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Friday 31 October, 2008

Union Resources LTD

Quarterly Update


                            Union Resources Limited                            


                           Company Announcements Office
                          Australian Securities Exchange

          QUARTERLY ACTIVITIES STATEMENT FOR PERIOD ENDED 30 SEPTEMBER 2008

Background

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

 1. assessment of the Sandpiper Submarine Phosphate Project ("the Sandpiper
    Phosphate Project") located off the coast of Namibia.
   
 2. the development of the Mehdiabad Base Metal Project ("the Mehdiabad
    Project") located in Central Iran; and
   
 A. 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 area of the EPLs is 200,000 ha.

Progress to date

The following occurred during the Quarter:

  * In its announcement to the Australian Securities Exchange (ASX) on 20 June
    2008 Union advised that it intended to confirm the drilling results
    previously obtained by Gencor in respect of the EPLs, and that an analysis
    of the previous exploration and assay data was currently being conducted by
    an independent expert to bring it up to the standards required by the JORC
    Code. The Company further advised that it anticipated this data would be
    available within the next two months. During the Quarter Union completed
    its re-analysis of the previous exploration and assay data previously
    obtained by Gencor. In order to comply with ASX reporting requirements the
    Company is attempting to obtain copies of the original Laboratory assays.
    These were performed by a reputable company in the US, but it has taken
    longer than anticipated to acquire the data. A programme of confirmatory
    sampling is now planned.
   
  * A review of the previous processing work was undertaken by Prayon, a
    Belgian company recognised as a leader in Phosphoric acid technology. The
    Prayon study has confirmed that the Sandpiper material produces acceptable
    Merchant Grade Acid without significant modification of standard phosphoric
    acid circuits. A tendency to foam is controlled and improved filtration
    characteristics are achieved by addition of flocculants and crystal habit
    modifiers that will not add significantly to operating costs. This
    indicates that the material should be marketable.
   
  * Union entered into a Memorandum of Understanding ("MOU") with Jan de Nul, a
    major Belgian dredging company to undertake work on the submarine recovery
    of phosphate material from the Sandpiper deposit. Jan de Nul has indicated
    that it is technically feasible to recover the material and under the terms
    of the MOU Jan de Nul will undertake the preliminary economic evaluation of
    the dredging operation at its own cost. In return, Union has agreed to give
    Jan de Nul priority on any dredging contracts for Sandpiper, subject to
    normal competitive bidding processes.
   
  * Union continued its evaluation of the technical and economic viability of
    the Sandpiper Project. This work falls into 3 major areas - recovery from
    the sea floor, shipping to land, and land-based handling upgrading of run
    of mine material to saleable rock phosphate. To date Union has progressed
    as follows:
   
  * Submarine recovery - Union has entered into an MOU with Jan De Nul as
    referred to above. It is clear that the recovery of the material is
    technically feasible, and currently Union's management is optimistic that
    economic recovery will be possible. Indications are that a 3 million dry
    ton per annum production rate could be reasonably achieved in a 4 month
    dredging campaign. This would allow optimisation of campaign timing to suit
    the best weather. Initial indications are that between 230 to 270
    operational days per annum would be available for dredging.
   
  * Upgrading -the original samples provided to Prayon were upgraded from
    approximately 17% P2O5 to 27% P2O5 by simple screening and
    hydro-cycloneing. As part of the ongoing evaluation this will be confirmed.
    Union also intends to evaluate whether this operation can be conducted at
    sea.
   
  * Union has started to model other land-based costs based on the operational
    constraints of the marine operation. This includes the material handling
    requirements, storage and working capital requirements.
   
 B. 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 Mehdiabad
Project.

As previously advised, IMIDRO purported to terminate several agreements
governing the Mehdiabad 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 Mehdiabad 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 Mehdiabad Project dispute and
progress the Mehdiabad Project.

C. One (1) for Five (5) Non-Renounceable Rights Issue

The Company announced during the Quarter that it would undertake a one (1) for
five (5) non-renounceable rights issue at $0.011 (1.1 cents) per share to raise
up to approximately $2 million, and that funds raised from the rights issue
would be expended solely on the Sandpiper Phosphate Project, other than funds
allocated for working capital which will be used to fund the Company's general
administrative expenses.

The Company's prospectus for the rights issue was subsequently despatched to
Shareholders in October.

D. Expenditure on Exploration Activity

Direct expenditure by the Company on exploration and other activities in
relation to the Sandpiper Phosphate Project during the quarter was $115,000.

