UCL - Union Resources Limited

[lacmur]

The radar has locked on this one in the last few days. The evil eye is looking hard. Formerly Union Capital Limited.

Classic speccy of all speccies. You know the story, gold miners who bought telcos and dot.coms that started up gold miners and all the rest of it. And everybody was happy, especially the shareholders that bought in at $6 in March 2000. Still smiling.

This lot presently own:

14% of Jabmail technologies(if it sounds painful, it is) an e-technology outfit who have recently listed on the good old Newcastle exchange. NSX code: JAB ba the hut

22% of Eastern Telecoms a Philippines based multi-franchised telco. Holding is through secured loans to Australian Gigahertz Networks International (AGNI). AGNI in turn hold 40% of Eastern. Union would love to sell out but can't because everybody is fighting everybody else and noone pays their capital gains tax in the Philippines and UCL can't even referee it. http://www.etpi.com.ph/

36% of Golden Aura (GOA) Recently distributed to shareholders in species 1 for every 50 UCL shares

100% of Union Zinc. This is the grandaddy of them all with an effective 38% stake in the Mehdiabad Zinc Company in the throes of completing a BFS on the largest undeveloped Zinc deposit in the World located in Central Australia, no, here's the rub, it's Central Iran. Still plenty of desert about though.

I just love the diversification and with such synergies to boot!

The focus is of course Mehdiabad and my focus has been transfixed by the movement in shareprice and volume in recent days. Very doubtful these guys can see the zinc, lead and silver through to extraction but they have an interest in a massive resource to either on sell or attract takeover suitors. Shares and rights coming out their eyes and ears but if they don't go broke in the process of developing the resource it's definitely one to watch. Ah, I mean buy.

Share price 4.7 cents up 11%, heavily discounted by the conversion from Iranian rials.

[lacmur]

quote:Originally posted by lacmur



Share price 4.7 cents up 11%, heavily discounted by the conversion from Iranian rials.



The rial just got revalued! Up 15% today to 6c on an announcement that further high grade zinc deposits have been encountered at Mehdiabad. Interest is beginning to stir overseas in this one and those in the know will be sure that Iran is not such a bad place to do business.

UCL still desperately need cash and have issued rights of all sorts to get it. Will be a wild ride , but there remains plenty of upside.

[lacmur]

Hmmm. Further move today up 23% to 7.4c. That there is a huge zinc deposit is without doubt. I expect a general upwards trend where UCL demonstrate capacity to tick off various steps along the way to the completion of the BFS. Cash is always the problem for such a small outfit but recent developments and the possible sale of the Filipino telco interest will go a long way to alleviating this.

In relation to issues of sovereign risk there is no doubt that having an interest in a resource in Central Iran does complicate the picture somewhat. However, from my knowledge of international business dealings in Iran the environment is considerably more conducive than one would expect at first blush. Western perceptions of Iran and particularly those advanced by the US government are far more jaundiced than reality on the ground. There is no doubt that politically there is continuing struggle between the hard-line Islamists and more moderate forces attempting to open up the society even more so than the considerable progress that has been achieved over the last decade. Business dealings are more than possible where the government is onside.

Recent international interest with Lundin taking up a substantial holding may well spark others to jump on board.

UCL plan to list on AIM this month if all goes well.

[lacmur]

The reversal is to be expected given the extreme movement over the last week.

Geopolitically, Iran is more on the nose than usual given the IAEA meeting and potential referral of Iran to the UN Security Council at the behest of the US. The odour is stronger because Iran will become an even more lonely US whipping boy now that North Korea are behaving themselves. Club axis of evil has only one member at present.

Looking closely for more buying opportunities.

[lacmur]

Juicy fruit. We are continuing the upward trajectory. 10c today. Still plenty of upside in my view.

[lacmur]

Another supercharged 25% rise today. There is no stopping Rob Murdoch just at present. Announcement after hours adding copper to the zinc, lead and silver resource already evident.

I think we are due for a retracement soon, if not tomorrow then Friday. I still see considerable room for upwards movement in this one.

Did anyone catch the elevator?

[tracker]

well done lacmur

I tip my hat

tracker

[lacmur]

A substantial retracement over the last two weeks not helped by news Rob Murdoch has sold the lion's share of his holdings to pay off the mortgage or something. May have had holders choking on their cornflakes when reading Saturday's SMH.

Still looking for another entry point. May have to wait it out a while. Listing on AIM successfully completed 14 October.

[lacmur]

Popped it's head up yesterday and had a look. Downtrend broken definitively today on excellent volume not seen for more than 15 trading days. Good re-entry point this morning. Still has some way to run.

[lacmur]

Popped its head up today to close above previous peak on excellent volume. Look for some big moves in the coming days and weeks. Draft BFS in preparation and not even Ahmadinejad's posturings will put those in the know of this one.

[Moonshine]

Hi lacmur,

Have just started researching this one myself.

