Oriel Resources Plc ("Oriel" or "the Company") is a nickel and gold mining exploration and development company active in Russia and other Republics of the Former Soviet Union.
Highlights
11 March 2004, shares began trading on the Alternative Investment Market of the London Stock Exchange. The company raised £40.56 million, and after placing 62.4 million shares of 1p each at a market price of 65p per share, the group was initially valued at £104.5 million.
6 May 2004, announced that an initial scoping exercise carried out by Mintek in South Africa, utilising a proposed DC Arc furnace technology, suggested that the Shevchenko Nickel Project in Kazakhstan could be put into commercial operation with low capital and operating costs.
6 May 2004, signed a contract with Mintek South Africa to complete test work on a 6 tonne sample for a pyrometallurgical process to produce a ferronickel containing +20% nickel from the Shevchenko Nickel Deposit in Kazakhstan.
6 May 2004, increased its ownership of Muzbel from 51% to 90% in accordance with an exclusive option agreement executed in November 2003.
30 July 2004, announced receipt of the Shevchenko Pre-Feasibility pyrometallurgical results from Mintek, which indicate that the ore is capable of producing a ferronickel product in excess of 20% nickel with recoveries of +90%.
July-August 2004, drill programs commenced at both the Urup and Togolok Gold Projects.
8 September 2004, the results of the Shevchenko Pre-Feasibility study were announced, confirming a pre-tax NPV of US$489 million discounted at 10% at a nickel price of US$4.50 per pound.
As part of the ongoing feasibility work a 450 tonne sample of Shevchenko ore has been shipped to Mintek in South Africa for a demonstration scale programme in their DC Arc Furnace facility for testwork to commence late 2004.
Executive chairman Sergey Kurzin said: "I am very gratified by the progress we have made since the company was floated on the Alternative Investment Market in March. In particular, independent consultants have confirmed the economic viability of the Shevchenko nickel project and I am looking forward to reporting on further developments at the yearend."
For further information please contact:
Sergey V Kurzin
Executive Chairman
Oriel Resources
18 Upper Brook Street
London W1K 7PU
Tel +44 (0)20 7514 0590
Or
Tim Blackstone
Britton Financial PR
62 Britton Street
London EC1M 5UY
Tel + 44 (0)20 7251 2544
Chairman’s Statement
Oriel Resources Plc ("the Company") was admitted to the Alternative Investment Market ("AIM") in London on 11 March 2004 ("Admission"), raising £40.56 million shares of 1p each at a market price of 65p per share, giving the group an initial valuation of £104.5 million. From this launch date, management has assembled a strong and highly technical team, taking its principal project the Shevchenko Nickel Laterite Project through to a positive Pre-Feasibility study in five months. In addition, first-phase drilling programs were initiated in July-August at both of the initial gold projects Urup and Togolok.
Since the company’s flotation we have justified shareholders initial enthusiasm. The Shevchenko project has made enormous progress already. Against a background of growing world demand for nickel and the significant advantages of the local infrastructure and resources, the Company believes we should be able to bring on stream one of the world’s lowest cost operations in record time.
Management
During the period, the Company appointed Nicholas Royston Clarke as Chief Operating Officer and Director. Nick is a Chartered Engineer with 30 years mining experience since qualifying from the Camborne School of Mines. Nick has worked in production management roles in South Africa, Ghana and Saudi Arabia, and has experience from a number of world-class mines. The Company also appointed Geoffrey Thomas Bush as a Non-Executive Director. Geoffrey has extensive knowledge in international corporate social responsibility matters, in addition to financial and general management experience. In addition David Swan has been appointed as Chief Financial Officer. David is a Chartered Accountant, with a wide experience of the mining and exploration industry. David has gained experience in a number of IPO and merger negotiations and has been responsible for the review and assessment of many mining opportunities.
Future Projects
Oriel is focussing on the acquisition of advanced mining projects in the Former Soviet Union and various alternatives to rationalise the Company’s assets to maximise the clearly predominant value of the Shevchenko Nickel Project to Oriel’s shareholders.
Group Results
Loss before taxation for the period ended 30 June 2004 was £4,383,850, with a loss per share of 5.0 pence. Cash reserve as at 30 June 2004 was £30,429,635.
