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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Oriel Res. | LSE:ORI | London | Ordinary Share | GB0034246743 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 121.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:4922M
Oriel Resources PLC
19 May 2005
19 May 2005
Oriel Resources plc ("Oriel" or the "Company")
Preliminary Results Announcement
period ended 31 December 2004
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
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
Oriel Resources Plc
Consolidated profit and loss account for the period ended 31 December 2004
Note #'000
Exploration expenses (7,481)
Other administrative expenses (4,200)
_______
Administration expenses and operating loss (11,681)
Interest receivable and similar income 775
_______
Loss on ordinary activities before taxation (10,906)
Taxation on loss on ordinary activities -
_______
Loss on ordinary activities after taxation (10,906)
Minority interest 394
_______
Retained loss (10,512)
_______
Loss per share
Basic and diluted loss per share 2 (9.7)p
_______
All amounts relate to continuing activities.
Oriel Resources Plc
Consolidated statement of recognised gains and losses for the period ended 31
December 2004
#'000
Consolidated statement of total recognised gains and losses
Loss for the financial period (10,512)
Exchange translation differences on consolidation 207
_______
Total recognised loss for the financial period (10,305)
_______
Oriel Resources Plc
Consolidated balance sheet at 31 December 2004
#'000 #'000
Fixed assets
Tangible assets 771
Intangible assets 12,068
Fixed asset investments 300
_______
Total fixed assets 13,139
Current assets
Debtors 432
Cash and short term deposits 26,212
_______
26,644
Creditors: amounts falling due within one year 532
_______
Net current assets 26,112
_______
Total assets less current liabilities 39,251
Creditors: amounts falling due after more than
one year 1,086
Provisions for liabilities and charges 200
_______
(1,286)
_______
Net assets 37,965
_______
Capital and reserves
Called up share capital 1,645
Share premium account 40,710
Merger reserve 5,099
Profit and loss account (10,305)
_______
Shareholders' funds - equity 37,149
Minority interests - equity 816
_______
37,965
_______
Oriel Resources Plc
Consolidated cash flow statement for the period ended 31 December 2004
Note #'000 #'000
Net cash outflow from operating activities 3 (10,018)
Returns on investments and servicing of finance
Interest received 775
_______
Net cash inflow from returns on investments and
servicing of finance 775
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,459)
Purchase of intangible assets (1,128)
_______
Net cash outflow from capital expenditure and
financial investment (2,587)
Acquisitions and disposals
Purchase of subsidiary undertakings (3,085)
_______
Net cash outflow from acquisitions and disposals (3,085)
_______
Cash outflow before management of liquid
resources and financing (14,915)
Management of liquid resources
Movement on deposits (15,541)
Purchase of trade investments (917)
Sale of trade investments 484
_______
Cash outflow from management of liquid
resources (15,974)
Financing
Issue of ordinary shares 41,800
Exercise of share options and warrants 275
_______
Cash inflow from financing 42,075
_______
Increase in cash for the period 4,5 11,186
_______
Oriel Resources Plc
Notes forming part of the financial statements for the period ended 31 December
2004
1 Accounting policies
The financial statements have been prepared under the historical cost
convention and are in accordance with applicable accounting standards.
The principal accounting policies are:
Basis of consolidation
Oriel Resources Plc, together with it's subsidiaries, is a mineral
exploration and development group that is focused on base and precious
metal opportunities in the territories of the Former Soviet Union.
The consolidated financial statements incorporate the results of Oriel
Resources Plc and all of its subsidiaries as at 31 December 2004 using the
acquisition method of accounting as required. Under the acquisition
method, the results of subsidiary undertakings are included from the date
of acquisition.
Mining rights and deferred exploration
Initial exploration and other expenditure incurred in relation to the
project areas to which the licences and rights relate are charged to profit
and loss in the year in which they are incurred. When a project reaches a
stage whereby a positive assessment of its economic viability can be
reasonably determined, then to the extent that they are recoverable, all
further exploration and development costs are carried forward as an asset
in the balance sheet.
