Oriel Resources plc

Oriel Resources plc

November 15, 2006 10:09 ET

Oriel Resources plc: Operations Update on the Development of the Voskhod Chrome Project, Kazakhstan

Funding agreed

LONDON, UNITED KINGDOM--(CCNMatthews - Nov. 15, 2006) - The Directors of Oriel Resources Plc ("Oriel" or "the Company")(TSX:ORL)(AIM:ORI), the London-based chrome and nickel exploration and mining company, are pleased to advise an update on the progress of the development of its Voskhod chrome project ("Voskhod"), in north western Kazakhstan. We are pleased to confirm that the funding for the development of the project has been agreed and that the project remains on schedule.

Debt Financing

Oriel is pleased to announce that it has received and accepted credit approved commitments from UniCredit Markets & Investment Banking acting through Bayerische HypoVereinsbank AG ("UniCredit Group (HVB)") and WestLB AG ("WestLB") to jointly arrange and underwrite a Project Term Loan Facility for up to a total of US$120 million for its Voskhod Chrome Project ("Facility"). The Facility consists of two tranches:

- Tranche 1 - US$100 million for the construction, development and operation of Voskhod; and

- Tranche 2 - US$20 million for potential overruns related to capital and working capital costs at Voskhod.

The Facility will be subject to the satisfaction of certain conditions including the securing by Oriel of all requisite regulatory permits and licenses and completion of final loan documentation.

The Facility is expected to close by the end of this year, with first drawdown expected in the first quarter of 2007.

Endeavour Financial is advising on the debt finance and will be working with Oriel to complete the document as soon as possible.

Chrome Ore Off-take

Conditional Letters of Intent ("LOI") for the supply of chrome ore and beneficiated chrome ore from the Voskhod Chrome Plant have been signed by the Company with five groups within the stainless steel and ferro-chrome industry: two end-users in Europe and Russia and three major traders in Europe and China.

The excellent quality of the Voskhod chrome ore is confirmed by the high level of interest in off-take demand. Demand has exceeded output by almost double the expected average production of 900,000 tonnes per year. The quality of the ore has been evaluated by SRK from hundreds of samples from the core drilling programme completed earlier this year as well as feed back from prospective consumers.

Off-take agreements are also now well advanced with three of the parties with whom LOI's have already been signed. One of these parties is the recently acquired Tikhvin ferro-chrome smelter plant near St Petersburg in Russia.

Demand for beneficiated chrome ore from the Tikhvin plant will be satisfied from approximately one-third of the Voskhod production, thus leaving the other two thirds of Voskhod's production for sale to other producers. Oriel is confident that off-take agreements for 70% of production will be finalised before the end of the year.

Voskhod Mine Development

Management is pleased to report on the following progress of mine development at Oriel's Voskhod Chrome Project:

- Successful completion of the box cut enabling underground contractors (Byrnecut Mining and Vostokshakhtstroy, a local Kazakh contractor) to establish the portal and initiate development of the decline.

- Commencement of the foundation work for the first ventilation shaft.

- Near completion of a temporary road from the box cut to the ventilation shaft opening.

- Completion of and start of operations at Voskhod's shotcrete batching plant that will manufacture concrete required for decline and cross cut developments.

- Advanced stage of upgrading Voskhod's 70-room employee accommodation facility in Chromtau.

- Nearing completion of the mining contract and process and engineering contract.

Dr Sergey V Kurzin, Executive Chairman of Oriel commented:

"The Board are extremely pleased that we have been able to secure a financing commitment from such world-class financial institutions and we look forward to working with the Lenders in completing the documentation for the US$120 million financing, as soon as possible.

"Also, I am happy to report that Oriel's experienced project management team is keeping Voskhod's mine development on schedule.

"The conclusion of the financing along with the recent acquisition announcement, subject to shareholder approval, means that we will have everything in place, including off-take agreements, to allow us to develop what is a world class deposit. The enlarged group will have a strong cash position and this will give us the ability to advance the Shevchenko Nickel Project, another potential world class deposit that we have 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
    Bankside Consultants
    Michael Padley / Michael Spriggs
    +44 (0) 20 7367 8888
    Vanguard Shareholder Solutions
    Keith Schaefer
    (604) 608-0824
    Website: www.orielresources.com