30 September 2004
Oriel Resources Plc announces Interim Results for the period 2 July 2003 to 30 June 2004
The group results reflect the conservative accounting policy to charge to profit and loss all expenditures on all projects which at balance date had not reached a stage whereby economic viability or recoverability could be positively determined. Expenditures are currently in line with expectations.
Review of Operations
Shevchenko Nickel Project
Prior to admission to AIM, Oriel had acquired a 51% interest in the Shevchenko Laterite Nickel Project ("Shevchenko") though the Kazakhstan registered legal entity Muzbel LLP. Shevchenko is Oriel’s most advanced minerals project with a Republic of Kazakhstan State Balance resource of 599,000 tonnes of nickel. A program of verification of existing reserves/resources and a scoping study on the metallurgical properties of the ore was immediately commenced following Admission.
In May 2004, Mintek of South Africa completed a scoping exercise which suggested that Shevchenko could be placed into commercial operation with low capital and operating costs. Upon receipt of this report, the Company exercised its options to increase its interest in the project from 51% to 90%. The preliminary results of the metallurgical work at this stage demonstrated that the ore was amenable to treatment by both hydrometallurgical and pyrometallurgical processes. However, the Company opted to pursue the pyrometallurgical route as it is a well established process with a lower capital cost than the more recently developed hydrometallurgical processes being introduced into Western Australia. In addition, the lead time is faster and the hydrometallurgical route less advanced.
In June 2004, the Company commissioned Mintek as Project Managers and Bateman Metals Ltd of South Africa to undertake a Pre-Feasibility study for the development of Shevchenko to assess the process parameters and provide capital and operating cost estimates for the furnace operations. GBM Minerals Engineering Consultants of the UK was also commissioned to provide capital and operating costs for the general mine infrastructure. Wardell Armstrong International, UK (WAI) provided resource and reserve statements, mine production schedules, mine capital and operating cost estimates in addition to providing an initial Environmental Scoping Study.
In tandem with the above, a program of 6,400 metres of infill and confirmation drilling and remodelling of four of the major ore bodies was completed in July. The results from the reconciliation drilling, based on total length-weighted average are within 5% of the original Soviet data. From the four main ore bodies, WAI has indicated a total resource in the Measured and Indicated Categories of some 34.3Mt @ 1.02% Ni. A further Inferred resource of 11.7Mt @ 0.97%Ni is present at Tarasov, which WAI believes will transfer to Indicated status once the results of recent infill drilling have been incorporated into the model.
The Company has undertaken trial mining on the main ore bodies and has moved some 45,000 tonnes of material from three locations to produce a surface ore stockpile of approximately 14,000 tonnes. The Company mined and shipped a 450 tonne representative sample from the exposed pits for the demonstration scale smelting campaign at Mintek to commence in Autumn 2004 as a critical part of the final Feasibility Study.
The Pre-Feasibility Study released on 8 September 2004 established that Oriel should be able to achieve pyrometallurgical recoveries of +90% into a refined ferronickel product grading +20% nickel from a DC Arc smelting process. Annual refined ferronickel production from year five is expected to be about 140,000 tonnes containing 31,000 tonnes of nickel and maximum capital exposure has been estimated at US$346 million. The pre-tax net present value of the project discounted at 10% and using a nickel price of US$4.50 per pound was calculated at US$489 million.
Review of Operations
Shevchenko Nickel Project
Prior to admission to AIM, Oriel had acquired a 51% interest in the Shevchenko Laterite Nickel Project ("Shevchenko") though the Kazakhstan registered legal entity Muzbel LLP. Shevchenko is Oriel’s most advanced minerals project with a Republic of Kazakhstan State Balance resource of 599,000 tonnes of nickel. A program of verification of existing reserves/resources and a scoping study on the metallurgical properties of the ore was immediately commenced following Admission.
In May 2004, Mintek of South Africa completed a scoping exercise which suggested that Shevchenko could be placed into commercial operation with low capital and operating costs. Upon receipt of this report, the Company exercised its options to increase its interest in the project from 51% to 90%. The preliminary results of the metallurgical work at this stage demonstrated that the ore was amenable to treatment by both hydrometallurgical and pyrometallurgical processes. However, the Company opted to pursue the pyrometallurgical route as it is a well established process with a lower capital cost than the more recently developed hydrometallurgical processes being introduced into Western Australia. In addition, the lead time is faster and the hydrometallurgical route less advanced.