Costs on productive areas are amortised over the life of the area of
interest to which such costs relate on a unit of production output basis.
Impairment of fixed assets
The need for any fixed asset impairment write down is assessed by comparing
the carrying value of the asset against the higher of its realisable value
and value in use.
Depreciation
Depreciation is provided to write off the cost or valuation, less estimated
residual values, of all tangible fixed assets evenly over their expected
useful lives. It is calculated using the following rates:
Plant, machinery and vehicles - 20 - 33 % per annum
Office equipment and furniture - 20 - 100 % per annum
Valuation of investments
Investments held as fixed assets are stated at cost less any provision for
impairment.
Foreign currency
Foreign currency transactions of individual companies are translated at the
rates ruling when they occurred. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the balance sheet dates.
Any differences are taken to the profit and loss account.
The results of overseas operations are translated at the average rates of
exchange during the period and the balance sheet translated into sterling
at the rate of exchange ruling on the balance sheet date. Exchange
differences which arise from translation of the opening net assets and
results of foreign subsidiary undertakings are taken to reserves.
All other differences are taken to the profit and loss account with the
exception of differences on foreign currency borrowings, which, to the
extent that they are used to finance or provide a hedge against foreign
equity investments, are taken directly to reserves to the extent of the
exchange difference arising on the net investment in these enterprises.
Tax charges or credits that are directly and solely attributable to such
exchange differences are also taken to reserves.
Goodwill
Goodwill arising on acquisition of a subsidiary undertaking is the
difference between the fair value of the consideration paid and the fair
value of the assets and liabilities acquired.
Deferred taxation
Deferred tax balances are calculated in respect of all timing differences
that have originated but not reversed by the balance sheet date except that
the recognition of deferred tax assets is limited to the extent that the
company anticipates to make sufficient taxable profits in the future to
absorb the reversal of the underlying timing differences.
Deferred tax balances are not discounted.
Environmental provisions
Appropriate and adequate provision is made for rehabilitation costs over
the estimated period of exploration activity, or life of mine.
Leased assets
All leases are treated as operating leases. Their annual rentals are
charged to the profit and loss account on a straight line basis over the
term of the lease.
Share based employee remuneration
When shares and share options are awarded to employees a charge is made to
the profit and loss account based on the difference between the market
value of the company's shares at the date of grant and the option exercise
price in accordance with UITF Abstract 17 (Revised 2004) 'Employee Share
Schemes'.
Liquid resources
For the purposes of the cash flow statement, liquid resources are defined
as current asset investments and short term deposits.
2 Loss per share
The basic loss per share of 9.7 pence is calculated, in accordance with
FRS14 (Earnings per share), on a loss on ordinary activities of #10,512,000
and on 108,705,528 ordinary shares, being the weighted average number of
ordinary shares in issue during the period. There is no difference between
the diluted loss per share and the loss per share presented
3 Reconciliation of operating loss to net cash outflow from operating
activities
#'000
Operating loss (11,681)
Depreciation 142
Increase in debtors (432)
Decrease in creditors (1,864)
Provision for rehabilitation 200
Provision for impairment 2,663
Loss on disposal of listed investments 433
Foreign exchange differences 521
_______
Net cash outflow from operating activities (10,018)
_______
Oriel Resources Plc
Notes forming part of the financial statements for the period ended 31 December
2004 (Continued)
4 Reconciliation of net cash inflow to movement in net funds
#'000
Increase in cash in the period 11,186
Cash outflow from management of liquid resources 15,541
Exchange differences (515)
_______
Net funds at the end of period 26,212
_______
5 Analysis of net funds
Cash Flow Exchange At 31
differences December
2004
#'000 #'000 #'000
Cash and short term deposits 26,727 (515) 26,212
Cash 11,186 - 11,186
Liquid resources 15,541 (515) 15,026
Total 26,727 (515) 26,212
_______ _______ _______
This information is provided by RNS
The company news service from the London Stock Exchange
END
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