Rights Valuation Details

RNS Number:8002L
Oriel Resources PLC
09 November 2006


                                                                        AIM: ORI
                                                                        TSX: ORL
                                                                   PRESS RELEASE
                                                                 9 November 2006
Oriel Resources plc

Oriel Resources proceeds with proposed acquisitions to become a vertically
integrated ferrochrome producer

The Directors of Oriel Resources Plc ("Oriel" or "the Company"), the
London-based chrome and nickel exploration and mining company, are pleased to
provide more information on the two significant transactions which were
announced on 16 October 2006. Shareholders are also informed that a circular and
admission document (the "Admission Document") has been published today, together
with a notice convening an extraordinary general meeting. A copy of this
Admission Document is available from the Company's web-site,
www.orielresources.com, and will be available on SEDAR at www.sedar.com as soon
as reasonably practicable.

Highlights of the Acquisitions

The Company has conditionally agreed to acquire IPH Polychrom Holdings B.V, a
company whose principal asset is a ferrochrome smelting plant which is under
construction at Tikhvin, near St Petersburg (the "TSP"). The IPH Acquisition
will be effected by Oriel acquiring the entire issued share capital of IPH from
its existing shareholders. The consideration for the IPH Acquisition will be
satisfied by the allotment of 248,971,014 Ordinary Shares.

In addition, the Company has conditionally agreed to acquire Croweley
International Limited from Quotan International Limited (the sole shareholder of
Croweley), a special purpose company which is beneficially owned by Alexander
Nesis (who also beneficially owns 50 per cent. of IPH). Croweley's only asset on
Completion will be US$100 million in cash plus accrued interest (if any) and it
has no significant liabilities. Oriel is acquiring Croweley in exchange for
102,880,584 Ordinary Shares which implies a price of 51 pence per Ordinary Share
(at the Bloomberg prevailing exchange rate of US$1.9060/#1.00 on 7 November
2006) being a 36.0 per cent. premium to Oriel's closing share price of 37.5
pence on 14 September 2006, when the Ordinary Shares were suspended on AIM.
Oriel will also make a cash payment equivalent to the amount by which Croweley's
assets exceed US$100 million on Completion. At any time up to 3 business days
prior to escrow closing under the Croweley Acquisition Agreement, Quotan (the
sole shareholder of Croweley) may sell up to 34 per cent. of its holding in
Croweley to Mr. Alexander Mamut and up to 50 per cent. of its holding in
Croweley to Mr. Petr Kellner (or entities connected with them).

In view of the size of each of IPH and Croweley in relation to Oriel, the
Acquisitions constitute a reverse takeover of Oriel under the AIM Rules and
therefore require the approval of Oriel's Shareholders at an Extraordinary
General Meeting, which has been convened for 11 am on 6 December 2006 at Oriel's
registered office, 1 Red Place, London W1K 6PL. In addition, because the Concert
Party (being the current shareholders of IPH, Quotan, Alexander Nesis and
Alexander Mamut) will own more than 50 per cent. of the enlarged share capital
of Oriel following Completion, Oriel is seeking a waiver under Rule 9 of the
City Code on Takeovers and Mergers, which would otherwise require the Concert
Party to offer to acquire those Ordinary Shares that it does not own at
Completion. A notice convening the Extraordinary General Meeting at which
resolutions in relation to these matters and other matters connected with the
Acquisitions will be proposed is set out at the end of the Admission Document.

It is expected that completion of the Acquisitions will take place on 7 December
2006.

Background to and reasons for the Acquisitions

The TSP is expected to start production of ferrochrome in early 2007 and will
require substantial quantities of chromite ore. Oriel's Voskhod Chrome Project (
the "VCP") is currently expected to start production in the first half of 2008.
Prior to the start of production at the VCP and to such extent as may be
necessary thereafter, Oriel expects to source ore for the TSP from Turkish and
other sources. In anticipation of the start-up of the TSP, initial contracts for
ore from Turkish sources have already been entered into by the IPH Group.

The IPH Acquisition will provide:

* Oriel with a dedicated consumer of a substantial part of the
  VCP's anticipated production with the remainder of the VCP's production to be
  sold to third parties;

* the TSP with a vertically integrated source of chromite ore;
  and

* Oriel with opportunities to optimise the economics and
  processes currently contemplated at the TSP.

