Union Resources Limited (“Union” or “the Company”) is focused on the development of the Mehdiabad Zinc-Lead-Silver Project located in Central Iran (“the Project”).

The Project is carried on by Union, the Iranian Government body Iranian Mines and Mining Industries Development and Renovation Organisation (“IMIDRO”) and Iranian company Itok GmbH (“Itok”) through an incorporated Iranian joint venture company, Mehdiabad Zinc Company (“MZC”).

On 7 December 2006 Union announced that IMIDRO had purported to terminate the agreements governing the Project. At that time, and subsequently, Union has asserted that the purported termination of the Agreements is invalid. Subsequent to receipt of the purported termination notice Union has endeavored, and continues to endeavor, to negotiate a settlement of the dispute in order that development of the Project can continue.

One of the Project agreements which IMIDRO purported to terminate was the “Basic Agreement” between Union, IMIDRO and Itok. The Basic Agreement provides that upon Union and Itok contributing US$10million in project expenditure between them they shall be entitled to that proportion of 50% in the Project represented by their expenditure. Further, IMIDRO must then elect whether to contribute equally with Union and Itok in respect of further Project expenditure, or have its 50% equity in the Project diluted in proportion to further Project expenditure contributed by Union and Itok.

Union has now received notification that Project expenditure by it and Itok of US$9,695,992 and US$463,179.19 respectively has been approved by the MZC Board. Whilst the sum of $US$9,695,992 represents only part of what Union claims is its legitimate Project expenditure, the significance of the MZC Board’s determination is that it constitutes formal recognition that Union and Itok have met their initial “earn-in” expenditure commitment under the Project agreements. The effect of this is that Union is entitled to have its Project expenditure through MZC converted to an approximately 47.7% equity in MZC (with Itok entitled to an approximately 2.3% equity).  This will prove to be of
significant benefit if a resolution of the current dispute can be achieved.

At the same time it announced the purported termination in December 2007, Union advised that it currently held a political risk insurance policy in respect of its investment in Iran (“the Policy”) and had notified the Australian Government Export Finance and Insurance Corporation (“EFIC”) of the purported termination. The limit of liability under the Policy is US$4.5million.

Union advises that due to time limits for lodging a claim under the policy the Company has now lodged a claim for compensation under the Policy arising out of the expropriation of Union’s interest in the Project, evidenced by the purported termination of the relevant Project agreements and the subsequent refusal by the relevant Iranian parties to negotiate a settlement of the dispute. Although Union is continuing to endeavor to negotiate a settlement of the dispute it nevertheless believes it has grounds for lodging a claim under the Policy. Union will provide all reasonable assistance to EFIC as it (EFIC) assesses Union's claim.

The Company previously advised that the Rt. Hon. Lord Lamont of Lerwick had agreed to become a director of the Company, subject to his appointment being approved by the Company’s shareholders at the Company’s annual general meeting held on 23 November 2007.

The Company is very pleased that Lord Lamont was duly elected as a director of the Company at the annual general meeting. The Union 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 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 Chairman of Jupiter Adria Plc and the East European Food Fund, and a director of RAB Capital Plc.