Oriel Resources plc (the “Company”) is pleased to announce it has completed the acquisition of
Oriel Resources plc, the AIM and Toronto listed nickel and chrome developer and gold exploration and development company, today announces its first full results for the 18 months ended 31 December 2004.

Highlights:

During the period:

• Commenced Definitive Feasibility Study on Shevchenko Nickel project – due for completion in September 2005
• Management team strengthened with appointment of Dr Nic Barcza as Managing Director and Nick Clarke as Director of Mining
• Strong cash position at year end and currently stands at £25.7m (16 May 2005)

After period end:

• Oriel has agreed to sell its 14% interest in the Varvarinskoye gold-copper project for $7.25m (£ 3.9m) cash.
• Completed acquisitions of Voskhod chrome deposit in January 2005 and Tokhtazan gold deposit in May 2005
• Successful listing on Toronto Stock Exchange in February 2005

Dr Sergey Kurzin, Executive Chairman of Oriel Resources said:

“We have made strong progress since the listing on AIM a year ago.

In the coming months we will complete the definitive feasibility study on the Shevchenko nickel project and be well underway on the definitive feasibility study for the Voskhod chrome project.

“We have a strong management team and substantial cash resources in place to allow us to deliver on our strategy. With our strong partnerships and national governmental support in the markets in which we operate, Oriel’s management looks forward with confidence to the year ahead.”



For further information please contact:

Dr Sergey V Kurzin, Executive Chairman, Oriel Resources plc
Tel: +44 (0) 20 7514 0590
http://www.orielresources.com

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

Jonathon Brill/Billy Clegg, Financial Dynamics
Direct: + 44 (0) 20 7831 3113

Paul Lathigee, Vanguard Shareholder Solutions
Direct: + (1) 604 608 0824

CHAIRMAN’S STATEMENT

I am pleased to present the results of Oriel Resources plc (“Oriel”) for the 18 months to 31 December 2004. This is Oriel’s first full results as a quoted company and it covers a period in which considerable progress has been made as a company and as a team.

A number of significant milestones have been achieved:

• Oriel’s shares were admitted to trading on the AIM market of the London Stock Exchange in a £40.6m (gross) placement in March 2004, and subsequently listed on the Toronto Stock Exchange in February 2005.
• A committed team comprising Oriel's management, consultant partners and contractors has been assembled to drive our two principal projects forward.
• The preliminary feasibility study on our flagship Shevchenko nickel project was completed with a positive result and the definitive feasibility study is progressing well.
• After period end we acquired the Voskhod chrome asset funded by raising over £13 million (gross) in February 2005.
• Also after period end, in May 2005 we agreed the terms of sale of Oriel’s 14% interest in Varvarinskoye.
• A solid financial base has been established – £25.7m (US$48.0m) in cash at 16 May 2005 and this balance does not include the proceeds from the sale of Varvarinskoye.

In a relatively short period of time, Oriel has become a sizeable ferroalloy resources business with substantial nickel and chrome assets in Kazakhstan. In addition a number of exciting gold exploration targets continue to be held by Oriel. We now have a strong management team, substantial cash resources, strong commercial partnerships and relevant governmental support, all of which we believe will provide a sound platform for future growth.

Since our admission to trading on AIM in March 2004, Oriel has aggressively pursued the development of its projects. The admission itself was the largest funded mining IPO in the history of AIM, and has provided the company with a solid financial foundation. As at 16 May 2005, we have $48.0m (£25.7m) in the bank. This balance of funds does not include the US$7.25m proceeds from the sale of Varvarinskoye.

 

Oriel’s subsequent listing on the Toronto Stock Exchange was a particularly positive move for Oriel. The listing will provide Oriel with access to the Canadian marketplace, which is a knowledgeable follower of the natural resources sector, whilst providing greater liquidity for the company’s shares. We look forward to expanding our shareholder base into North America through this listing.


Oriel has generated quality assets

Our major projects are characterised by their strategic locations, well developed local and regional transport infrastructure, access to competitive local power and labour rates. Also Kazakhstan’s location provides ready access to end user markets in Russia, Europe and China.