In June 2004, the Company commissioned Mintek as Project Managers and Bateman Metals Ltd of South Africa to undertake a Pre-Feasibility study for the development of Shevchenko to assess the process parameters and provide capital and operating cost estimates for the furnace operations. GBM Minerals Engineering Consultants of the UK was also commissioned to provide capital and operating costs for the general mine infrastructure. Wardell Armstrong International, UK (WAI) provided resource and reserve statements, mine production schedules, mine capital and operating cost estimates in addition to providing an initial Environmental Scoping Study.
In tandem with the above, a program of 6,400 metres of infill and confirmation drilling and remodelling of four of the major ore bodies was completed in July. The results from the reconciliation drilling, based on total length-weighted average are within 5% of the original Soviet data. From the four main ore bodies, WAI has indicated a total resource in the Measured and Indicated Categories of some 34.3Mt @ 1.02% Ni. A further Inferred resource of 11.7Mt @ 0.97%Ni is present at Tarasov, which WAI believes will transfer to Indicated status once the results of recent infill drilling have been incorporated into the model.
The Company has undertaken trial mining on the main ore bodies and has moved some 45,000 tonnes of material from three locations to produce a surface ore stockpile of approximately 14,000 tonnes. The Company mined and shipped a 450 tonne representative sample from the exposed pits for the demonstration scale smelting campaign at Mintek to commence in Autumn 2004 as a critical part of the final Feasibility Study.
The Pre-Feasibility Study released on 8 September 2004 established that Oriel should be able to achieve pyrometallurgical recoveries of +90% into a refined ferronickel product grading +20% nickel from a DC Arc smelting process. Annual refined ferronickel production from year five is expected to be about 140,000 tonnes containing 31,000 tonnes of nickel and maximum capital exposure has been estimated at US$346 million. The pre-tax net present value of the project discounted at 10% and using a nickel price of US$4.50 per pound was calculated at US$489 million.
Oriel expects to complete the Definitive Feasibility Study during Q2 of 2005 pending expected positive results from the 450 tonne bulk test sample to be completed by Mintek commencing late 2004. In addition, Oriel has initiated ore flash drying and calcining test work which is being undertaken by Polysius AG in Germany.
Discussions with prospective financing sources are underway and lead engineers for the Feasibility Study will be appointed in November 2004.
Other Projects
In addition to the success and progress to date of the Shevchenko Project, the Company has also invested resources in a number of gold exploration projects, in particular the Urup and Togolok projects.
Urup Gold Project
Through its subsidiary Urup GGC, Oriel has been issued a 5 year Exploration License over a 70 sq km area of Urup Island, located approximately 500 km east of Sakhalin Island in Far East Russia. Epithermal gold mineralization was discovered there by the State Unitary Company Sakhalin Geological Expedition, and the two main projects Kupol and Aynskoye were trenched in 2001 and 2002. Based on the results of these trenches (without drilling) the Sakhalin Geological Expedition estimated that the Kupol prospect alone had potential for more than one million ounces of gold mineralisation. Trench sample results over an area of approximately 100 by 150 metres at Aynskoye averaged approximately 3g/t Au. Numerous anomalous rock chip samples were collected over much of the 70 sq km license area, indicating potential for additional prospects.
Oriel initiated a drilling program in the second half of 2004, to confirm the potential of Kupol and Aynskoye and to commence exploring the remainder of the license area. During July, the Company mobilised a drilling camp, equipment and personnel to Urup Island. The establishment of this camp on the island was a major logistical achievement. Diamond drilling commenced in August, upon establishment of the camp and access roads, and to date approximately 900 metres of drilling and 300 linear metres of trenching has been completed. In addition ground magnetics, IP and EM has been completed over the Kupol and Aynskoye areas. This programme continues at the date of this report; initial drillhole results are expected to be released in early October.
