SOURCE: Oriental Minerals Inc.

October 26, 2006 08:15 ET

Oriental Minerals Acquires World-Class Mineral Portfolio in South Korea

VANCOUVER, BC -- (MARKET WIRE) -- October 26, 2006 -- Oriental Minerals Inc. (TSX-V: OTL) is pleased to announce acquisitions, and an option agreement, that dramatically expand its world-class mineral portfolio. In addition to agreeing to acquire what was one of the largest tungsten mines in the world, the Sangdong tungsten-molybdenum mine in South Korea, OTL has secured South Korea's largest (historically) producing gold mine and additional tungsten-molybdenum and gold exploration projects. The size and quality of Oriental Minerals' portfolio demonstrates the excellent geological prospectivity of the Korean peninsula.

Highlights include:

TUNGSTEN - MOLYBDENUM
SANGDONG: Formerly one of the world's largest tungsten mines
* reported tungsten historical "remnant reserve" of 189 million lbs of
tungsten oxide (WO3) from 17 million tonnes grading 0.5% WO3 per tonne.
* extensions to tungsten deposit - prospective strike length of at least 10
kilometres,
* above ground ore stockpiles, and reported molybdenum deposit beneath the
tungsten mine workings, with a historical resource of 140 million lbs of
MoS2 from 16 million tonnes grading 0.40% MoS2 per tonne (or 8.8 lbs MoS2)
and an additional 199 million lbs of MoS2 from 104 million tonnes grading
0.0.087% MoS2  per tonne (or 1.9 lbs MoS2).

CHONGYANG:
* former molybdenum-tungsten mine, closed in 1977,
* bulk open-pit potential.

GOLD - SILVER
MUGUK: Formerly South Korea's largest gold producing mine
* epithermal gold-silver style,
* reported by KORES to contain a measured resource of 332,712 oz of gold
and 1,915,962 oz of silver from 713,610 tonnes grading 14.5 g/t gold and
83.5 g/t silver just prior to mine closure.   An additional inferred
resource was reported of 283,508 oz of gold and 1,408,472 oz of silver from
705,370 tonnes grading 12.5 g/t Au and 62.1 g/t Ag.

GASADO:
* epithermal gold-silver project,
* robust gold-silver exploration upside

OPTION AGREEMENT
Option to acquire a portfolio of 22 advanced mineral projects;
A qualified person has not done sufficient work to classify any of these historical resources as current mineral resources. The issuer is not treating any of the historical estimates as current mineral resources and the historical estimates should not be relied upon. Historical resource and reserve estimates are also subject to independent confirmation as to whether categorization is NI 43-101 compliant.
PROJECTS

TUNGSTEN-MOLYBDENUM

1.   SANGDONG
- FORMERLY ONE OF THE WORLD'S LARGEST TUNGSTEN-MOLYBDENUM MINES.
The Sangdong Mining titles cover the Sangdong tungsten-molybdenum mine, one
of the largest in the world when it was closed in 1992 due to low metals
prices.  Tungsten prices have increased from US$4 per pound in 1992 to $70
per pound currently, while molybdenum prices have increased from less than
US$2 per pound in 1992 to a high of $38 per pound now.

- REPORTED REMAINING TUNGSTEN RESOURCES IN THE OLD MINE
Approximately half of the identified original historical tungsten resources
are reported to remain with extensions of the mineralization to the east
and to the west.  The reported "remnant ore reserve" is estimated at 15.6
million tonnes at 0.5% WO3 in the "Main ore body" and 1.4 million tonnes at
0.55% WO3 in the "East ore body."  Total strike length of horizon with
known tungsten mineralization is at least 10 kilometres.  Tungsten
mineralization occurs as three individual stacked stratiform manto skarn
horizons.

- ABOVE GROUND ORE STOCKPILES
The former mine stockpiles represent attractive early development ore at
current market prices.

- REPORTED MOLYBDENUM DEPOSIT BENEATH THE TUNGSTEN MINE WORKINGS
The molybdenum deposit reported beneath the existing tungsten mine workings
was drill tested by KORES, the Korean government mining organization from
1980 to 1987.   Drilling was carried out from the historical underground
Tungsten mine workings, with 24 diamond holes completed.
Work undertaken by the Korea Engineering Co. estimated the deeper high grade molybdenum deposit at Sangdong contains a historical resource of 140 million pounds of molybdenum sulphide from 16 million tonnes grading 0.40% MoS2 per tonne (or 8.8 lbs MoS2). An additional resource of 199 million pounds from 104 million tonnes grading 0.087% MoS2 per tonne (or 1.9 lbs MoS2) is also reported. This unmined high grade historical molybdenum resource is hosted within quartz vein stockworks above a granite intrusion.

A qualified person has not done sufficient work to classify these historical "reserves"/resources as current mineral "reserves"/resources. The issuer is not treating the historical estimates as current mineral resources and the historical estimates should not be relied upon. As the historically reported "reserve" is not yet accompanied by operating permits or positive economic modeling, the estimate should be considered as a historical resource.