Ferroalloy projects

Oriel’s principal assets are the Shevchenko nickel project (“Shevchenko”) which is being developed on an aggressive timeline, together with the recently acquired Voskhod chrome deposit (“Voskhod”), both situated in north western Kazakhstan. Accordingly, the group now has two significant ferroalloy related deposits which it is currently developing.


Shevchenko Nickel Project, Kazakhstan

Against a background of growing world demand for nickel, and the significant advantages of the local infrastructure and resources available in Kazakhstan, Oriel increased its interest in Shevchenko to 90% in May 2004. We achieved a very significant step forward with the positive result of the Preliminary Feasibility Study (“PFS”). The PFS was prepared by Mintek of South Africa, assisted by Bateman Metals Ltd (“Bateman”), a ThyssenKrupp Group company (Polysius AG), Wardell Armstrong International Ltd, and GBM Minerals Engineering Consultants Ltd. We are now confident that the Definitive Feasibility Study (”DFS”), led by Bateman and including technical input from Polysius AG, Mintek, and Wardell Armstrong International Ltd, will be completed in the third quarter of 2005.

Oriel has rapidly progressed Shevchenko through the selection of stable and long term partners such as Bateman and Polysius AG. The rapid progress we have been able to make will help us bring the project into commercial operation. I am pleased with the appointment of Bateman, with support from an international group such as Polysius AG, to act as our lead engineers and partners on the next stage of development of Shevchenko. Their engineering track record and experience of working in Kazakhstan will be positive for Shevchenko.

In the likely event of a successful DFS, it is expected that financing for Shevchenko will be sought in the fourth quarter of this year. Endeavour Financial (“Endeavour”) and Bateman Project Finance (“BPF”), as our project financial advisers, have been contracted to assist Oriel in arranging the debt portion of the required project finance. All going well, we can expect to enter the construction stage this time next year. Endeavour has wide experience in project finance initiatives within the Former Soviet Union and has provided financial advisory services to the mining and minerals industries for 17 years. I look forward to the success of the partnerships provided by both Endeavour and BPF. I am also pleased that we have the support of another


ThyssenKrupp Group company, namely ThyssenKrupp Metallurgie, who have signed a letter of intent for the purchase of up to 100% of the production of the ferronickel from Shevchenko.

We are targeting to complete the transition from DFS through to production in approximately two years which would be an outstanding achievement for Oriel. We believe that this target is realistic and with our combined team in place it is achievable.


Voskhod Chrome Deposit, Kazakhstan

In February 2005, Oriel completed the purchase of the Voskhod chrome deposit, funded by way of a private placement of new equity securities.

Whilst adding an additional commodity to Oriel’s portfolio, Voskhod complements Shevchenko in terms of the targeted end-user market and the expected project timeline. I feel that Voskhod provides an essential contribution to building a long term asset base for Oriel as a significant supplier to the stainless steel industry and one of only a few combined nickel/chrome suppliers to the stainless steel market.

Oriel has commissioned SRK (UK) Ltd to prepare an initial feasibility study and Mintek to undertake confirmatory ore beneficiation testwork and expects the report to be completed during the second quarter of 2005. The study will examine the option for direct sale of high grade chrome ores and concentrates to markets in Russia and China. As with Shevchenko, Voskhod is expected to benefit from low production costs.

Gold Projects

Oriel has also been pursuing non-ferroalloy properties and in the course of 2004 has undertaken exploration or due diligence on a number of gold and silver properties in the Former Soviet Union. In February 2005 we announced that the board was considering the most appropriate structure for its gold related activities. No decision has yet been made, and the Board continues to explore the available options.

Varvarinskoye, Kazakhstan Oriel has just announced the agreed terms of sale of its 14% free carried interest in this project. The sale of this project, which is operated by European Minerals Corporation, represents a significant profit of approximately £3.6m to Oriel.

Taboga, Russia We continue to hold our option over this project and the extent of our exploration work will be determined by our future strategy.