What an AMAZING resource!

Just a bummer about the location!

I have to admit though... despite all the political war-mongering going on between the US and Iran... UCL are just going about their business, and completing more drilling (50,000 m drilled to date i think), Metwork (very favourable towards extraction of Zn, Ag, Pb and even some Cu now) and are even putting the finishing touches on the BFS.

How is that for confidence!

The anticipated development cost of US$1.645 Billion is definatley the obstacle at this stage, as quoted in the 3rd qtr activities report :


The challenge now is to finance the development of the Project and upgrade the
Project to achieve a full international bankable stage.



It is going to be very interesting to see how they go with this given the West's attitude towards Iran at the moment.

Kind of poses the question of just how much of a threat is the war-mongering to this operation.

Any kind of war would likely be over within 6-12 months.

Whereas we are talking about a resource with a 20 year defined mine life (possible 40 yr with resource upgrades) with a value of approx US$24 BILLION (http://www.hotcopper.com.au/post_thread.asp?fid=1&tid=314373#1045922).

The aim is to be producing within 2 years.

I personally think that MANY international financiers would be able to see beyond the current instability and step up to the plate.

As you pointed out last year lacmur... it is a class speccie... but I like it.

UCLOA - 9.82c by 31/03/2009
UCLOB - 10c by 31/03/2009

Options look good value if you can handle the risk.

Cheers lacmur,

Moonshine

[Heavy Metal]

Does the Mehdiabad deposit doesn't contain any uranium? Sure to get the development fast-tracked:D

Seriously, I don't think the soverign risk is as bad as the market imagines. Iran will do anything to diversify away from oil (and dates:D) as its sole source of foreign income.

[lacmur]

Thanks for your thoughts Moonshine and Heavy Metal.

That the company are making progress is undeniable even if slower than expected, however the market is seriously concerned about all the sabre-rattling that is going on between the US and Iran.

UCL are a very risky play only for those with strong tolerance. There are a lot of forces lined up against them both of a geopolitical and geographic nature. Mehdiabhad not only suffers from being located in just the wrong country in a perceptional sense but also in the wrong spot as they will have water problems when/if it comes to mining.

Furthermore, the Itok relationship is a problem. It is not going well and the independent evaluation (one Iranian and one Australian) to resolve the situation sounds a little ominous.

Finally, I suppose the biggest challenge of the lot is UCL getting the money together to actually make something of all its preparatory work. The news on the sale of the Philippines telco asset is encouraging but the financing of this project is mind boggling. Rob Murdoch is often looking sideways for a takeover suitor, something that is not really a great sign of his own confidence they can see this through. A T/O will mean long term shareholders don't get full value from this massive resource.

Having put down all those caveats, to hell with them and buy, buy, buy. I like to dance a merry jig as the gloom descends.

[Heavy Metal]

Lacmur you have me interested in this one. As already mentioned, the soverign risk is overrated. Would be interested as to why UCL has not attracted the attention of some rich Arabs looking to diversify away from oil.

[nobull]

I see Societe Generale have been appointed to organise the finance for this mega project. They have, according to their website, been in Teheran since 1974. SG were successful in raising $400m of project finace for Bema Gold's Kupol project in Russia. Trade sanctions against Iran seem unlikely (would hurt the West just as much?), but banking sanctions are a possibility. Does anyone know what Societe Generale would do if a coalition of the willing imposed banking sanctions on Iran? Would they drop us as one of their clients? What are the chances of success for Union to raise $1.6bn to unlock the value in Mehdiabad?

[Moonshine]

If you haven't already checked this clip out on their website... do yourself a favour and have a look.


It takes best part of 10-15mins to download on ADSL... so be patient.

I can assure you... it is worth it!

http://www.unionresources.com.au/UCL/documents/305.php

Cheers,

Moonshine

[xman]

hi moonshine, any idea on GBG's performance recent days?

[xman]

hi moonshine, any idea on GBG's performance recent days?

[lacmur]

quote:Originally posted by Heavy Metal

Lacmur you have me interested in this one. As already mentioned, the soverign risk is overrated. Would be interested as to why UCL has not attracted the attention of some rich Arabs looking to diversify away from oil.


I think the major issue holding UCL back over 2006 has been continual uncertainty about ownership. how much is UCL's how much the Iranian partner? Will UCL receive due recognition for its large investment in proving up the resource and getting the BFS completed?

Hopefully this will be resolved soon. In trading halt at the moment and some speculation that the announcement to come will address the ownership question. Still has good prospects if this issue is sorted out and of course the financing can be arranged. Sovereign risk still a factor but way overrated in my view as Iran is keen to do business.

UCL have opted for a staged development.

[lacmur]

Gonesky!!! The Iranian partner has unilaterally terminated all agreements. I hope nobody got too badly burnt. While this may not be the end of the story, it is clear that I have underestimated the pitfalls of doing business in Iran.

Down 55% with a bullet this morning.