Shevchenko Feasibility Study

RNS Number:7574V
Oriel Resources PLC
16 December 2005

16th December, 2005

                         Oriel Resources plc ("Oriel")

  Oriel Resources plc announces positive Feasibility Study for the Shevchenko
                      nickel laterite project, Kazakhstan

Oriel Resources is pleased to announce that Bateman Minerals and Metals Ltd
(Bateman) has completed the Shevchenko Nickel Project Feasibility Study and has
issued a comprehensive Executive Summary report. The complete detailed report
comprising all the relevant appendices is in preparation for release early in
2006. The study was carried out by Bateman as the lead contractor with
consultancy support from Wardell Armstrong International (WAI) (UK), Mintek
(South Africa) and Polysius (part of the ThyssenKrupp group of companies,
Germany) for the resource modelling, mining plan and environmental studies,
smelting technology and ore pre-treatment processing aspects respectively.

Highlights of the study, include:

   *47 year project operating life
   *Nickel production in first 10 years peaks at an annual 23,765t nickel in
    109,000t of ferronickel after an 18 month ramp up period.
   *NI43-101 compliant Proven and Probable nickel laterite ore reserves of
    104.4 million tonnes at 0.79% nickel.
   *Capital direct field cost for process plant, infrastructure and mine of
    $448 million and $594 million including indirect field costs, EPCM,
    insurances and owner's costs.
   *Average operating costs of $1.91/lb Ni for initial 10 years and $2.12/lb
    Ni for the first 25 years. Industry average cash cost is $3.42/lb Ni.
   *25 year project NPV (at 8% discount rate) is $275 million and $328
    million for full 47 year project life with IRR's of 13.55% and 13.82%
    respectively, pre-tax at $4.25/lb nickel price (current price $6.50/lb).

The Shevchenko deposit is located within the Kostanai District of Kazakhstan,
some 50km southwest of the town of Zhitiqara. The deposit is accessed by a part
bitumen, part hardcore road across the steppe from Zhitiqara to the village of
Shevchenko which lies a few kilometres to the west of the deposit. Oriel owns
90% of the project and has a Mining Contract with the Government of the Republic
of Kazakhstan which allows for full exploitation of the deposit.

The resource infill drilling, geological modelling and mine optimisation plan
has increased the overall project life considerably and it is projected to be 47
years based on mining the resource in 24 years. The AusIMM JORC (1999) and NI
43-101 compliant reserve is estimated as follows:

        Proven - 21.392 million tons @ 0.85% Ni
        Probable - 83.023 million tons @ 0.77% Ni

The Shevchenko resource and this reserve statement have been prepared using
Datamine(R) and NPV Scheduler(R) by Dr P Newall and Mr A Wheeler of WAI. Dr.
Newall is a qualified competent person in accordance with definitions set out in
National Instrument 43-101 and is a chartered engineer (CEng) and Fellow of the
Institute of Materials, Minerals and Mining (FIMMM).

The mine production schedule will produce approximately 2.5Mtpa direct feed ore
running at 1.04% Ni in the first ten years of operations with ferronickel
production from the furnaces scheduled to start by the end of 2008. Mining of
the orebodies is completed in 24 years and direct feed to the furnaces averages
0.95% Ni over this period. Mining produces substantial quantities of lower grade
material which will be stockpiled for smelting beyond this 24 year mining period
and an overall project life of 47 years is envisaged.

The process plant is based on flash drying and calcining of the ore and uses DC
(direct current) arc furnace smelting technology to produce the ferronickel
alloy. This technology offers the most economical solution for extracting the
nickel, due to comparatively low capital costs, high thermal energy efficiency
and high Ni recovery. DC furnace technology has also been shown by Mintek to be
well suited to processing the fine Shevchenko ores over the range of
compositions expected. Falconbridge has selected a very similar process
flowsheet and DC arc technology for their Koniambo project in New Caledonia.

The process flow sheet described below was developed by Bateman, based on the
results of comprehensive smelting and ore pre-treatment test work. It consists
of ore milling, drying and upgrading in a single Polysius AerofallTM mill,
calcining in two Polysius PolcalTM suspension calcining systems, smelting in
twin-electrode DC arc furnaces and a ladle refining station to remove impurities
from the molten ferronickel. This is followed by a shotting station where the
molten ferronickel alloy is granulated, dewatered and stored ready for shipment.
Slag from the furnaces will be granulated and disposed on a dump at site, but
can also be used as a construction aggregate.

