Shevchenko Preliminary Test Results Positive

• Preliminary pilot-scale test work by Mintek has produced ferronickel product containing +21% nickel.
• Draft Preliminary Feasibility Study (PFS) to be completed by the end of July
• Oriel commissions Mintek/Bateman and GBM to prepare PFS

Dr Sergey Kurzin, Chairman of Oriel Resources Plc (“Oriel” or the “Company”), is very pleased to announce that following an inspection trip to Mintek’s facilities in Randburg, South Africa with Nick Clarke, Oriel’s COO, the following test results have been received which are very encouraging to the future success of its northern Kazakhstan Schevchenko Nickel Project.

A 6 tonne ore test sample sent previously from the Shevchenko nickel project in northern Kazakhstan, is currently being evaluated in a smelting campaign at Mintek's 200kVA DC Arc Furnace pilot plant in Randburg, South Africa and will be completed by the end of June 2004. The initial results are extremely encouraging and indicate that the process can deliver a ferronickel nickel alloy with over 20% ferronickel at a recovery of over 90%.

The testwork commenced treating the ore on Monday 14 June and the quality of the ferro-nickel product produced has steadily increased to some 21.7% Ni by Thursday 17 June by which time some 2 tonnes of calcined material, at a grade of 1.3% Ni, had been treated with a coal reductant added at the rate of 5.5% and a magnesite flux of 9%. The tapping temperatures of the slag were 1600±50oC. As the testwork programme proceeds the addition of coal will be reduced to 4.5% to increase the nickel in alloy. Mintek are confident that a nickel alloy containing ± 25% Ni with acceptable losses to the slag of ≤0.1% Ni will be produced by the end of the smelting programme. This testwork programme will provide material and energy balances to quantify the process flow sheet and produce initial engineering data to be used in the Preliminary Feasibility Study (PFS).

In addition to receiving encouraging news on the test work from Mintek, Oriel has commissioned a number of engineering consultants to assist in the preparation of various components of the PFS on the Shevchenko Project. A consortium of Mintek and Bateman, both highly respected South African engineering groups, will undertake the PFS on the proposed pyrometallurgical plant and GBM Minerals Engineering Consultants in the UK, will study the mine and process plant infrastructure issues. Wardell Armstrong International (WAI), also in the UK, is preparing resource/reserve statements, pit optimisation and production schedules in addition to a preliminary Environmental Impact Assessment on the project. The PFS work will be largely completed by the end of July 2004, at which time the results will be made public. A demonstration-scale campaign on a larger ore sample of 400 tonnes is planned for October, which will provide input data for the Final Feasibility Study.

 

Oriel has also completed 3,000 metres of Confirmation Drilling, to test the previous Soviet resource data, and a further 3,200 metres of in-fill drilling to move Inferred material to the Measured and Indicated resource categories. Previous resource work by WAI has shown that JORC classified resources at the Shevchenko Project are 34.3 million tonnes at 1.02% Ni in the Measured and Indicated categories with Inferred resources of 11.7 million tonnes at 0.97% Ni. This drilling campaign will provide a JORC classified resource statement approaching 50 million tonnes in the Measured and Indicated categories. Additional work is ongoing in assessing a number of satellite deposits in the region. The State Committee for Reserves of the Republic of Kazakhstan has estimated a B + C1 + C2 resource for Shevchenko of 101.7 million tonnes averaging 0.92% Ni and 0.064% Co.

As well as completing the initial test work and advancing the PFS, Oriel has engaged various marketing groups to assess the marketability of its proposed production of ferronickel. Based on Oriel’s preliminary analysis, the most prospective markets will be China and Northern Europe. Oriel’s marketing consultants view is that market demand will remain strong.

With a robust nickel price currently in excess of $13,000 per tonne and demand forecast to outstrip supply in the medium term, Oriel intends to fast track Shevchenko into production to meet the demand imbalance and benefit from high prices.

Oriel’s management expects that Shevchenko will be a low cost producer and that the capex will be at the low end of similar projects capable of producing 30,000 tonnes of nickel equivalent per annum. In addition, Oriel expects to commence production in early 2007, depending on successful completion of a Bankable Feasibility Study and availability of required project financing.

Important milestones for Shevchenko are as follows:-

July 31st, 2004 Preliminary PFS Results.
August 2004 Final PFS Results.
October 2004 400 Tonne Bulk Test programme commences.
Early 2005 Final Feasibility Study.

Dr Sergey Kurzin stated that the balance of 2004 will be an exciting time for Oriel’s shareholders, not only as its Shevchenko Project is advanced to the Final Feasibility Stage by year end, but also as Oriel’s gold projects are drill tested.

For further information, or to download the entire press release, please visit our website at www.orielresources.com or contact:

Sergey V Kurzin
svkurzin@orielresources.com

Stephen R Dattels
sdattels@orielresources.com

18 Upper Brook Street. • London W1K 7PU • England
Telephone +44 (0) 20 7514 0590 Facsimile +44 (0) 20 7514 0591