Oriel Resources Plc announces


• On 29 April 2004 Oriel Resources Plc (“Oriel” or the “Company”) signed a contract with Mintek of South Africa to complete test work for a pyrometallurgical process to produce up to 120,000 tons per annum of ferronickel containing approximately 25% nickel (30,000 tons of nickel) from the Schevchenko deposit, Kazakhstan.

• Preliminary evaluation by Mintek indicates favourable economics to produce nickel at a variable operating cost of less than $1.00 per lb, which would place it in the lowest cost quartile.

• Mintek’s test work is intended to provide the information required to support the necessary process guarantees by November 2004 and completion of a Feasibility Study by December 2004.

• Mintek & Oriel will proceed to the Final Detailed Feasibility Study to be completed in the first half of 2005.

• Oriel exercises option to acquire 90% of Schevchenko.

Mintek Contract for Schevchenko signed
Dr. Sergey V. Kurzin, Chairman & CEO of Oriel Resources PLC is pleased to report that Oriel’s subsidiary Muzbel LLP (“Muzbel”) has signed a contract with Mintek, the internationally renowned R&D and technology provider based in South Africa, to conduct a pilot campaign on Oriel’s Schevchenko nickel Project in Kazakhstan. Mintek has been commissioned to develop the process flow sheet and provide the data for the design of the Project.

Feasibility Work
The pre-feasibility pilot campaign is scheduled to start in May and be completed by July 2004. A large demonstration-scale campaign will be carried out in September and the results used to complete the Feasibility Study by December. The full Detailed and Bankable Feasibility Study will follow the Feasibility Study during the first half of 2005 at which time a funding of the construction phase will be finalized. Mintek will contract a number of sub contractors to provide engineering services which will include Kazmekhanobr, the leading Kazakhstan Research Institute in metallurgical R&D.

Mintek
Mintek has developed and supplied similar technologies to successful projects in South Africa and elsewhere over the past twenty years. Examples include chromite and ilmenite smelting and the production of chromium-containing ferronickel master alloy for stainless steel production. The decision to use the Mintek process for the Schevchenko project will allow the production of ferronickel, which the industry believes is growing in demand at a faster rate than the alternative primary source, namely nickel cathode. Stainless steel producers generally prefer ferronickel because it includes good quality iron units that are also needed for the production of stainless

steel. Falconbridge, at their Koniambo Project in New Caledonia has proposed to use DC Arc Furnace technology similar to that proposed by Mintek for the Shevchenko Project.

Low Cost Nickel Producer
Mintek’s pilot plant near Johannesburg rated at 70 tons per day of nickel ore will be used for the initial evaluation, which should give the necessary confidence to proceed with the Project. The benefits of the process developed by Mintek include significantly lower capital costs due to improved flow sheet design and much lower operating costs as a result of the direct use of the mined and partly upgraded Schevchenko nickel ore fines. Electricity, gas, coal, power, labour and other costs in Kazakhstan are substantially lower than Western costs and Mintek suggests that it should result in the variable operating costs being below $1/lb nickel, with the total costs, being in the region of $1.50/lb nickel.

 

This would, if achieved, make Schevchenko a ‘lowest quartile’ cost producer. Using Mintek’s proprietary DC Arc Furnace, which provides better control of the reduction of iron, it should be possible to produce a ferronickel product greater than 20% contained nickel. The relatively low grade of Shevchenko’s ore is offset by the benefits of the Project’s projected low operating costs. In addition, the further low projected capital costs, by virtue of the existing infrastructure, should be reduced by accessing Russian built equipment.

Dr. Sergey V. Kurzin said that “I am pleased to report the favourable initial evaluation by Mintek and potentially exciting future of the Project. This is a direct result of the excellent infrastructure and cost advantages of the Project’s location in an area where rail links, gas supply, cheap energy and low cost expert mining labour are available.”

Acquisition 90%
In light of the above, Oriel has successfully negotiated an acceleration of its option to acquire 90% of Luckstone Corporation, a holding company that owns 100% of Muzbel LLP. Oriel is pleased to announce that it will increase its ownership of Muzbel from 51% to 90% in accordance with an Exclusive Option Agreement executed in November 2003. Oriel is also pleased to announce that it has successfully negotiated a change to the terms of the Option Agreement, permitting it to acquire the additional 39% of Muzbel for a combination of half cash (USD$ 2,625,000) and half shares (1,972,200 shares valued at 75p per share).

For further information, please visit our website at www.orielresources.com or contact:

Dr Sergey V Kurzin
info@orielresources.com
Stephen R Dattels
info@orielresources.com
Oriel Resources PLC
18 Upper Brook Street. • London W1K 7PU • England
Telephone +44 (0) 20 7514 0590 Facsimile +44 (0) 20 7514 0591