The IPH Acquisition will create an integrated chromite mine, processing plant
and ferrochrome smelter which the existing Directors and the proposed Directors
referred to below (the "Directors") believe will create significant value for
Oriel shareholders. In particular:

* the IPH Acquisition will provide Oriel with exposure to the
  ferrochrome market which is generally more liquid than the chromite market;

* the Enlarged Group will have a wider range of potential
  customers as a supplier of both chromite ore and ferrochrome; and

* the Enlarged Group will have the flexibility to manage ore
  production and smelting capacity in response to prevailing market conditions.

In addition, conditional on and concurrently with the IPH Acquisition, Oriel
will acquire Croweley. At closing of the Acquisitions, Croweley will have a cash
balance of US$100 million which is intended to be used:

* to finance the development of the VCP (in addition to
  anticipated debt finance);

* for working capital purposes;

* to advance the Shevchenko Nickel Project; and

* to pursue future strategic opportunities.

As a result, the Enlarged Group will have a significantly stronger cash position
and balance sheet than the current Oriel Group and is expected to commence
cashflow generation (through the TSP) approximately one year earlier than would
be the case if the IPH Acquisition were not to occur. The Directors believe that
these two factors, amongst others, should make it easier to raise further funds
which may be used to expedite the development of the Shevchenko Nickel Project
and allow the Enlarged Group more options for further participation in the
ferro-alloy and stainless steel industries. Finally, the Directors believe that
the Enlarged Group will benefit from the combination of Oriel's access to
western capital markets and technical expertise as well as the political and
financial strengths of its new shareholders.

Terms of the Acquisitions

Under the terms of the IPH Acquisition Agreement, the Company has conditionally
agreed to acquire the entire issued share capital of IPH from the IPH Sellers.
The aggregate consideration for IPH will be satisfied by the issue of
248,971,014 Ordinary Shares to the IPH Sellers on Completion.

The IPH Acquisition Agreement contains certain warranties and indemnities given
by the IPH Sellers to the Company in relation to the IPH Group and its business
and certain warranties and indemnities given by the Company to the IPH Sellers
in relation to the Oriel Group and its business (in both cases subject to
certain financial and other limitations).

In addition, the IPH Acquisition Agreement includes certain restrictions on the
Company entering into negotiations with any third party in relation to the sale
of the Company or the business of the Oriel Group in the period prior to
Completion and a requirement on the Company and IPH to operate their groups in
the ordinary course until Admission. The IPH Acquisition Agreement may be
terminated in a number of circumstances which are detailed in paragraph 12.1.2
of Part XI of the Admission Document.

Under the terms of the Croweley Acquisition Agreement, the Company has
conditionally agreed to acquire the entire issued share capital of Croweley from
its owner, Quotan, in exchange for the issue of 102,880,584 Ordinary Shares to
Quotan. Quotan is currently beneficially owned by Mr Alexander Nesis. At any
time up to the date which is 3 business days prior to escrow closing under the
Croweley Acquisition Agreement, Quotan may sell up to 34 per cent. of its
holding in Croweley to Mr Alexander Mamut and up to 50 per cent. of its holding
in Croweley to Mr Petr Kellner (or entities connected with them). In these
circumstances, the persons who acquire the relevant shares in Croweley will be
required to accede to the Croweley Acquisition Agreement and sell their shares
in Croweley to Oriel in exchange for Ordinary Shares. Whether or not any such
sales occur, Oriel will issue 102,880,584 Ordinary Shares in exchange for all of
the issued shares in Croweley and will pay a cash sum equivalent to the amount
by which Croweley's net assets on Completion exceed US$100 million to the
vendors of Croweley. Further details of Mr Mamut, Mr Nesis and Mr Kellner are
set out in Part I and Part III of the Admission Document.

The Croweley Acquisition Agreement contains certain warranties and indemnities
(subject to certain financial and other limitations) given by Oriel to Quotan in
relation to the Oriel Group and its business and certain warranties and
indemnities given by Quotan in relation to the status of Croweley, its assets
and liabilities and ownership of Croweley's issued share capital.

The Acquisitions are conditional upon, amongst other things, the approval of the
transaction by the Russian Antimonopoly Service, a waiver of certain pre-emptive
rights by the Kazakhstan government (which was obtained on 30 October 2006), the
approval of certain of the resolutions to be proposed at the EGM by
Shareholders, the approval of the Proposals as required by the rules of the TSX
and Admission.

Further details of the IPH Acquisition Agreement and the Croweley Acquisition
Agreement are contained in paragraph 12.1 of Part XI of the Admission Document.