Togolok Gold Project
The Togolok Gold Project (Togolok) is located in a known mineralised belt in the Tien Shan Mountains of southeastern Kyrgyzstan. Altitudes range from 2,200m to 4,550m above sea level. Exploration targets comprise a series of sub-parallel predominantly quartz-gold-sulphide veins in two main zones, Togolok and Dzhangart. A 1997 Kyrgyz Resource of over 300,000 oz has been estimated for the central area of Togolok, defined from trenching, nine drillholes and an adit. WAI suggests resources in the central part of the Togolok body contain approximately 200,000 oz from surface down to the adit level and that further resources exist below this depth.
Oriel acquired a 51% stake in the project, with the option to purchase up to 95%, in order to explore for extensions to the known mineralisation along a corridor of mineralisation and alteration extending for approximately 4km to the northeast of the known resource. In addition to repairing existing access to the project, approximately 2000 metres of drilling from 8 holes and 650 linear metres of trenching have been completed. An IP and ground magnetic survey has also been conducted over a 1.5km sq. area.
Discussions with prospective financing sources are underway and lead engineers for the Feasibility Study will be appointed in November 2004.
Other Projects
In addition to the success and progress to date of the Shevchenko Project, the Company has also invested resources in a number of gold exploration projects, in particular the Urup and Togolok projects.
Urup Gold Project
Through its subsidiary Urup GGC, Oriel has been issued a 5 year Exploration License over a 70 sq km area of Urup Island, located approximately 500 km east of Sakhalin Island in Far East Russia. Epithermal gold mineralization was discovered there by the State Unitary Company Sakhalin Geological Expedition, and the two main projects Kupol and Aynskoye were trenched in 2001 and 2002. Based on the results of these trenches (without drilling) the Sakhalin Geological Expedition estimated that the Kupol prospect alone had potential for more than one million ounces of gold mineralisation. Trench sample results over an area of approximately 100 by 150 metres at Aynskoye averaged approximately 3g/t Au. Numerous anomalous rock chip samples were collected over much of the 70 sq km license area, indicating potential for additional prospects.
Oriel initiated a drilling program in the second half of 2004, to confirm the potential of Kupol and Aynskoye and to commence exploring the remainder of the license area. During July, the Company mobilised a drilling camp, equipment and personnel to Urup Island. The establishment of this camp on the island was a major logistical achievement. Diamond drilling commenced in August, upon establishment of the camp and access roads, and to date approximately 900 metres of drilling and 300 linear metres of trenching has been completed. In addition ground magnetics, IP and EM has been completed over the Kupol and Aynskoye areas. This programme continues at the date of this report; initial drillhole results are expected to be released in early October.
Togolok Gold Project
The Togolok Gold Project (Togolok) is located in a known mineralised belt in the Tien Shan Mountains of southeastern Kyrgyzstan. Altitudes range from 2,200m to 4,550m above sea level. Exploration targets comprise a series of sub-parallel predominantly quartz-gold-sulphide veins in two main zones, Togolok and Dzhangart. A 1997 Kyrgyz Resource of over 300,000 oz has been estimated for the central area of Togolok, defined from trenching, nine drillholes and an adit. WAI suggests resources in the central part of the Togolok body contain approximately 200,000 oz from surface down to the adit level and that further resources exist below this depth.
Oriel acquired a 51% stake in the project, with the option to purchase up to 95%, in order to explore for extensions to the known mineralisation along a corridor of mineralisation and alteration extending for approximately 4km to the northeast of the known resource. In addition to repairing existing access to the project, approximately 2000 metres of drilling from 8 holes and 650 linear metres of trenching have been completed. An IP and ground magnetic survey has also been conducted over a 1.5km sq. area.
Varvarinskoye
The Company maintains a 14% earned working interest in the 2.22 Moz Varvarinskoye Gold-Copper Project in northern Kazakhstan, which is being advanced to production financing.
New Projects
Oriel is focussing on the acquisition of advanced mining projects in the Former Soviet Union. The Company is looking at various alternatives to rationalise the Company’s assets and to maximise the clearly predominant value of the Shevchenko Nickel Project to Oriel’s shareholders.
Sergey V Kurzin
Executive Chairman
To see the full text of Interim results including Consolidated Profit & Loss Statement for the period from date of incorporation 2 July 2003 to 30 June 2004 and Notes to the financial statements for the period ended 30 June 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.
