Oriel Resources plc
TSX : ORL
AIM : ORI

Oriel Resources plc

October 11, 2007 05:00 ET

Oriel Chooses Atmospheric Acid Leach Process to Unlock the Value of the Shevchenko Nickel Project, Kazakhstan

LONDON, UNITED KINGDOM--(Marketwire - Oct. 11, 2007) - Oriel Resources plc ("Oriel", or the "Company") (TSX:ORL)(AIM:ORI), the London-based chrome and nickel mining and processing company, is pleased to announce the results of its extensive comparative analysis of all appropriate technologies for the development of the Shevchenko Nickel Project, Kazakhstan. The Company has chosen to proceed with continuous atmospheric tank leach technology, as it provided significantly better economic and technical performance compared to the other technologies.

- Leach tests give up to 90% nickel recovery on screened and upgraded Shevchenko ores;

- Favourable acid consumption rates in testwork;

- Sulphuric acid readily available at competitive rates from Glencore International AG ("Glencore"), sourced from Kazzinc operations, Ust-Kamenogorsk, Kazakhstan;

- Oriel to implement Phase 1 commercial development of Shevchenko to produce a nickel mixed hydroxide product ("MHP");

- Low operating costs - expectation is that given the low cost availability of acid and the favourable leach dynamics, cash operating costs will be in the 2nd quartile of the world's nickel producers cost curve;

- Construction of Phase 1 commercial processing expected to begin Q2 2008, or as soon as practicable after completion of relevant engineering studies;

- Phase 1 commercial scale production of a nickel mixed hydroxide product ("MHP") aimed to commence H2 2009.

Baran Engineering & Projects Ltd., a subsidiary of Baran Group Ltd., a global provider of engineering, technology and construction services, ("Baran") has been selected as Project Managers and will work with Oriel on finalising capital estimates during November 2007 and to implement Phase 1 commercial development.

Background to Comparative Analysis

In March 2007 Oriel commissioned Baran to carry out a technical and economic assessment of process options available for a nickel production facility at Shevchenko. Baran reviewed the following options:

1. Ferronickel ("FeNi") production using the conventional Rotary Kiln Electric Arc Furnace (RKEF) process design and compared to the Direct Current ("DC") arc furnace flow sheet used in the feasibility study of December 2005 compiled by Bateman Minerals and Metals, South Africa, ("Bateman").

2. Atmospheric tank leaching based on a process flow sheet developed by Oriel's hydrometallurgical consultants (in collaboration with Oriel) as well as extensive bench-scale test work at Mintek, South Africa. The selected flowsheet incorporated "tried and tested" conventional unit operations developed in similar projects and the process design was developed by Hydromet, South Africa with detailed modelling by Dr Mike Dry, Canada.

3. Heap leach based on the technical knowledge of and extensive pilot column test work at Mintek and preliminary engineering design and costing study of a heap leach plant by GBM Minerals Engineering Consultants Ltd, UK ("GBM").

High Pressure Acid leach ("HPAL") technology was not considered as Shevchenko laterite ores display favourable leach kinetics at low process intensity and due to the high capital costs, operating complexities and other well publicised problems experienced at existing operations.

Further Details on the Assessment of Atmospheric Tank Leaching

Since late 2006 Oriel has continued bench-scale atmospheric test work at Mintek, South Africa, which has covered extensive tank and continuous column leaching (representing heap leaching) of the three mineral types (limonite, nontronite and saprolite) found in the Shevchenko nickel laterite ore deposit. The stirred tank leaching results carried out at solids to liquid ratio of 30% at a temperature of 90 degrees C achieved extremely positive levels of nickel extraction of 80% to 90% in 12 to 14 hours residence time.

The results of these tests formed the basis for Baran's leaching study and were incorporated into a model of the overall process flow sheet which was used to examine the technical feasibility of the circuit. The results were used to calculate reagent and utility consumptions (acid, limestone, magnesia, lime, water, fuel, gas) and these values were used in conjunction with indicative consumable costs to calculate the variable portion of the projected operating cost. Reagent and energy consumption data will be used as the inputs to the design of the continuous pilot-scale operation to commence Q1 2008 and the subsequent Phase 1 commercial-scale plant.

Oriel has a competitive advantage to develop a leaching operation in Kazakhstan as the Company will be supplied with sufficient sulphuric acid from Kazzinc operations in Kazakhstan. In addition, the selection of a hydrometallurgical process to unlock the value of Shevchenko ensures the project is not dependant on electrical energy costs which are expected to rise significantly in the coming years. Oriel recently completed a long term off-take agreement with Glencore to market a significant proportion of the Company's Voskhod Chrome Project's annual 900,000 tonnes of beneficiated chromite ore product, commencing Q3 2008.

Oriel has taken the decision to pursue the final testwork and construction of a commercial plant based on extensive testwork and the technical and economic assessment managed by Baran and supported by a number of experienced consultants. An agitated ambient pressure tank leach operation to produce nickel into a MHP or further into a metal is considered the most appropriate technology to unlock the potential of the Shevchenko nickel laterite. Baran, as appointed Project Managers, will immediately commence work on the process flowsheet design sufficient for local permitting to be obtained and for construction to start on site in Q2 2008 and will report back to Oriel during November 2007 on the selected plant through-put, production capacity, capital and operating cost estimates for the plant.