Information on Oriel

Oriel was formed in July 2003 and is a London-based chrome and nickel
exploration and mining company with its Ordinary Shares and Warrants admitted to
trading on AIM and its Ordinary Shares listed on the TSX. Its primary focus is
on the identification, acquisition, exploration and development of advanced
chrome, nickel, and other alloying opportunities in the countries of the FSU,
including Kazakhstan and Russia.

The Oriel Group currently has two projects, namely the Voskhod Chrome Project
and the Shevchenko Nickel Project, both situated in north-western Kazakhstan.
Following the results of recent feasibility studies for both projects, and given
the current high demand for chrome and nickel products, the Directors intend to
work towards fast-tracking the Voskhod Chrome Project into production and
developing the Shevchenko Nickel Project.

Further information on Oriel is set out in Parts II, V and XI of the Admission
Document and financial information on the Oriel Group is included in Parts VI
and VII of the Admission Document.

Information on IPH

IPH is a Dutch holding company which has two Russian subsidiaries which have,
since 2004, been actively developing the TSP. The TSP was approximately 85 per
cent. complete as at the end of September 2006 and construction finance for the
TSP is fully committed. The Directors expect that construction of the TSP will
be completed by the end of 2006. Commercial smelting is expected to start at the
TSP in the first half of 2007. The market for the TSP's ferrochrome is expected
to be Europe with further possible markets in China and the US.

Ferrochrome smelting requires three main raw materials: chromite ore, coke and
quartzite flux. IPH currently expects to source coke and quartzite flux from
producers in Russia. Subject to completing the IPH Acquisition and the VCP
entering into commercial production, the Directors expect that the VCP will
provide the majority of chromite ore for the TSP, immediately transforming the
Group from a mining production company into an integrated mine, processing and
production facility.

The successful construction and operation of the TSP is subject to a number of
risks, including: construction and commissioning risks and risks relating to
certain ongoing litigation against the construction of the TSP. For further
details see Part III of the Admission Document and for details of the associated
risks see Part IV of the Admission Document.

The current shareholders of IPH are Polyprom Holdings B.V., A&NN Properties
Limited, Baran-Alrig Ltd., Baran Group Ltd. and Ehud and Shaul Rieger and Dina
Rieger-Weiss.

Further information on the IPH Group and its shareholders is included in Part
III of the Admission Document and financial information on the IPH Group is
included in Parts VIII and IX of the Admission Document.

Strategic Development Plan

The immediate goals of the Enlarged Group will be to:

* commence production of ferrochrome at the TSP;

* secure debt finance, continue construction and commence
  commercial mining operations at the VCP; and

* integrate the production of the TSP and the VCP.

In the longer term, the Enlarged Group will seek to advance development of the
Shevchenko Nickel Project and to leverage its assets, size and skills to further
participate in the ferro-alloy and stainless steel industries if appropriate
opportunities become available.

The Concert Party fully supports the immediate and longer term goals of the
Enlarged Group as set out above and does not intend to redeploy any of the
Enlarged Group's fixed assets.

Current Trading and Prospects

The Oriel Group

Oriel acquired the Voskhod Chrome Project in February 2005 and since that time
has completed over 20,000 metres of core drilling to confirm the nature and
tenor of the chrome ore body. In 2005, Oriel commissioned SRK Consulting (UK)
Limited to undertake a preliminary feasibility study followed by a full
feasibility study which was completed in May 2006. CIM Standard compliant
resource and reserve estimates have been completed and details of these
statements can be found in paragraph 3.4.7 on page 91 of the SRK Competent
Persons' Report in Part V of the Admission Document.

Oriel is aggressively pursuing the development and construction phase of the VCP
and: is in the process of acquiring a man camp; has completed the installation
of temporary power to site; is in the process of installing a concrete batching
plant; and has commenced construction of temporary site access roads. The boxcut
required for the decline development was completed during October 2006.

