Russia has cut a deal with Iran on joint development of the Mehdiabad zinc deposit in central Iran, Moscow's Kommersant business daily reported Tuesday.

The Russian Technologies State Corporation Rostechnologii and Bank Saderat Iran are to create a joint venture to develop the world's largest lead and zinc deposit, despite the UN sanctions imposed in 2008 which bans Iranian private banks' operation for alleged financing of the extremists groups, the paper said.

Beside Russian and Iranian participants, the project, with estimated investment of over 1 billion U.S. dollars, will also be financed with Turkish and Seychelles capitals, it added.

Initially, the Mehdiabad project was run by an Iranian-Australian joint venture, but the operation has been frozen due to political risks.

Moscow and Tehran have recently agreed that a Russian company would take over the license. More than one week ago, Russian Energy Minister Sergei Shmatko and Iranian Foreign Minister Ali Akbar Salehi signed a protocol during the 10th session of the Russia-Iran trade and economic commission.

Mehdiabad deposit contains 394 million tons of lead, zinc and silver ore. Iran is the world's 15th largest zinc producer.