The mined ore is upgraded by screening of the dried product in the drying plant
by 6% for a mass loss of some 15% prior to calcining. Accordingly, the average
grade of calcined feed to the furnaces in the initial 10 years is 1.2% nickel
from which recoveries across the furnace and after refining is estimated at 
92.3%. The low grade screened ore will be stockpiled for treatment later in the
project life.

The smelting plant is based on two 80 MW DC arc furnaces designed by Bateman
that are capable of smelting approximately 2.16Mtpa of upgraded, dried and
calcined ore. The average annual production over the initial 10 years (after the
18 month ramp up) of ferronickel alloy is approximately 86,500 tons at a nickel
grade of 24% for 20,600t of saleable nickel. The 25 year ferroalloy production
will average 74,000t with saleable nickel of 18,125t per annum.

The ex-works operating cost for the first 10 years is projected as $1.91/lb Ni
and $2.12/lb Ni for 25 years. The average cash operating cost for the life of
the project is expected to be $2.36/lb Ni. The ferronickel industry average cash
cost of production in 2005 was $3.42/lb of nickel.

Capital direct field costs for the plant, infrastructure and mine is $448
million and $504 million including indirect field costs. The total EPCM project
capital including insurances and owner's costs, excluding contingency is $594
million.

The NPV (@ 8%) is $275 million for the first 25 years with an un-geared IRR of
13.55% and the NPV over the life of the project is $328 million with an IRR of
13.82 % based on a nickel price of $4.25/lb, pre -tax.

The project economics at a nickel price of $4.25/lb, pre-tax, are shown in the
table below.

Project Life                              10 Years       25 Years       47 Years
Operating Costs (ex-works), $/lb Ni           1.91           2.12           2.36
NPV (at 8% discount rate), $M                    -            275            328
IRR (ungeared), %                                -          13.55          13.82

Oriel has implemented a tax efficient corporate structure in which to operate
the project. However, the project economics have been analysed on a pre-tax
basis as Oriel is currently negotiating agreement to have amended taxation
legislation applied to the project which may offer relief from corporate income
tax for up to 10 years.

Oriel is at an advanced stage with the negotiations for an exclusive off take
agreement with ThyssenKrupp Metallurgie that covers worldwide sales of the
ferronickel. At this stage of the project development costs associated with the
transportation to market have not been factored into the cash cost of
production.

The project is extremely well served with main utilities such as power (500kV
transmission lines), gas (pipeline linking Russia and Kazakhstan) and main rail
line linked to the extensive rail system available throughout CIS, Russia and
into China from the nearby town of Zhitiqara. The main infrastructure elements
in the capital estimate, include:

   *a new 110 kV power line and gas pipeline from Zhitiqara,
   *a new rail siding and handling facilities at Zhitiqara,
   *a new access road linking the site with existing national road and some
    limited upgrading of the existing national is also provided in the capital
    cost, and
   *repairs to an existing water reservoir and the construction of a water
    supply line.

This infrastructure has been designed to be suitable for three 80 MW DC arc
furnaces, should an additional furnace be constructed at a later date.

When constructed and in full production the operation will directly employ 752
personnel in a region that suffers from low industrial activity. Socio-economic
studies show that the project will bring much needed employment to the region
and will be welcomed by the local population.

Dr Sergey V. Kurzin, Executive Chairman, said "I am pleased that this major
milestone has been successfully reached on the Shevchenko Project. Oriel is now
working with Endeavour Financial, its financial advisers, to look at the best
way to advance the project in order to unlock the maximum value for the
shareholders. We are therefore considering various options as to how to progress
the project including financing and strategic partnerships. The long term
sustainable supply of nickel to the growing markets in Asia, Russia and Europe
is the main objective of the Shevchenko nickel project and we have reached the
stage where it is much closer to becoming a reality. "

                                      - Ends -

For further information, please contact:

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

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

Jonathon Brill/Billy Clegg, Financial Dynamics
Tel: + 44 (0) 20 7831 3113

Vanguard Shareholder Solutions
Tel: [phone]




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