Oriel is in advanced discussions with an experienced contractor, Central Asia
Mining, which is a joint venture between Byrnecut, Australia and
Vostokshakhtostroy, Kazakhstan, to perform the decline and ventilation shaft
development of the construction works. An interim contract has been negotiated
with Vostokshakhtostroy for the provision of services to stand steel arch sets
in the recently completed decline boxcut, commence foundation works at the
proposed ventilation shaft positions and excavate the initial 10 metres of the
decline from the base of the boxcut. In addition, discussions are well advanced
with an engineering company, DRA International, for both lump sum fixed price
and engineering procurement and construction management contracts in relation to
the beneficiation plant and associated infrastructure respectively. Oriel has
already engaged both these contractors on a cost reimbursable basis for a short
period to ensure momentum is maintained in the development of VCP. An
Environmental and Social Impact Assessment study is in progress and expected to
be completed during the fourth quarter of 2006. The preparation of the technical
submission, based on the SRK feasibility study, and which is required for
regulatory approval, is well advanced and is expected to be lodged with the
relevant government ministry during the fourth quarter of 2006.

To complete the VCP, Oriel will need to secure appropriate debt financing. The
Company has been working with its financial advisors, Endeavour Financial, on
securing debt finance for VCP and expects to secure credit approved,
underwritten offers from selected banks during fourth quarter 2006. The
Directors expect to complete the necessary documentation as soon as possible
after receipt of the credit approved offers and hope to draw down funds in 2007
in line with the development plan for the VCP. If the debt financing is not
secured, the development of the VCP will be rescheduled to conserve working
capital or until alternative sources of funding can be found.

A feasibility study on the Shevchenko Nickel Project was completed in December
2005. Following
completion of the Acquisitions, the Company will examine development options for
the Shevchenko Nickel Project.

The IPH Group

IPH has continued to progress the construction of the TSP since 31 December
2005. As at 1 October 2006, IPH had invested approximately US$113 million on
capital investment (which comprises capital, plant and equipment and
construction in progress) at the TSP. In addition, IPH has entered into a
memorandum of understanding with DCM DECOmetal GmbH (an Austrian-based metals
trader) as a potential marketer for its ferrochrome and in October 2006 IPH also
entered into three agreements to purchase 9,000 tonnes of chromite ore. Further
details of the construction of the TSP are included in Parts III and V of the
Admission Document.

Details of the Consideration Shares

The Ordinary Shares to be issued pursuant to the Acquisitions will be issued
credited as fully paid and will, in aggregate, represent approximately 63.3 per
cent. of the enlarged share capital (assuming no options over Ordinary Shares or
Warrants are exercised before Admission).

The Proposed Directors

Conditional on the Acquisitions becoming effective and the approval of
Shareholders at the EGM, Alexander Nesis, Ehud Rieger and Neil Woodyer have
agreed to become non-executive directors of the Company. Details of the letters
of appointment of each of these proposed non-executive directors are set out
below.

Each Proposed Director will be appointed, subject to approval at the EGM, as a
non-executive Director with effect from Admission and his appointment will
continue until terminated by either party by providing one month's notice in
writing. Each Proposed Director will be entitled to a fee of #18,000 per annum,
payable monthly in arrears and will receive all travel and other reasonable
expenses incurred in connection with his duties, but, save for participation in
the Oriel Share Option Scheme, will not otherwise be entitled to participate in
any bonus scheme or benefit in kind arrangements of the Group.

Dealings and trading

Following publication of the Admission Document, application will be made by the
Company for the Enlarged Share Capital and the Warrants to be admitted to AIM.
It is expected that Admission will take place and trading in the Enlarged Share
Capital and Warrants will commence on the first dealing day following the date
on which the Resolutions are passed at the Extraordinary General Meeting,
convened for 6 December 2006.

The EGM

The Acquisitions are subject to the approval of existing Oriel shareholders at
an extraordinary general meeting to be held at the offices of Oriel, 1 Red Place
, London W1K 6PL at 11 a.m. on 6 December 2006. The notice convening the EGM is
set out on the final pages of the Admission Document.

The Existing Directors have unanimously recommended that Shareholders vote in
favour of the proposed resolutions at the EGM. Oriel has received irrevocable
undertakings to vote in favour of the Acquisitions from its Existing Directors
in respect of approximately 7% of the Ordinary Shares.

Financial advisers and nominated adviser

Oriel's Nominated Adviser and Broker is Canaccord and its financial adviser for
debt and acquisition transactions is Endeavour Financial. IPH's financial
adviser is Morgan Stanley & Co. Limited. On completion of the Acquisitions, it
is anticipated that Canaccord will continue as Nominated Adviser and co-broker
to Oriel, Morgan Stanley will become financial adviser and co-broker to Oriel
and Endeavour Financial will continue in its current role as financial adviser
in respect of debt and acquisition opportunities.

