Re Agreement and Placing

RNS Number:5328H
Oriel Resources PLC
19 January 2005



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, THE RUSSIAN FEDERATION OR THE
REPUBLIC OF KAZAKHSTAN.

                                                                 19 January 2005

                 Oriel Resources plc (the "Company" or "Oriel")



Share Purchase Agreement signed in relation to the Voskhod Chrome Deposit

Proposed placing of shares and warrants to raise approximately #8,500,000


On 23 November 2004 Oriel announced it had signed an exclusive option agreement
to purchase the Voskhod chrome deposit  ("Voskhod"). The Directors of Oriel are
pleased to announce that a conditional sale and purchase agreement has now been 
signed under which Oriel will purchase Voskhod. Completion of the purchase is
expected to take place on or about 2  February 2005. In addition, Oriel is
proposing to place new shares and warrants to raise approximately #8,500,000.

Acquisition Structure

Further to the announcement of 23 November 2004, Oriel has crystallised the
structure for the acquisition (the  "Acquisition") with the vendors of Voskhod.
Under the structure concluded:

   *  Oriel will acquire JSC Geoinvest ("Geoinvest") a company incorporated in
      the Republic of Kazakhstan from Energinvest Holding GmbH (the "Vendor"). 
      The consideration for the acquisition totals #13,476,362, equivalent to
      US$25 million at an exchange rate of US$1.8551/#1, being the exchange rate
      prevailing on 11 November 2004.

   *  Geoinvest is the sole shareholder of Voskhod-Oriel LLP a limited
      liability partnership formed in Kazakhstan which has become the counter
      party to the mining contract relating to Voskhod with the competent
      authority of the government of Kazakhstan.

   *  The consideration will be satisfied as to #8,085,817 by a payment
      in cash on completion (converted into US Dollars at the closing rate
      on 18 January 2005 of US $1.8668/#1) and as to the balance by the
      issue to the Vendor, or at its direction, of a total of 9,181,352
      new ordinary shares in Oriel, credited as fully paid (representing
      approximately 5.58% of the Company's currently issued share
      capital). The Vendor has directed that 6,426,946 of such shares
      should be issued and allotted to a third party.

   *  Completion is expected to take place on or about 2 February
      2005, subject to satisfaction of the conditions set out below.

   *  The acquisition of Geoinvest is conditional, inter alia, upon:

      -  the delivery of various legal opinions in agreed form;

      -  completion by the Vendor of certain registration formalities 
         regarding Geoinvest's share capital with the relevant Kazakhstan 
         authorities;

      -  the delivery of certain lock-in undertakings referred to below; and

      -  the approval of the Antimonopoly Agency of Kazakhstan being obtained.

   *  Each of the Vendor and the third party will be required, as a 
      precondition of completion, to undertake to the Company and to Canaccord 
      Capital (Europe) Limited ("Canaccord") not to dispose of the shares to be
      allotted to them. In the case of the Vendor that undertaking lasts for 
      six months from completion; in the case of the third party, 12 months. In 
      each case the undertakings provide that sales in the subsequent 12
      month period should be made through Canaccord.

Financing the Acquisition

The Acquisition is not conditional upon the Company raising additional capital.
However, the  Board considers that it would be prudent to seek to replace the
monies expended on the cash element of the  consideration by way of a placing of
new equity securities. Accordingly the Company proposes to raise approximately 
#8,500,000 by way of an institutional placing arranged by Canaccord of units
consisting of one ordinary share and one  half of a warrant, at a price per unit
of #0.50 (CAN$1.14). Each warrant is exerciseable at a price of #0.75 (CAN$1.71)
for a period of five years. The placing will be conditional upon completion of
the Acquisition. A further announcement  is expected to be made in due course,
which will include the full details of the placing including the terms of the 
warrants. The warrants will not initially be admitted to trading on AiM but an
application is expected to be made for  such admission following preparation of
an AiM admission document.

The Voskhod Chrome Deposit

The Voskhod chrome deposit is located near Khromtau, Aktubinsk Oblast, Republic
of Kazakhstan.  The deposit lies within the Kempirsayskiy Massif, together with
up to 80 other deposits discovered since 1936. One of  the world's largest
chrome mines, Donskoy GOK, owned and operated by KazChrome, lies a few
kilometres to the north of  the deposit. The Voskhod deposit is at depths of 98
metres to 440 metres below surface and consists of one large lens  with up to
nine smaller footwall protrusions. The central section of the orebody is massive
and high-grade and includes  vertical thicknesses of 90 to 200 metres.
Infrastructure in the region is well developed with a long history of mining 
centred on Khromtau and the deposit has road, rail and power links within a few
kilometres.

A recent independent report by a UK based international geological consultancy,
SRK (UK)  Limited, confirmed the present resources as being sufficiently robust
to be placed into the Indicated JORC  classification to give 18.7 million tonnes
at 46.22% Cr2O3. This grade compares favourably with similar deposits in  South
Africa. Geoinvest commissioned pre-feasibility reports by Geoincentre (i.e.
Geological Innovational Centre), a  technical institute based in Almaty. Using
Geoinvest's financial model, the pre-tax and royalty net present value  ("NPV")
estimate is US$122 million at a discount rate of 10% at US$80 per tonne of ore,
with an internal rate of return  ("IRR") in excess of 40%, based on pre-
production capital expenditure of only US$30 million for an underground 
operation. A mine life of over 26 years at 700,000 tonnes per annum underground
production was used in Geoinvest's  financial model. This assessment assumed
sales of high grade ore and concentrates in China with ore prices  substantially
below prevailing market levels.

Oriel commissioned Mintek to assess the potential production of ferrochrome on
site and  estimate likely capital and operating costs. The selected process
flowsheet assumes the production of 240,000 tonnes  per annum of high carbon
ferrochrome (HC FeCr) at 67% chrome from two 57MW AC furnaces. The required
capital investment  was estimated at US$266 million with annual operating costs
of US$113 million. The cash cost of chrome produced was  estimated at about
US$0.17 per pound of chrome placing the operation in the lowest quartile of
world producers in 2003.  The pre-tax NPV at a 10% discount rate is US$395
million at a chrome price of US$0.60 per pound (currently in excess of  US$0.70
per pound) giving a 27% IRR.

Following completion of the acquisition Oriel intends to commence confirmatory
ore  beneficiation testwork and smelter trials as part of a pre-feasibility
study estimated to be completed during the  second quarter of 2005. The study
will examine a number of project options ranging from the sale of ore
concentrates to  full ferrochrome production. The option to produce
ferrochromium is expected also to include examination of production  at Voskhod
or alternatively at Oriel's existing Shevchenko site with the potential to
benefit from the infrastructure  proposed to be built for the nickel smelters.

                        
Enquiries to:
                    
Oriel Resources plc

Dr Sergey V Kurzin, Chairman             Tel: [phone]
Dr Nic Barcza, Director of Technology

Canaccord Capital (Europe) Limited

Robert Finlay                            Tel: [phone]
Robin Birchall

Britton Financial PR

Tim Blackstone                           Tel: [phone]





                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
AGRSFASUUSISEDF