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Union Resources LTD (URL)

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Tuesday 31 July, 2007

Union Resources LTD

Quarterly Activities Statement



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 joint venture operates through an Iranian registered company
Mehdiabad Zinc Company (MZC).

Exploration carried out in the area subject to the joint venture, and based on
funding and expertise provided by Union, outlined one of the largest
undeveloped Zinc resources in the world with an estimated Measured and
Indicated Resource (at a cut off grade of 2% zinc) of 362 million tonnes at
4.2% Zn, 1.6% Pb and 35g/t silver (Measured: 140 million tonnes at 4.1% Zn,
1.6% Pb and 34g/t silver; Indicated: 222 million tonnes at 4.2% Zn, 1.6% Pb and
36g/t silver) with a further 32 million tonnes of Inferred Resources at 4.5%
Zn, 1.4% Pb and 38g/t silver. The total resource is 394 million tonnes at 4.2%
zinc, 1.6% lead and 36 g/t silver. Preliminary metallurgical testwork suggests
that overall recoveries of Zn, Pb and Ag are 71%, 53% and 29%, respectively.

Union has continued to position itself for the development phase of the
Project. Union's consultant, Aker Kvaerner Australia Pty Ltd (Aker Kvaerner)
has completed a technical and economic study of the Project. Aker Kvaerner has
stated that the Project is now considered to meet Aker Kvaerner's standard for
a feasibility study, subject only to receipt of necessary water rights and
environmental clearances, the grant of the Exploitation Licence, and an
indication of commitment to the Project from the Iranian Government. Aker
Kvaerner's view is that upon resolution of these matters the Mehdiabad Project
(at an optimal production level of 200,000 tpa zinc metal) will be ready to
move to the next stage of development. This will involve a Definitive Study to
confirm the process details, Invitation to Bid and Front End Engineering and
Design, followed by the appointment of an EPCM contractor (engineering,
procuring and construction management) for the Project. Union's joint venture
partners in MZC are currently addressing the issues of water and environmental
clearances. However, the granting of the Exploitation Licence continues to be
an issue of contention.

Aseh Sanat, an independent Iranian firm of consulting engineers, has now
provided a report to the Board of MZC which states that, subject to some minor
considerations, the Feasibility Study Report meets the standard for a bankable
feasibility study. Following extensive negotiations, the MZC Board has accepted
the Feasibility Study Report and noted that, based on the report received from
Aseh Sanat, the Feasibility Study report can be updated to a bankable
feasibility study upon the granting of requisite licences, support from the
government sector and commitment of foreign 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.

Union has continued technical work on the Project and is evaluating novel
process improvements which have the potential to produce better recovery and
reduce the capital costs of processing oxide deposits. The testing is currently
being completed and is showing very promising results. This technical work will
slow until the remaining issues currently preventing the development of the
Project have been settled.


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 is invalid.

At the same time Union received a further letter from IMIDRO confirming that
the Shareholders Agreement which controls the activities of MZC, remains valid.
In addition the Iranian Ministry of Finance confirmed that Union's investment
of US$14 million to March 2006, is fully protected under Iran's Foreign
Investment Laws.

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 international
finance to be raised.

Since receiving the purported letter of termination, Union has sought to
protect its investment and enforce its legal rights by invoking the dispute
resolution provisions contained in the Basic Agreement. Meetings to try to
resolve the dispute were held in February and April. Other Iranian government
stakeholders attended the February meetings and support a resolution between
the parties.

Whilst there is a desire to resolve the issues, the position of the parties is

 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 joint venture 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 joint venture agreements and in Union's
    view is not workable.
Union continues to assert that the joint venture agreements require that MZC
must control both the mining and processing of the ore and that compliance with
the procedures stipulated in the Agreements is the most efficient way of
developing the Project.

Further meetings to try to resolve the issues so that the Project can move to
the next stage are in process. If the issues can not be resolved
satisfactorily, the joint venture agreements allow for International Chamber of
Commerce arbitration hearings to be held in order to resolve the dispute.


On 26 June 2007 the Company wrote to its eligible shareholders offering them
the opportunity to each purchase up to $5,000 worth of fully paid ordinary
shares in the Company at an issue price of 2.7 cents per share under the
Company's Share Purchase Plan. The closing date of the offer has subsequently
been extended to 5pm on 1 August 2007.

Union will utilise the proceeds of the Share Purchase Plan offer for working
capital to finance the ongoing operations of the Company, both in Australia and
in Iran. The extent to which the proceeds of the Share Purchase Plan will be
used in developing the Project and/or funding further negotiations with the
relevant Iranian parties and/or conducting arbitration proceedings will depend
on the outcome of pending negotiations with the Iranian parties.

The information in this report that relates to Mineral Resources is based on
information compiled by Dr. Phillip Hellman who is employed by Hellman &
Schofield Pty. Ltd. and is a Fellow of the Australasian Institute of
Geoscientists. Dr. Hellman has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person as defined in
the 2004 Edition of the "Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves". Dr. Hellman consents to the
inclusion in the report of the matters based on his information in the form and
context in which it appears.

Metallurgical recoveries and the appropriateness of the use of a 2% lower Zn
cut-off grade (the approximate lower economic cut-off) for reporting of
resources are on the basis of advice received from Mr Patrick Scott, consultant
to Union Resources. Mr Scott is a Director of PS Associates Pty Ltd and a
Fellow of the AusIMM. He qualifies as a Competent Person under the meaning of
the 2004 edition of the Australasian Code for Reporting Exploration Results,
Mineral Resources and Ore Reserves (the "JORC Code"). He has reviewed this
announcement and consents to the inclusion of this statement in the form and
context in which it appears.

