Steffen, Robertson & Kirsten (UK) Ltd (SRK) has completed a preliminary assessment study (“PAS”) on Oriel’s 100% owned Voskhod Chrome deposit located in the Khromtau District of the Aktobe Region of western Kazakhstan. On the basis of the PAS, Oriel has decided to proceed with the development of the project simultaneously with the completion of a definitive feasibility study. Oriel purchased Voskhod in February 2005 for the equivalent of US$15.0 million in cash and the allotment of 9,181,352 shares, at the time valuing Voskhod at US$25.0 million

The key findings of the SRK study are as follows:

• Project Net Present Value (NPV) of US$329 million (pre tax) with an Internal Rate of Return (IRR) 62%, using a 10% discount rate and a chromite ore (high grade lumpy and fines concentrate) sale price of US$170 per ton.
• Pre-production construction capital expenditure under US$50 million to produce 700,000t per annum of chromite ore from an underground mining and beneficiation operation.
• Cash operating costs of US$25 per ton of ore mined equating to a cash cost of US$34 per ton of chromite product sold.
• Annual gross revenue from sales of US$85 million.
• Heinz Pariser report gives chromite ore (lumpy and fines concentrate) sale prices ranging from US$142 to US$200 per ton to markets in Russia and China at the current time depending on the grade and penalty constituents.

SRK undertook an audit of the Soviet compiled Voskhod resource estimate in August 2004 and was sufficiently confident of the data set to place them into the AusIMM JORC (1999) classified Indicated and Inferred categories.

SRK’S Audited AusIMM JORC (1999) Statement, August 2004
Resource Estimate Indicated Mineral resource Inferred Mineral Resource
Tonnes, million 18.7 0.59
Grade, %Cr¬2O3 46.2 14.56

This resource statement complies with National Instrument (NI) 43-101 standards for reporting of resources and was prepared by Dr Alwyn Annels of SRK. The economic estimate has been based entirely on the Indicated resources and was prepared by Mr M Beare of SRK in July 2005. Dr Annels and M Beare are both designated as qualified persons under the terms of NI 43-101

Executive Chairman, Dr Sergey V Kurzin said; “The results of the PAS study give the Board of Directors significant confidence in the Voskhod asset and accordingly we have decided to fast track the development of the mine by approving the design and construction of an exploration decline to access the chrome orebody. In summary, the selling price is higher, the operating costs are lower and as a result the project economics are better than our preliminary estimates at the time of purchasing this high return asset. Financing of this initial phase of the project will be provided entirely from Oriel’s existing cash reserves which presently stand at US$44.5 million, and we anticipate no further equity dilution as a result of taking this particular asset to cashflow, expected by mid 2007.”

SRK was assisted in the production of the PAS by Heinz Pariser, Alloy Metals & Steel Market Research (“Heinz Pariser”), which provided the chrome ore marketing and pricing data. Mintek, South Africa, was used for the process options and preliminary plant design. The SRK study authors were Dr A Annels and M Beare, both Qualified Persons under the terms of NI 43-101.

Voskhod lies within a layered ultramafic complex, referred to as the Kempirsayskiy Massif, together with up to 80 other deposits discovered since 1936. This massif is 82 km long in a NNE direction and covers an area of 920 km2. The host rocks to the deposit have been subjected to hydrothermal alteration and now consist of serpentinites and serpentinized dunites.

The Voskhod deposit consists of one large lens of massive to disseminated chromite with up to 9 smaller pods or footwall protrusions. It is a totally “blind” deposit, lying as it does at depths of 98 to 440 m with a northeasterly dip of 28o. Two grades of ore are recognized, “Rich” and “Subordinate” which are separated on the basis of a grade threshold of 45% Cr2O3 classified under the Russian resources / reserve system as C1 plus C2 resources, as approved by the State Committee of Resources (SCR). In January 2003 the SCR determined this deposit to contain a total of 18.7 Mt at a grade of 46.2% Cr2O3. In August 2004 SRK conducted an audit of the SCR estimate and were sufficiently confident of the data presented to place these Russian C1 plus C2 resources into the “Indicated Category” as defined by the AusIMM, JORC (1999) classification system.

In April 2005 Oriel initiated a comprehensive diamond drilling campaign on the deposit, monitored in its entirety by SRK personnel, to confirm previous assay data and to provide geotechnical and hydrological information for developing the mine design. As at 20 August 2005 a total of 34 holes have been drilled totalling 12,334 metres. Ore intersections have confirmed the tenure of the deposit and assaying of the ore intersections is progressing.

SRK notes that Voskhod is situated in a mining district generally well served by infrastructure. Voskhod is adjacent to the Donskoy GOK mining complex and the aptly named town of Khromtau. SRK considers that there are no significant obstacles in the provision of infrastructure for a mining operation. Adequate power is expected to be supplied from a state-owned substation 15 km away via a dedicated power line. Process water for the mine operations will be sourced from the continual pumping of surplus water from underground.

