Union Resources is focused on exploration and development of the offshore Namibian Sandpiper-Meob phosphate project with joint venture partners Bonaparte Diamond Mines and Tungeni Investments; and resolution of the potential disputes and the potential development of the Mehdiabad base metal project in Central Iran. It has now lodged a claim with EFIC in respect of Mehdiabad.
For sometime Union Resources has prepared for the possibility that it may not be able to progress with the Mehdiabad project and resolve the differences between the parties, and therefore acquired the Sandpiper project in Namibia and more recently entered into the Sandpiper-Meob Phosphate Joint Venture. Union has prioritised and will continue to prioritise development of the Sandpiper-Meob project over Mehdiabad.
To further the development of the Sandpiper-Meob Phosphate Joint Venture Project, Union Resources yesterday announced a fully underwritten rights issue to raise A$3.93 million and is making a takeover bid for its joint venture partner Bonaparte Diamond Mines.
The Mehdiabad project is carried on by Union Resources, Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) and the company 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.
IMIDRO purported to terminate several agreements governing the Mehdiabad project in December 2006. Union Resources stated then, and is still firmly of the opinion, that the agreements were invalidly terminated. Since that time Union Resources has been negotiating with various Iranian parties in an effort to resolve the impasse and progress the project. At the same time, Union Resources has been exploring the possibility of resolving the matter through arbitration and has made initial preparations for instituting arbitration proceedings should that become necessary.
As previously advised, at the time of the purported termination by IMIDRO Union Resources held a political risk insurance policy in respect of its investment in the Mehdiabad project with the Export Finance and Insurance Corp (EFIC). The limit of liability under the Policy is $4.5 million.
The Company’s ongoing efforts to have its Iranian counterparties to the Mehdiabad agreements observe the terms of those agreements have been unsuccessful to date. Due to this and the fact that time limits are imposed under the EFIC Policy for lodging a claim under the policy, the company has today lodged a claim with EFIC under the policy for compensation for expropriation of the company’s interest in MZC. The lodging of this claim does not affect Union Resources’ other rights.
Union Resources will co-operate with EFIC and provide all necessary information to enable EFIC to assess its claim. At the same time, Union Resources will continue to maintain dialogue with its Iranian counterparties in the hope of resolving the disputes regarding the Mehdiabad project.