                                  Appendix 5B                                  

                  Mining exploration entity quarterly report                   

Name of entity - Union Resources Limited          

ABN - 40 002 118 872

Quarter ended ("current quarter") - 30 June 2007    
                                                                                                                        Consolidated statement of cash flows

Cash flows related to operating activities     Current quarter    Year to date  
                                                    $A'000        (12 months)                            
1.1    Receipts from product sales and related        -                -              
1.2    Payments for 
       (a) exploration and                         (343)            (2,388)        
       (b) development                                -                -                                                
       (c) production                                 -                -                                                     
       (d) administration                           (784)            (2,012)                                      
1.3    Dividends received                                                      
1.4    Interest and other items of a similar          38               200            
       nature received                                                         
1.5    Interest and other costs of finance             -                -              
1.6    Income taxes and GST paid/refunded             29               176            
1.7    Other                                           -                -              
                                                    -------          --------                
       Net Operating Cash Flows                     (1,060)          (4,024)        
                                                    --------         --------  
Cash flows related to investing activities 
1.8    Payment for purchases of: 

       (a) prospects                                   -                -              
       (b) equity investments                          -                -              
       (c) other fixed assets                          -              (22)           
1.9    Proceeds from sale of: 

       (a) prospects                                  -                -              
       (b) equity investments                         -               336            
       (c) other fixed assets                         -                -              
1.10   Loans to other entities                        -                -              
1.11   Loans repaid by other entities                 -                -              
1.12   Other                                          -                -              
                                                     ----             -----                         
       Net investing cash flows                       -                314            
                                                     ----             -----                                                  
1.13   Total operating and investing cash           (1,060)          (3,710)        
       flows (carried forward)                                                 

1.13   Total operating and investing cash           (1,060)          (3,710)         
       flows (brought forward)                                                 
       Cash flows related to financing                                         
1.14   Proceeds from issues of shares,                -                -               
       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                                          -                -               
                                                    -----            -----
       Net financing cash flows                       -                -               
                                                    -----            -----                                                   
       Net increase (decrease) in cash held       (1,060)          (3,709)         
1.20   Cash at beginning of quarter/year to        2,687            5,338           
1.21   Exchange rate adjustments to item 1.20       (1)              (2)             
                                                  --------          ------
1.22   Cash at end of quarter                      1,626            1,626           
                                                  --------         --------- 

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 included in         556            
       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          
       The above amount includes the payment made on termination of contract by
       Geophysical Research Pty Ltd of $386,203 (including GST), consultancy   
       fees, Directors fees, salaries and reimbursement of expenses.           

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   

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                              450             
4.2   Development                                              -               
      Total                                                   450             
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 items      $A'000           $A'000     
in the accounts is as follows.                                                 
5.1    Cash on hand and at bank                    1,626            2,687           
5.2    Deposits at call                              -                -               
5.3    Bank overdraft                                -                -               
5.4    Other                                         -                -               
                                                   ------           ------                            
       Total: cash at end of quarter (item         1,626            2,687           
       1.22)                                       ------           ------                            

Changes in interests in mining tenements

                          Tenement   Nature of interest    Interest at            Interest 
                          reference   (note (2))           beginning of            at end of
                                                           quarter                 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 
                                                      per security up per      
                                                      (see note 3) security    
                                                      ($)          (see note 3)
7.1   Preference +           -           -                -            -
7.2   Changes during         -                                           
      (a) Increases                                                            
      through issues                                                           
      (b) Decreases                                                            
      through returns                                                          
      of capital,                                                              
7.3   +Ordinary       777, 172,727   777,172,727       fully paid   fully paid 
7.4   Changes during         
      (a) Increases                                                            
      through issues     1,000          1,000             10 cents    fully paid 
                                                                                                                              (b) Decreases                                                            
      through returns                                                          
      of capital,                                                              
7.5   +Convertible                 -                -            -            -
      debt securities                                                          
7.6   Changes during     
      (a) Increases                 -                -            -            -
      through issues                                                           
      (b) Decreases                 -                -            -            -                                     
7.7   Options                                                Exercise      Expiry date
      One ordinary      246,040,340      246,040,340          $0.0982      March 31, 2009
      share for each    Listed UCLOA     Listed UCLOA                
      option held        
      One ordinary      264,429,711      264,429,711           $0.10       March 31, 2009
      share for each    Listed UCLOB     Listed UCLOB                             
      option held                                           
      One ordinary       90,000,000                           $0.075       March 31, 2009                
      share for each     Unlisted                                               
      option held                                                              
7.8   Issued during          -                                           
7.9   Exercised            1,000            1,000             10 cents             
      during quarter                                         (exercise                               
7.10  Expired during         -                                           
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.

Sign here: ............................................................ Date:
31 July 2007


Print name: 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.

For further information contact: 

Australia:          Union Resources Limited
                    Dr Frank Reid - Managing Director
                    Phone: +61 07 3833 3833

London:             Hanson Westhouse Limited
                    Bill Staple or Martin Davison
                    020 7601 6100 

                    Bankside Consultants
                    Simon Rothschild or Louise Mason
                    020 7367 8888

                                         == == == == ==                                 


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