Tokhtazan, Kyrgystan This very prospective property was under negotiation in 2004 and its acquisition was completed and announced in May 2005. Apart from due diligence, no significant works have yet been undertaken.

Taldy Bulak, Kyrgystan This is another highly prospective gold / copper project over which Oriel holds an exclusive option to purchase. Review of geological data and due diligence is currently being undertaken.

Urup Gold, Kuril Islands, Russia The results of our exploration programme confirmed the high grade of the main target. However the tonnage potential is more limited than originally thought

and a reinterpretation of data following the results of this season’s work has indicated that this project may not be appropriate for Oriel and provision has been made in the accounts against the carrying value of this asset.

Togolok Gold, Kyrgyzstan In 2004 we completed drilling, trenching and geophysical campaigns on the Togolok gold deposit. The scale and nature of the deposit as interpreted from our exploration results indicate that the Togolok deposit does not meet Oriel’s requirements. No further work will be conducted and we will not exercise the option to acquire this project.

 

Management Team & Quality Partnerships

Since its inception, Oriel has established a strong management team with experience in building successful teams and effecting and developing exploration strategies worldwide.

In March 2005 we announced a number of changes in the board including the appointment of Dr Nic Barcza as Managing Director. He brings some 25 years’ experience in the area of ferroalloy smelting and processing. He will be of prime importance to the development of the key metallurgical technologies and processes for Shevchenko and recently acquired Voskhod.

Over the past 12 months the company has undertaken additional recruitments which increases further the strength and breadth of the team. In June 2004, Nick Clarke joined as Chief Operating Officer, and has subsequently been appointed Director of Mining. Nick brings with him over 30 years’ worldwide mining experience and has worked in production management roles in a number of challenging environments. In August 2004 we appointed David Swan as our Chief Financial Officer and Company Secretary and most recently he has been appointed to the board as Finance Director.

Reflecting the company’s evolution and following the listing of Oriel shares on the Toronto Stock Exchange, it was considered appropriate to propose two Canadian non-executive directors. The appointment of Roger T Richer and John D Reynolds to the Board will be confirmed at the forthcoming Annual General Meeting.

Oriel now possesses a highly skilled, experienced and committed staff with a proven track record. The benefits of having a strong and highly technical team can be witnessed by the rapid progress of Shevchenko through to a positive pre-feasibility study in five months. The achievements to date have only been made possible by the expertise and hard work of all our employees. I would therefore like to thank each individual for their contribution and commitment during 2004.

At this point I would like to express my appreciation to Stephen Dattels for his contribution to Oriel during the early days and since its listing on AIM. Stephen has resigned to spend more time with his family and pursue other interests.


Financial Results

Oriel remains in the development and exploration stage on all projects and, therefore, losses have been incurred throughout the period. The loss for the period ended 31 December 2004 includes exploration expenditure of £7.5m and administration expenditure of £4.2m. The retained loss at 31 December 2004 is £10.5m.

Outlook

Oriel’s operations have evolved into two distinct commodity groups, ferroalloys and gold. With this in mind the Board continues to assess the most appropriate structure for the group's activities to ensure we provide the best value for shareholders together with the best operating potential for Oriel as a company.

In the next 12 months, our objectives are:

• Shevchenko nickel project - definitive feasibility study to be completed
• Project finance for Shevchenko to be secured
• Voskhod - definitive feasibility study to be well advanced
• Definition and implementation of the strategy for our gold assets

We will shortly be issuing our full annual report to shareholders and this will include notice of our Annual General Meeting. I would encourage you to attend as I look forward to meeting our shareholders. We have a number of important resolutions which include an increase in our authorised capital; amendment to our Articles to increase the number of directors to accommodate recent appointments; and a renewal to the authority for the directors to issue shares.


Dr Sergey V Kurzin
Executive Chairman

To see Oriel Resources Plc Consolidated profit and loss account for the period ended 31 December 2004 please click here or to save the document on your computer please right-click your mouse here and choose "Save Target As" from the menu.