Lock-in Arrangements

As required by Rule 7 of the AIM Rules, each of (a) the Existing Directors, the
Proposed Directors and their associates (as defined in the AIM Rules) who hold
Ordinary Shares or Warrants, (b) the IPH Sellers and (c) the Croweley
shareholders on Completion (other than Petr Kellner (or entities connected with
him) who will hold less than 10 per cent. of the Ordinary Shares and so will not
be subject to Rule 7), will agree not to sell, transfer or otherwise dispose of
any interest in any Ordinary Shares or Warrants held by them immediately
following Admission (other than in certain limited circumstances which are
permitted by the AIM Rules, including the acceptance of a takeover offer and the
execution of an irrevocable commitment to accept a takeover offer) for a period
of 12 months.

On an issued share basis, these lock-in arrangements will apply in respect of
between 314,802,673 and 366,242,965 Ordinary Shares representing between 57 and
66 per cent. of the enlarged share capital of Oriel. The IPH Sellers and the
Croweley shareholders have agreed not to sell Ordinary Shares for a period of 24
months from Admission unless such sales are in accordance with the orderly
marketing requirements of Canaccord.

In addition, each of the IPH Sellers has agreed with Canaccord and the Company
to place 70 per cent. of the IPH Consideration Shares held by them immediately
following Admission in an escrow account to secure claims under the IPH
Acquisition Agreement for a period of up to 18 months following Admission, or
later if state commissioning of the TSP has not been obtained by that date or if
a claim is notified before the expiry of 18 months from Admission.

The terms of the lock-in arrangements are described more fully in paragraph
12.1.4 of Part XI of the Admission Document.

Dividends

It is the intention of the Directors to achieve capital growth. The Directors
intend to reinvest any future profits in the Company and, accordingly, are
unlikely to declare dividends in the foreseeable future. However, the Directors
will consider the payment of dividends out of distributable profits of the
Company when it is appropriate to do so.

Commenting on the Acquisitions, Dr Sergey V. Kurzin, Executive Chairman of Oriel
said:

"The transactions offer a unique opportunity to Oriel shareholders. Under this
three-way combination, our shareholders will benefit from the assets, expertise,
and political and financial strength of the entities we have brought together.
The Enlarged Group will be a vertically integrated ferrochrome business with a
strong financial footing and increased capacity to develop our Shevchenko nickel
project. I am particularly pleased that our new partners from the IPH
Acquisition have shown their commitment by investing US$100 million in cash.
Looking ahead, the Enlarged Group will have a strong foundation from which to
explore further growth opportunities, both vertically and horizontally, in the
ferro-alloy and stainless steel industries."

The Directors and Proposed Directors accept responsibility for the information
contained in this announcement. To the best of the knowledge and belief of the
Directors and Proposed Directors (who have taken all reasonable care to ensure
that such is the case), the information contained in this announcement for which
they are responsible is in accordance with the facts and does not omit anything
likely to affect the import of such information.

This announcement does not constitute an offer or an invitation to purchase any
securities.

Capitalised terms used in this announcement but not otherwise defined have the
meanings given to them in the Admission Document.

Canaccord Adams Limited, which is regulated and authorised in the United Kingdom
by the Financial Services Authority, is acting exclusively for Oriel Resources
plc and no one else in relation to the Acquisitions and will not be responsible
to anyone other than Oriel for providing the protections afforded to clients of
Canaccord Adams Limited nor for providing advice in relation to the Acquisitions
or any matter referred to in this announcement.

Morgan Stanley & Co. Limited, which is regulated and authorised in the United
Kingdom by the Financial Services Authority, is acting exclusively for IPH
Polychrom Holding BV and no one else in relation to the Acquisitions and will
not be responsible to anyone other than IPH for providing the protections
afforded to clients of Morgan Stanley & Co. Limited nor for providing advice in
relation to the Acquisitions or any matter referred to in this announcement.

ENDS
--------------------------------------------------------------------------------
For further information please contact:

Dr Sergey V Kurzin, Executive Chairman, Oriel Resources plc
Tel: [phone]

Nick Clarke, Managing Director, Oriel Resources plc
Tel: [phone]

Gavin Dallas, Marketing and PR, Oriel Resources Plc
Tel: [phone]

Michael Padley / Michael Spriggs, Bankside Consultants
Tel: [phone]

Keith Schaefer, Vanguard Shareholder Solutions
Tel: + 1 604 608 0824

www.orielresources.com
--------------------------------------------------------------------------------




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

END
VALFSMSFUSMSEDF