment in
    water between the depths of 250 and 300 meters. It is geologically simple
    and exhibits good consistency in area and thickness which will simplify
    exploration and development.
  * World rock phosphate prices have risen substantially recently, with
    industry standard Moroccan export prices increasing from US$50 per ton FOB
    to over US$200 per ton FOB over the last year.
B.2 History of the Area

Phosphates were discovered in the area in the 1970s during regional marine
surveys. In subsequent years the areas held by SPL have been subject to
significant exploration and evaluation by several entities:

  * Gencor (1992 and 1994) ran a sampling program consisting of 50 vibracore
    holes covering at least 1,000 sq km with excellent recovery. SPL acquired
    data for 38 of the holes. On the final page of this report is a table of
    the drill hole results prepared by an independent consulting geologist. The
    report shows the range of grades of P2O5 as falling between 12.30% and
    21.49% with most falling in the range 15-20% in water of between 250 and
    300m depth. Within the 1,000 sq. km area surveyed one area of approximately
    8km x 8km where 11 holes were drilled returned an average of 4.6 metres at
    17% P2O5 (see Table immediately below). The program also demonstrated that
    phosphate occurs in an adjacent area over 30 km long and over 10km wide,
    which constitutes a very large deposit. It should be noted however that
    only six holes were drilled in this larger area (nos. 53, 55, 57, 59, 60
    and 62 in the attached report) which is insufficient to establish
    continuity of the phosphatic horizon. Despite a recommendation for further
    evaluation by the evaluation team, when Gencor was acquired by Billiton
    work on the prospect ceased.

          Hole ID                  Drilled            P2O5     
          P1Vc6-34                  3.98             17.52     
          P1Vc9-37                  4.12             13.38     
          P1Vc7-35                  6.15             17.13     
          P1Vc8-36                  4.26             18.35     
          P1Vc4-32                  6.35             17.37     
          P1Vc5-33                  5.42             17.27     
          P1Vc1-29                  2.90             18.59     
          P1Vc2-30                  4.73             19.66     
         P1Vc15-43                  3.78             17.57     
         P1Vc14-42                  5.48             17.06     
         P1Vc12-40                  3.19             18.64     
                                    4.58             17.44     

Union Resources Limited Namibian Phosphate Prospect - 11 holes drilled in an
area approximately 8 km by 8km.

(Average quoted as 4.6 m grading 17% P2O5).

  * Foskor of South Africa kept a defensive watching brief on the area as part
    of its competitive strategy and evaluated the possibility of blending the
    sedimentary Namibian phosphorites with the rock phosphate material it was
    processing in South Africa. A significant difference in the reactivities of
    the material (the Namibian Material was significantly more reactive during
    the production of Phosphoric acid) meant that the material was not suitable
    for blending, and Foskor's interest lapsed.
  * The Ocean Phosphates Consortium (2004) extended the bulk sampling program
    of Gencor and commissioned a desk top study into the technical viability of
    recovering the phosphate material from depth. Subsequent to the death of
    one of the senior executives of a member of the Ocean Phosphates
    Consortium, exploration discontinued.
  * The EPLs were then applied for and acquired by SPL.
Union is currently having the raw data from the Gencor study re-interpreted in
order to produce an acceptable resource estimate consistent with the JORC Code.

B.3 Immediate Program

Union intends to:

  * Confirm the Gencor results. An analysis of the previous exploration and
    assay data is currently being conducted by an independent expert to bring
    it up to the standards required by the JORC Code.
  * Subject to funding and vessel availability, commence a bulk sampling
    program in order to confirm the behaviour of the material in Phosphoric
    Acid plant circuits;
  * Identify a strategic partner in the area of submarine material recovery in
    order to confirm the technical viability of recovering around 3 million tpa
    of the material;
  * Seek potential off takers for the material; and
  * Confirm the technical and economic viability of the project
B.4 Significant Terms of the Acquisition of SPL

Union has acquired 100% of the issued and outstanding share capital of SPL on
the following significant terms:

 1. The issue of 9,000,000 Union shares to the vendor of the shares of SPL
    ("the Vendor").
 2. Final completion under the contract will take place on or before 20 April
    2009, subject to satisfaction of a number of conditions precedent, namely:
     i. receipt of any required regulatory approvals;
    ii. the Namibian Minister of Mines and Energy either granting renewal of
        the EPLs or granting a Mining Licence over all or part of the area
        covered by the EPLs; and
    iii. Union forming the view that the exploration and proposed development
        of phosphate mining operations in the areas of the EPLs is commercially
 3. Provided the conditions precedent referred to are satisfied, Union will:
     i. on completion pay to the Vendor the sum of US$500,000 and issue to the
        Vendor 9,000,000 unquoted options over ordinary shares in Union, each
        option having an exercise price of AUD$0.13 per share and expiring on
        30 April 2011; and
    ii. grant to the Vendor a royalty, capped at US$10,000,000, equal to 3% of
        gross revenue derived from sales of product derived from the ore mined
        on the site of the EPLs.
 4. If the conditions precedent are not satisfied, the 9,000,000 Union shares
    to be issued to the Vendor will be cancelled, and Union will transfer back
    to the Vendor the shares in SPL.
Expenditure on Exploration Activity

During the quarter $51,035.67 was spent on exploration activities in relation
to the Sandpiper Phosphate Project.