An extensive database of technical information is being reviewed by Oriental, as well as the preparation of a technical report compliant to National Instrument 43-101.

The Company has a multi-pronged evaluation strategy at Sangdong, as
follows:
- review the deeper high-grade molybdenum deposit.
- determine potential for early cash flow from the former operating mine
ore stockpiles.
- consider remaining ore blocks in the tungsten mine workings.
- consider potential for open pit mining on existing tungsten-molybdenum
resources.
- examine the significant exploration potential along strike.

2.   CHONGYANG
FORMER TUNGSTEN MINE
The portfolio also includes the Chongyang tungsten mine, which ceased
production in 1977.  Consisting of a sheeted quartz-sericite-pyrite
"greisen" system hosted in a porphyritic granite stock, the Chongyang vein
system is 200m wide by 400m long, and can be traced over a 1400m strike
length.  Oriental will initiate an evaluation of the bulk tonnage open pit
potential of this deposit by drill testing.

GOLD-SILVER

1.   MUGUK
- HISTORICALLY SOUTH KOREA'S LARGEST GOLD PRODUCER
Historically, Muguk was South Korea's largest gold producer, with recorded
production of 8.15 tonnes of gold mined between 1934 and 1972 and resumed
production at a rate of 200 tonnes per day from 1987 to 1998, all from the
No. 2 vein. The previous explorers identified more than 20 separate sub
parallel vein systems, with at least 6 individual vein systems traceable
over 1.3 - 2.2 km strike lengths.  Individual veins are 0.1 to 3.0m wide
and are hosted in Cretaceous granite.  Individual shoots within the No.2
vein have been exploited down to 750m depth, with mill recoveries
historically averaging 95.7%.

- EPITHERMAL GOLD-SILVER DEPOSIT.
In 1998, Muguk was reported by KORES to contain a measured resource of
332,712 oz of gold and 1,915,962 oz of silver from 713,610 tonnes grading
14.5 g/t gold and 83.5 g/t silver just prior to mine closure.   An
additional inferred resource was reported of 283,508 oz of gold and
1,408,472 oz of silver from 705,370 tonnes grading 12.5 g/t Au and 62.1 g/t
Ag. These historical resources were estimated using a polygonal
longitudinal method.

A qualified person has not done sufficient work to classify this historical
resource as current mineral resources, nor confirm that the categorization
conforms to CIM Standards. The issuer is not treating the historical
estimate as current mineral resources and the historical estimate should
not be relied upon.

- MINERALIZATION
Mineralization at Muguk is considered to be a low sulphidation epithermal
system, comprising grey chalcedonic banded veins and stockworks. Higher
gold grades are associated with electrum-bearing sulphide bands on the
margins of these veins.

The Company proposes to evaluate the potential at Muguk to establish a high
grade gold-silver mine or a bulk tonnage low to medium grade gold-silver
mine exploitable by open pit.  If established, a central milling complex at
Muguk could potentially exploit additional high grade resources identified
in the surrounding region.

2.   GASADO
- EPITHERMAL GOLD-SILVER DEPOSIT
Gasado is an epithermal gold-silver deposit held under 4 Mining Rights on Gasado Island, 5 km off the south-west coast of South Korea.

Gasado is considered to be a high level, low sulphidation epithermal system developed over the 7 km long by 3 km wide island. Historical exploration by the previous operator indicated the existence of robust gold and silver mineralization 4 to 7 metres wide. Individual vein structures can be traced over up to 2.5 km strike lengths, with 9 separate mineralised vein systems identified. The vein systems are hosted within Cretaceous acid volcanic rocks.

Gasado has a reported historical resource estimate of 143,088 tonnes averaging 6 grams per tonne Au, and 434 g/t Ag, (using 6 g/t Au equivalent cutoff) defined by 55 drill holes. Within the historical resource estimate are high-grade shoots (greater than 10 g/t Au, 1000 g/t Ag) hosted in banded epithermal veins up to 9 m wide and surrounding stockwork network veins up to 35 m wide.

A qualified person has not done sufficient work to classify the historical resource as current mineral resources. The issuer is not treating the historical estimate as current mineral resources and the historical estimate should not be relied upon.

TERMS - ACQUISITION AGREEMENT

1.   SANGDONG

The Sangdong Acquisition Agreement calls for the following:
a. US$80,000 upon signing (paid), US$8,000 November 8, 2006, and US$16,000
January 7, 2007.
b. US$720,000 cash and $US800,000 in Company stock issued at a deemed price
of the then current 10 day market average at Closing (by February 28,
2007).
c. US$2.4 million cash and US$800,000 in Company stock issued at 6 months
after Closing; same amounts to be paid again 18 and 30 months after
Closing.
d. Spend US$800,000 in each of first and second years.
e. Spend US$2.4 million in each of years 3, 4 & 5, except spend at least
US$16 million if undertaking commercial production.
f. Oriental is Operator of the project, earns 51% ownership interest at
Closing, 19% by completing pre-feasibility within 5 years, and earns the
final 30% by commencing a feasibility study during year 5 and completing
the study within 18 months.
g. As consideration for the payments and share issuances noted in a-c
above, the Vendor shall provide Oriental with clear title to Sangdong free
of all encumbrances in exchange for retaining a 2% net smelter return on
all production from Sangdong.