 

The mine will be fully mechanised and SRK has proposed a ramp access to the orebody with mining by a sub level caving system for ore production of 700,000 tons per annum giving a projected mine life of 25 years. Mined grades delivered to the beneficiation plant have been estimated at 43.7% Cr2O3 after mine recovery and dilution factors have been applied. Mintek has provided process options to produce a number of saleable chromite ore products. The plant would comprise crushing, milling, dense media separation and gravity concentration units with sufficient flexibility to allow high grade ore to be crushed and screened to form a metallurgical ‘lumpy’ product should selective ore mining prove feasible.

It is expected that the proposed plant will be able to produce two products, namely a metallurgical ‘lumpy’ product grading approximately 49% Cr2O3 and a metallurgical fines concentrate grading approximately 55% Cr2O3. Estimated total annual sales are expected to be in the order of 511,000 tons split approximately as to 322,000 tons for the ‘lumpy’ material and 189,000 tons for the fines concentrate.

Marketing data supplied by Heinz Pariser has indicated that the sale price of chrome ore products from Kazakhstan during the first quarter 2005 have ranged from US$142 to US$200 per ton. Oriel is in discussion with a number of interested consumers of the Voskhod products both in China and Russia and will be pursuing these markets aggressively over the coming months.

Pre-production capital costs have been estimated at US$48 million prior to initial revenues from chromite production. This estimate does not include financing, administration and taxation costs. Cash operating costs over the life of the mine have been estimated at US$24.8 per ton of ore mined which equates to a cash cost of US$34 per ton of chromite product sold, based on an assumed yield of 73% saleable products from the run of mine ore. The project NPV, pre financing charges and government taxes, at a chromite sale price of US$170 per ton and a 10% discount rate is given as $329 million with an IRR of 62%. The range of NPV’s and IRR’s at chromite sale prices of US$142 and US$200 per ton are US$212 million at 46% and $454 million at 78% respectively and indicate extremely robust project economics.

Our advisors, Endeavour Financial, have provided Oriel with early confidence that it is likely that project debt funding of up to US$40 million could be available to finance the development of Voskhod. The level of Oriel’s cash reserves and the amount of potential debt financing places Oriel in a position where it does not envisage any requirement for further equity raising for the development of Voskhod.

The SRK report has provided Oriel with sufficient confidence to proceed to the next stage of project development, notwithstanding a Definitive Feasibility Study (DFS) is yet to be completed. SRK, as lead engineer, is preparing a detailed proposal to undertake the DFS for completion by 2nd quarter 2006 in conjunction with Mintek on process testwork and design and an internationally recognised process engineering company. As part of this fast track process Oriel has decided to commence the design and construction of the access ramp to the Voskhod orebody and has commissioned SRK to prepare detailed designs for the ramp and associated development works for submission to the relevant Kazakh authorities for approval to start engineering works during 2nd quarter 2006.

Oriel confidently expects production of chromite ore from the Voskhod deposit to commence mid 2007.

 

Shevchenko

Further to earlier announcements Oriel now expects that the completion of the Definitive Feasibility Study (“DFS”) will be completed in early 2006. The timetable for the completion of the DFS has been pushed out by delays in receiving final tenders and re-engineering work on some of the more complex production and infrastructure models.

This revised timetable has not impacted on progress in other areas and Oriel with its advisor Endeavour Financial, has short listed a number of multilateral and commercial international banks. Indicative term sheets for their participation in funding the debt portion of the Shevchenko project are currently under review.

In addition, Oriel continues to receive excellent support from both the regional and the Federal Government in Kazakhstan for both Voskhod and Shevchenko and this is expected to continue, as the projects develop, into material assets for the company.
_______________________________________________________

Dr Alwyn Annels, PhD, CEng, FIMMM is a Principal Mining Geologist at SRK (UK) Ltd, and was co-author of the Preliminary Assessment Study. He is a qualified person in accordance with definitions set out in National Instrument 43-101 and he has consented to this announcement and reference to his report herein.

Mr Mike Beare, BEng, CEng, MIMMM, Senior Mining Engineer at SRK (UK( Ltd), and was co-author of the Preliminary Assessment Study. He is a qualified person in accordance with the definitions set out in National Instrument 43-101 and he has consented to this announcement and reference to his report herein.

ENDS

For further information, please contact:
Dr Sergey V Kurzin, Executive Chairman, Oriel Resources plc
Tel: +44 (0) 20 7514 0590

Dr Nic A Barcza, Managing Director, Oriel Resources plc
Tel: +44 (0) 20 7514 0590

Nick Clarke, Director of Mining, Oriel Resources plc
Tel: +44 (0) 20 7514 0590

Jonathon Brill/Billy Clegg, Financial Dynamics
Tel: + 44 (0) 20 7831 3113
Vanguard Shareholder Solutions
Tel: 1-800 866-788-9288