Mining Production and Development

The Company did not undertake any mining production and development activities
in the quarter


Dr Frank Reid
Managing Director

Sandpiper deposit - Summary List of intersections at a lower cut-off of
10% P205Average grade over drilled thickness (length).                 
Hole       Easting Northing elevation From m   To m     Sample  %P2O5  
Number                      below sea (sea     (sample  length         
                            level     floor)   depth)   m              
PHF2-45     -90300  2661488      -240     0.00     1.13    1.13   15.95
P1Vc11 -    -86999  2733702      -245     0.00     5.61    5.61   17.80
PHF3-46    -100690  2661491      -217     0.00     5.37    5.37   17.36
P1Vc13 -    -84949  2733743      -259     0.00     1.10    1.10   13.33
PHF5 - 48  -100714  2669485      -217     0.00     3.76    3.76   19.75
p1Vc9 - 37  -85003  2734696      -254     0.00     4.12    4.12   13.38
p1Vc7 - 35  -87998  2734708      -242     0.00     6.15    6.15   17.13
PHF4-47     -93498  2669498      -243     0.00     1.22    1.22   15.44
p1Vc8 - 36  -87998  2734708      -246     0.00     4.26    4.26   18.35
p1vC10 -    -84011  2734720      -276     0.00     0.09    0.09   13.10
PHF8 - 50  -100586  2677374      -217     0.00     2.62    2.62   17.57
p1Vc6 - 34  -84988  2735697      -254     0.00     3.98    3.98   17.52
p1Vc4 - 32  -86974  2735698      -247     0.00     6.38    6.38   17.37
PHF7-49     -90299  2677397      -258     0.00     1.52    1.52   15.36
p1Vc5 - 33  -85998  2735713      -251     0.00     5.95    5.95   17.27
p1Vc3 - 31  -83998  2736684      -260     0.00     2.26    2.26   15.83
PHF9 - 51   -90297  2685491      -268     0.00     1.66    1.66   17.59
p1Vc1 - 29  -87989  2736703      -242     0.00     2.90    2.90   18.59
p1Vc2 - 30  -85952  2736713      -251     0.00     4.73    4.73   19.66
PHF10 - 52 -100558  2685566      -215     0.00     1.42    1.42   16.18
PHF12-53    -90295  2693595      -274     0.00     5.05    5.05   16.94
PHF13 - 54 -100492  2693595      -208     0.00     2.68    2.68   22.30
PHF14-55    -90270  2701451      -271     0.00     3.98    3.98   21.49
PHF16-57    -87252  2709005      -283     0.00     3.32    3.32   20.46
PHF18-59    -93553  2712731      -244     0.00     3.48    3.48   20.77
PHF19-60    -85243  2717029      -284     0.00     1.86    1.86   20.30
PHF21-62    -93665  2721616      -216     0.00     1.78    2.48   13.77
PHF22-63    -84022  2725992      -289     0.00     0.19    0.19   12.30
PHF24-65    -91695  2730383      -226     0.00     3.10    3.10   16.66
P1Vc15 -    -85993  2732679      -250     0.00     3.78    3.78   17.57
P1Vc14 -    -87997  2732702      -241     0.00     5.48    5.48   17.06
P1Vc16 -    -84002  2732711      -280     0.00     0.24    0.24   13.00
P1Vc12 -    -89570  2733674      -245     0.00     3.69    3.69   19.24

The information contained in this report relating to exploration results is
based on information compiled by Mr Les Davis. Mr. Davis is employed by
Veronica Webster Pty. Ltd. Mr Davis is a Fellow of the Australasian Institute
of Mining and Metallurgy and has the relevant experience in relation to the
mineralisation being reported upon to qualify as a Competent Person as defined
in the 2004 Edition of the Australasian Code for Reporting of Exploration
Results. Mr Davis consents to the inclusion in the report of the matters based
on his information in the form and context in which it appears.