2.   GASADO

The Gasado Acquisition Agreement calls for the following:

a.   US$20,000 upon signing (paid), US$2,000 on November 8, 2006, and
US$4,000 on January 8, 2007.
b. US$180,000 cash and US$200,000 in Company stock issued at a deemed price
of the then current 10 day market average at Closing (by February 28,
2007).
c. US$600,000 cash and US$200,000 in Company stock issued at 6 months after
Closing; same amounts to be paid again 18 and 30 months after Closing.
d. Spend US$200,000 in each of first and second years.
e. Spend US$600,000 in each of years 3, 4 & 5, except spend at least US$4
million if undertaking commercial production.
f. Oriental is Operator of the project, earns 51% ownership interest at
Closing, 19% by completing pre-feasibility within 5 years, and earns final
30% by commencing feasibility during year 5 and completing within 18 months
of year five.
g. As consideration for the payments and share issuances noted in a-c
above, the Vendor shall provide Oriental with clear title to Gasado free of
all encumbrances in exchange for retaining a 2% net smelter return royalty
on all production from Gasado.
TERMS - OPTION AGREEMENT

Option to acquire a portfolio of 22 advanced mineral projects

Terms for exercise of the Option are (a) US$10,000 upon signing the Option (paid), (b) US$50,000 cash and US$50,000 in Company stock issued at the then current market average, upon Closing, (c) US$1 million cash and US$1 million in Company stock issued at the then current market average, upon commencement of commercial production, and (d) reservation of 2% net smelter return royalty in favor of the vendor.

Oriental has given immediate notice of exercise of its Option right on the Muguk gold-silver project and the Chongyang tungsten project.

REGULATORY APPROVALS

The Acquisition and Option Agreements and Option exercises referenced above are all subject to regulatory approval and the approval of the TSX Venture Exchange.

FUTURE KOREAN EXPLORATION STRATEGY

A comprehensive exploration program is being initiated in Korea involving:
- Continued acquisition of additional identified molybdenum-tungsten, gold-
silver and copper-lead-zinc properties of high merit.
- Application for mining rights has commenced over large areas highly
prospective for base metal skarns.
- Helicopter-borne magnetometer geophysical survey over the base metal
skarn properties.
- Mapping, sampling and delineation of drill targets on the acquired
properties.
- Drill testing of acquired properties.
- Pre-feasibility studies on the Sangdong molybdenum deposit.
Oriental Minerals will take advantage of technical staff seconded by the vendor, consultants such as Bob Skrzeczynski from Longview Technical and in-country geological expertise such as Mr. Kim Wanjoong (12 years experience) and Mr. Christopher Sennitt (26 years experience), both with specific South Korean expertise. Bob Skrzeczynski has particular expertise in tungsten from his involvement in the discovery of the Watershed Tungsten deposit in Australia with the former Utah Development Company and is the former Commercial Manager for BHP Minerals Exploration in the Australasian region.

The Company's Co-Chairman, Damien Reynolds, said, "I am very excited that Oriental has capitalized on its current advantage as the only Western company involved in mineral exploration in Korea. The remaining resources at Sangdong alone represent an enormous opportunity for the Company and we think there is considerable potential to add to the historical resource base at each of the projects. We look forward to working closely with the vendor, Mr. Jae Youl Sim to maximize the value of these projects."

APPOINTMENT OF CFO

OTL has appointed Tom Needham as Chief Financial Officer. Mr. Needham is a financial executive with over 15 years experience working with public companies in mineral exploration and oil and gas sectors, including companies with multi-national operating subsidiaries.

QUALIFIED PERSON

The qualified person for the purposes of this release is Mr. Mark Dugmore.

About Oriental Minerals Inc.

Oriental Minerals is a Canadian-based exploration company exploring for world-class mineral deposits in South Korea. The Company's current projects include tungsten-molybdenum, base metals and gold-silver properties with significant known mineralization and excellent regional potential.

South Korea is an independent country with strong ties to the USA and key trading partner with Canada and Australia. The country has an excellent infrastructure, established and workable Mining Laws, and available trained mining workforce. These factors combined with an in-country bi-lingual team, assists OTL in capturing a first class country wide, diversified minerals portfolio.

On behalf of the Board of Directors,
Damien Reynolds
Director and Co-Chairman
Statements in this news release, other than purely historical information, including statements relating to the Company's future plans and objectives or expected results, constitute Forward-looking statements. Such statements are based on numerous assumptions and are subject to all the risks and uncertainties inherent in the Company's business, including risks related to mineral exploration and development. Consequently, actual results may vary materially from those described in the forward-looking statements.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Oriental Minerals Inc.
    Damien Reynolds
    Director and Co-Chairman
    Phone (604) 681-5755
    www.orientalminerals.com