E. Mining Production and Development

Through its strategic partner (Jan de Nul) the Company undertook preliminary
assessment of dredging feasibility and costs. The costs of this work were born
by Jan de Nul.

F. Post Balance Date Event

The Company advised ASX on 27 October 2008 that it had entered into a joint
venture agreement in relation to its Namibian Phosphate Project with Australian
company Bonaparte Diamond Mines NL and Namibian company Tungeni Investments cc.

Yours faithfully

UNION RESOURCES LIMITED

Dr Frank Reid

Managing Director

                                                                       

                                  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 2008          

Consolidated statement of cash flows

Cash flows related to operating          Current quarter    Year to date      
activities                                                  (..3...months)    
                                         $A'000                               
                                                            $A'000            
                                                                              
1.1   Receipts from product sales and    -                  -                 
      related debtors                                                         
                                                                              
1.2   Payments for (a)exploration and    (115 )             -                 
                                                                              
      evaluation                         -                  -                 
                                                                              
      (b) development                    -                  -                 
                                                                              
      (c) production                     (524)              -                 
                                                                              
      (d) administration                                                      
                                                                              
1.3   Dividends received                                                      
                                                                              
1.4   Interest and other items of a      26                 -                 
      similar nature received                                                 
                                                                              
1.5   Interest and other costs of        -                                    
      finance paid                                                            
                                                                              
1.6   Income taxes paid                  -                                    
                                                                              
1.7   Other (provide details if          8                  -                 
      material)                                                               
                                                                              
      Net Operating Cash Flows           (605)              -                 
                                                                              
      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 (605)              -                 
      flows (carried forward)                                                 

1.13  Total operating and investing cash (605)              -                 
      flows (brought forward)                                                 
                                                                              
      Cash flows related to financing                                         
      activities                                                              
                                                                              
1.14  Proceeds from issues of shares,    (19)               -                 
      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           (19)               -                 
                                                                              
      Net increase (decrease) in cash    (624)              -                 
      held                                                                    
                                                                              
1.20  Cash at beginning of quarter/year  1,180              -                 
      to date                                                                 
                                                                              
1.21  Exchange rate adjustments to item  5                  -                 
      1.20                                                                    
                                                                              
1.22  Cash at end of quarter             561                -                 

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         266               
       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                                                     
                                                                             
      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                    100                        
                                                                               
4.2   Development                                   -                          
                                                                               
4.3   Production                                    -                          
                                                                               
4.4   Administration                                400                        
                                                                               
      Total                                         500                        

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            561               180                
                                                                               
5.2   Deposits at call                    -                 1,000              
                                                                               
5.3   Bank overdraft                      -                 -                  
                                                                               
5.4   Other (provide details)             -                 -                  
                                                                               
      Total: cash at end of quarter (item 561               1,180              
      1.22)                                                                    

Changes in interests in mining tenements

                          Tenement   Nature of interest     Interest  Interest 
                          reference                         at        at end of
                                     (note (2))             beginning quarter  
                                                            of                 
                                                            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      898,373,543   898,373,543     Fully paid     Fully paid   
      securities                                                               
                                                                               
7.4   Changes             -                                                    
      during                                                                   
      quarter             -                                                    
                                                                               
      (a) Increases                                                            
      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       246,040,340   246,040,340    Exercise price Expiry date    
      (description                                                             
      and           UCLOA         UCLOA          9.82           31 March 2009  
      conversion                                                               
      factor)       264,428,911   264,428,911    10.00          31 March 2009  
                                                                               
                    UCLOB         UCLOB          7.50           31 March 2009  
                                                                               
                    90,000,000    -              2.00           31 March 2013  
                                                                               
                    Unlisted      -              2.10           31 March 2015  
                                                                               
                    6,000,000     -              1.30           31 March 2015  
                                                                               
                    Unlisted      -              By reference   31 March 2015  
                                                 to                            
                    5,333,332     -                             1 April 2009   
                                                 Future market                 
                    Unlisted      -                             1 April 2009   
                                                 price                         
                    1,333,333     -                                            
                                                 2.00                          
                    Unlisted                                                   
                                                 2.00                          
                    1,333,333                                                  
                                                                               
                    Unlisted                                                   
                                                                               
                    1,500,000                                                  
                                                                               
                    Unlisted                                                   
                                                                               
                    1,500,000                                                  
                                                                               
                    Unlisted                                                   
                                                                               
7.8   Issued during       -                                                    
      quarter                                                                  
                                                                               
7.9   Exercised           -                                                    
      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.

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.

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