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

                                  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    
       40 002 118 872                                30 June 2008        

Consolidated statement of cash flows

Cash flows related to operating           Current quarter      Year to date   
                                               $A'000          (12 months)    
1.1   Receipts from product sales and            -                  -                 
      related debtors                                                         
1.2   Payments for (a) exploration and         (132)              (488)             
                                                 -                  -                 
      (b) development                                                         
                                                 -                  -                 
      (c) production                                                          
                                               (520)              (2,449)           
      (d) administration                                                      
1.3   Dividends received                         -                  -                 
1.4   Interest and other items of a             30                 147               
      similar nature received                                                 
1.5   Interest and other costs of                -                  -                 
      finance paid                                                            
1.6   Income taxes paid                          -                  9                 
1.7   Other (provide details if                  -                  33                
      Net Operating Cash Flows                 (622)              (2,748)           
      Cash flows related to investing                                         
1.8   Payment for purchases of: (a)              -                  -                 
                                                 -                  -                 
      (b) equity investments                                                  
                                                 -                  (21)              
      (c) other fixed                                                         
1.9   Proceeds from sale of: (a)                 -                  -                 
                                                 -                  2                 
      (b) equity                                                              
                                                 -                  -                 
       c. other fixed                                                         
1.10  Loans to other entities                    -                  -                 
1.11  Loans repaid by other entities             -                  -                 
1.12  Other (provide details if                  -                  -                 
      Net investing cash flows                   -                  (19)              
1.13  Total operating and investing cash         (622)              (2,767)           
      flows (carried forward)                                                 

1.13  Total operating and investing cash         (622)              (2,767)           
      flows (brought forward)                                                 
      Cash flows related to financing                                         
1.14  Proceeds from issues of shares,            (3)                2,354             
      options, etc.                                                           
1.15  Proceeds from sale of forfeited            -                  -                 
1.16  Proceeds from borrowings                   -                  -                 
1.17  Repayment of borrowings                    -                  -                 
1.18  Dividends paid                             -                  -                 
1.19  Other (provide details if                  -                  -                 
      Net financing cash flows                   (3)                2,354             
      Net increase (decrease) in cash            (624)              (413)             
1.20  Cash at beginning of quarter/year          1,807              1,602             
      to date                                                                 
1.21  Exchange rate adjustments to item          (3)                (9)               
1.22  Cash at end of quarter                     1,180              1,180             

Payments to directors of the entity and associates of the directors

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

                                                           Current quarter   
1.23   Aggregate amount of payments to the parties         192               
       included 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                                                     

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  

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

4.1   Exploration and evaluation                    100                        
4.2   Development                                   -                          
      Total                                         100                        

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                 180               804               
5.2   Deposits at call                         1,000             1,000             
5.3   Bank overdraft                           -                 -                 
5.4   Other (provide details)                  -                 -                 
      Total: cash at end of quarter            1,180             1,804             
      (item 1.22)                                                            

Changes in interests in mining tenements

                         Tenement   Nature of interest    Interest  Interest 
                         reference                        at        at end of
                                    (note (2))            beginning quarter  
6.1  Interests in mining          -                     -         -         -
     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 +  -             -              -              -              
7.2   Changes       -             -              -              -              
      quarter       -             -              -              -              
      (a) Increases                                                            
      (b) Decreases                                                            
      returns of                                                               
7.3   +Ordinary     898,373,543   898,373,543    Fully paid     Fully paid     
7.4   Changes       -             -              -              -              
      quarter       -             -              -              -              
      (a) Increases                                                            
      (b) Decreases                                                            
      returns of                                                               
7.5   +Convertible  -             -              -              -              
7.6   Changes       -             -              -              -              
      quarter       -             -              -              -              
      (a) Increases                                                            
      (b) Decreases                                                            
7.7   Options                                    Exercise price   Expiry date  
      (description  246,040,340   246,040,340                                                              
      and           UCLOA         UCLOA          9.82           31 March 2009 
      factor)       264,428,911   264,428,911    
                    UCLOB         UCLOB         10.00           31 March 2009   
                    90,000,000    -            
                    Unlisted                     7.50           31 March 2009                                           
                    6,000,000     -              
                    Unlisted                     2.00           31 March 2013              
                    5,333,332     -            
                    Unlisted                     2.10           31 March 2015                                         
                    1,333,333     -  
                    Unlisted                     1.30           31 March 2015 
                    1,333,333                 By reference      31 March 2015                        
                    Unlisted                  to future     
                                              market price                                      
                    1,500,000     -              2.00            1 April 2009  
                    Unlisted                     2.00            1 April 2009              
7.8   Issued during 1,500,000     -              
      quarter       Unlisted                     2.00            1 April 2009  
                    Unlisted                     2.00            1 April 2009   
7.9   Exercised     -             -              -              -              
7.10  Expired       -             -              -              -              
7.11  Debentures    -             -                                            
      (totals only)                                                            
7.12  Unsecured     -             -                                            

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.

31 July 2008
Dr Frank Reid


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