Batch and pilot scale tank leaching and nickel recovery testwork to produce both a mixed hydroxide product and metal is planned for completion by Q2 2008 and will be conducted at the South African facilities of Mintek. This testwork will confirm the design parameters for the commercial-scale plant and demonstrate the performance characteristics of the plant, based on the process flow sheet developed.

Tank leaching of nickel laterites is considered to be an appropriate solution to the treatment of the Shevchenko ore. Tank leaching is widely practiced in the Platinum Group Metals Industry (5 plants installed in USA, Finland, Zimbabwe and South Africa), it is fundamental to the Xstrata process (1 plant installed Australia) and is practiced by all the Central African cobalt heterogenite processes (5 plants installed, Nkana, Chambishi, Luilu, Shituru and Kabwe and 4 in design Nikanor, Tenke Fungurume, Kolwezi Tailings and Kalukundi) where the process dynamics of tank leaching are well understood.

During Q4 2006, in conjunction with consultants specialising in the leaching of nickel ores and heap leaching of base metals, Oriel commenced an extensive programme of test work to evaluate the potential of atmospheric leaching of the Shevchenko ore as an alternative to smelting, as suggested in the January 2006 feasibility study completed by Bateman. This test work programme followed on from very encouraging bottle roll tests which indicated nickel extraction of over 90% in approximately 30 days and with sulphuric acid consumptions that compared favourably with results presented for other nickel leaching projects.

In addition, encouraging beneficiation results from recent ore screening work completed in Kazakhstan by Kazmechanobr will be followed up in order to develop the most appropriate ore preparation flow sheet design that would precede the leaching stage in the Phase 1 commercial-scale plant. The upgrading tests on the ore increased the Ni grades to 1.3% Ni, which greatly improves the project economics.

Dr Sergey V Kurzin, Executive Chairman of Oriel commented:

"I am extremely pleased with what the Oriel team and our consultants have achieved. The Company has expended considerable time and energy on extensive research into discovering which technology is most suited to process Shevchenko's ores. Shevchenko has the potential to become a world class nickel producer through our choice of process option which combines low operating cash costs and relatively low capital costs. We have now taken the first solid steps to develop this resource and take advantage of the growing global stainless steel demand."

Notes to Editors:

Oriel Resources was formed in July 2003 with Dr Sergey V. Kurzin as Executive Chairman and CEO and is a London-based chrome and nickel mining and processing company with its Ordinary Shares and Warrants admitted to trading on London's Alternative Investment Market (AIM) and its Ordinary Shares listed on the Toronto Stock Exchange (TSX). The Company's primary focus is on the identification, acquisition, exploration and development of advanced chrome, nickel, and other alloying opportunities in the countries of the FSU, including The Republic of Kazakhstan and The Russian Federation. The Oriel group currently has three projects, namely the Tikhvin ferrochrome smelter project, Russia, the Voskhod chrome project and the Shevchenko nickel project, both situated in north-western Kazakhstan. Following the results of recent feasibility studies for the Russia and Kazakh-based projects and given the current high demand for chrome and nickel products, the directors are fast-tracking the Voskhod chrome project into production while further developing the Shevchenko nickel project. The Tikhvin ferrochrome smelter project near St Petersburg, Russia commenced operations in April 2007.

Shevchenko Mineral Resources

The resource infill drilling, geological modelling and mine optimisation plan has increased the overall project life considerably and it is projected to be 47 years based on mining the resource in 24 years.

The AusIMM JORC and Ni43-101 compliant resource is estimated as follows:



Measured & Indicated Resources (JORC Compliant)
Cut Off Grade Tonnes ('000) Ni
0.6% 107,398 0.84%
0.8% 50,637 0.98%


Location and Geology

The Shevchenko nickel deposit was discovered in 1952 and is located within the Kostanai district of Kazakhstan, some 50km south-west of the town of Zhitiqara. The deposit is accessed by part bitumen, part hardcore road across the steppe from Zhitiqara to the village of Shevchenko which lies a few kilometres to the west of the deposit. Oriel owns 90% of the project and has a Mining Contract with the Government of the Republic of Kazakhstan which allows for full exploitation of the deposit, for the full 24 years with the right of extension. Socio-economic studies show that the project will bring much needed employment to the region and will be welcomed by the local population.

Infrastructure

The project area is extremely well served with main utilities such as power (500kV transmission lines), gas (pipeline linking Russia and Kazakhstan) and main rail line linked to the extensive rail system available throughout CIS, Russia and into China from the nearby town of Zhitiqara.

Contact Information

  • Oriel Resources plc
    Dr Sergey V Kurzin
    Executive Chairman
    +44 (0) 20 7514 0590
    or
    Oriel Resources plc
    Nick Clarke
    Managing Director
    +44 (0) 20 7514 0590
    or
    Oriel Resources plc
    Gavin Dallas
    Marketing and PR
    +44 (0) 20 7514 0590
    +44 (0)20 7514 0591 (FAX)
    Email: info@orielresources.com
    Website: www.orielresources.com
    or
    Bankside Consultants
    Michael Padley / Michael Spriggs
    +44 (0) 20 7367 8888
    or
    Canaccord Adams Limited
    Robin Birchall / Ryan Gaffney
    +44 (0) 20 7050 6500
    or
    Vanguard Shareholder Solutions
    Keith Schaefer
    (604) 608-0824