Oriel Resources plc

Oriel Resources plc

April 24, 2007 03:00 ET

Oriel Resources plc: Ferrochrome Smelting Commences at Tikhvin

Operations update on the development of the Voskhod chrome and Shevchenko nickel projects, Kazakhstan

LONDON, UNITED KINGDOM--(CCNMatthews - April 24, 2007) - The Directors of Oriel Resources Plc ("Oriel" or "the Company") (TSX:ORL)(AIM:ORI), the London-based chrome and nickel mining and processing company, are pleased to announce the commencement of smelting at the Company's Tikhvin ferrochrome smelting plant ("Tikhvin") in Russia. We are also pleased to provide an update on the progress of development at the Voskhod chrome project ("Voskhod") and Shevchenko nickel project ("Shevchenko"), in Kazakhstan.

Ferrochrome Production Commences at Tikhvin

Located 200km south east of St Petersburg within an industrialised zone with immediate access to road and rail transport, Tikhvin has commenced the first of two phases of high carbon ferrochrome production. Initial HCFeCr production capacity will stand at 148,000t per annum, rising to 180,000t in phase two of the project during 2011.

Acquired from IPH Polychrom Holdings B.V. in December 2006, Tikhvin is a significant step forward in Oriel's objective of becoming a premier, fully integrated supplier to the stainless steel industry. SRK Consulting UK Ltd completed a Competent Person's Report on the Tikhvin ferrochrome smelter in October 2006.

Comprising four semi-closed submerged arc AC furnaces with full capacity of 22.5MVA each (at 180,000t per annum HCFeCr) and four gas cleaning plants, the plant's initial demand for beneficiated chromite ore will be satisfied by imported material. This initial supply is due to cease in 2008 as Oriel's own Voskhod chrome project is brought on-line. From 2008 onwards, Tikhvin's first-stage ore demand will be met from approximately one-third of the planned Voskhod mine production.

Ferrochrome produced by Tikhvin will contain approximately 65%Cr metal and is due to be sold to markets on a spot basis, through a selected metals trader.

Voskhod Chrome Project Development

The Board is pleased to provide shareholders with the following update on mine development at Oriel's Voskhod chrome project:

- The Mining Contract and the Process EPCM & Lump Sum Contracts have been completed with Central Asia Mining (a joint venture between Byrnecut Mining, Australia and Vostokshakhtstroy, a local Kazakh contractor) and DRA International, South Africa, respectively.

- US$120 million debt financing closed with the Eurasian Development Bank (Russian/Kazakh Government joint venture), Bayerische Hypo- und Vereinsbank AG (UniCredit Group) and WestLB AG. These three institutions have provided loan facilities totalling US$120 million for the further development of Voskhod.

- After the successful completion of the box cut, Central Asia Mining commenced development of the mine portal in January 2007 and the installation of steel arch setts has commenced.

- Completion of a temporary road from the box cut to the planned ventilation shaft opening.

- Advanced stage of upgrading Voskhod's 100-room employee accommodation facility.

- Off-take sales agreements have been completed with Sinosteel of China, Vargon Alloys of Sweden and Oriel's own Tikhvin ferrochrome plant in Russia; representing approximately 70% of Voskhod's production, as required by the debt providers.

Shevchenko Nickel Project Development

Oriel has contracted two consultant engineering and technology supply companies to evaluate and assess all appropriate processing technologies. A decision on the chosen technology and a construction timeline will be announced mid 2007.

Dr Sergey V Kurzin, Executive Chairman of Oriel commented:

"The Board is extremely pleased with what has been achieved at Tikhvin since its acquisition. With next year's chromite production at Voskhod and the subsequent ferrochrome production from Tikhvin, Oriel will be a vertically integrated ferroalloy producer; something the management team has worked extremely hard at to achieve.

In addition to assessing all possible processing technologies for the development of the Shevchenko nickel project, Oriel's management is also evaluating the construction of additional ferrochrome plants to utilise the excess of Voskhod chromite production.

The conclusion of Voskhod's debt financing has allowed Oriel to continue to develop what will soon be a world class chromite mine. Subsequent to last year's previously announced transactions, the enlarged Oriel now has a stronger cash position, providing the ability to advance the Shevchenko nickel project, yet another potential world class deposit in Kazakhstan."

Contact Information

  • Oriel Resources plc
    Dr Sergey V Kurzin
    Executive Chairman
    +44 (0) 20 7514 0590
    Oriel Resources plc
    Nick Clarke
    Managing Director
    +44 (0) 20 7514 0590
    Oriel Resources plc
    Gavin Dallas
    Marketing and PR
    +44 (0) 20 7514 0590
    Website: www.orielresources.com
    Bankside Consultants
    Michael Padley / Michael Spriggs
    +44 (0) 20 7367 8888
    Vanguard Shareholder Solutions
    Keith Schaefer
    (604) 608-0824