Oriel Resources Share Discussion Threads

[kermit] 15/12/2006 07:34

Nickel Rises to 19-Year High as Supply Is Disrupted (Correct)

By Chanyaporn Chanjaroen

(Corrects production-deficit forecast in fifth paragraph.)

Dec. 14 (Bloomberg) -- Nickel rose to its highest price since at least 1987 in London on speculation that disruptions at mines and smelters will keep production lagging behind demand through 2007.

Cia. Vale do Rio Doce, which acquired Canadian nickel producer Inco Ltd. this year, said today that its Indonesian unit may miss an output target for 2006 because of reduced power supply. French nickel miner Eramet SA has lost production since September because of a strike by miners. Prices have more than doubled in the past year.

``Gains are supply driven,'' Catherine Virga, a New York- based analyst at CPM Group, said in a telephone interview. ``The market will be in a deficit next year, extending to 2008.''

Nickel for delivery in three months gained $1,500, or 4.5 percent, to $34,750 a metric ton on the London Metal Exchange. Earlier, the metal used in stainless steel rose to $34,875 a ton, topping the previous 19-year high set on Dec. 5 by $374.

PT International Nickel Indonesia, the country's largest nickel producer, may miss this year's output target of 71,000 tons as lower-than-average rainfall since October reduced electricity at the company's hydroelectric power generator, the company said today in an e-mailed statement. BHP Billiton Ltd., the world's largest mining company, said Dec. 11 there will be a combined production shortfall this year and next of 57,000 tons.

``Supply-wise we haven't seen any significant increase,'' Mo Ahmadzadeh, president of Mitsui Bussan Commodities Ltd. in New York, said today by phone.

Aluminum Rises

Aluminum rose to the highest in more than six months as stockpiles of the metal used in beverage cans and cars dwindled, spurring speculation that supplies are tightening.

Inventory of the metal tracked by the LME has dropped 13 percent since the end of June, according to exchange data. The production deficit widened to 328,000 tons in the 10 months to October, from 167,000 tons in the first nine months of the year, the Ware, England-based World Bureau of Metals Statistics said yesterday.

``There's not much of the metal around at the moment,'' said Adam Rowley, a London-based analyst at Macquarie Bank Ltd., Australia's largest securities firm. Prices may rise to $3,000 a ton in the next few months, Rowley said.

Aluminum for delivery in three months gained $64, or 2.3 percent, to $2,864 a ton on the LME, after earlier reaching $2,875, the highest since May 23.

Prices of aluminum, the most-traded metal on the LME, have gained 25 percent this year, lagging behind copper, zinc and nickel, as output grew in China, the world's largest producer.

Production in the U.S., the second-biggest source of aluminum, dropped 7.9 percent last month after the closing of a smelter in Maryland owned by Alcoa Inc., according to the Arlington, Virginia-based Aluminum Association.

[adam] 14/12/2006 15:33

nickel over $16/lb !

[mikehardman] 06/12/2006 14:43

lagging 12% behind TSE:ORL...

[mikehardman] 06/12/2006 13:21

I like that article having a NPV for Voskhod + Shevchenko of 4-times present mkt.price :)

[flagon] 05/12/2006 22:18

New article about Oriel here.





Flagon

[adam] 30/11/2006 17:38

joint backing from Russian/Kazakh governments when credit already arranged. at whose request?

[adam] 21/11/2006 09:25

only 5% lower as CDN/GBP is now over 2.17. London should be the lead market though as there are more shares in issue than the CDI's, typically volume is greater too.

[brad1] 21/11/2006 08:46

approximately 10% lower than on the TSX!

[brad1] 20/11/2006 16:37

1st tick up since back from suspension, hopefully the sign of things to come. This is a very interesting story and if all goes to plan we could see a serious rerating in the near future.

[adam] 15/11/2006 12:25

> The smelter is not yet complete

It is nearly complete, but then Voskhod is FAR from being complete (a year away at least) and yet Nesis has sold ALL of his smelter to a company with an far from complete chrome project and a more distant nickel project. So you can argue he is halving his stake in TSP almost and paying an additional $100m for very incomplete project(s)! I think he got a good deal, but i'm not sure where the share price would be if this deal was not on the table..
It does not state whether this deal was a condition of the financing, one must assume not, but then this deal seems likely to go through, so perhaps the funders took a view. Bottom line is though that Oriel will have cashflow Q1 2007 and be able to produce finished chrome all being well, whereas previously it would not.

[grgkecer] 15/11/2006 12:07

The smelter is not yet complete, and the welter of problems its ownership brings makes it as much a liability as an asset.

[adam] 15/11/2006 11:53

They already have the funding! - announced today, so I am perplexed. It is a moot point. I have read risk statements b4 thanks.
Additionaly your maths is misleading they have not paid $100m for 63% of Oriel. Oriel now 100% owns the Smelter. Independent shareholders (RAB 19%) will get a vote on this, and that will not include Nesis.
The status is that Q1 2007 will have TSP cash flow, Voskhod is on schedule (see today's release) and is now fully financed!. Risks remain, but are being reduced. i would much rather that Nesis did not have 63%, but presumably Kurzin struck the best deal he could. I think this has significant upside and I am glad of the negativity and "i've sold out" statements here as it is a good indication of sentiment. I would be more worried if everyone were unrelentingly positive.

[grgkecer] 15/11/2006 11:37

adam

It doesn't sound to me that this would "enhance their ability to get the funding":

Time and cost overruns in the construction of the TSP or the development of the VCP may adversely affect the Enlarged Group.
The TSP is approximately 85 per cent. complete and the Directors expect that construction of the TSP will
be completed in early 2007. Commercial smelting is expected to start in the first half of 2007. The VCP is also
being developed and is currently expected to start production in the first half of 2008. As with all
construction and development projects, there is a risk that these projects may take longer than expected or
cost more then budgeted. If this were to occur the pay back period might be affected. In addition, the TSP
will need to be commissioned by the Russian authorities. The commissioning process is complex and
involves approximately seventeen different authorities. Although production can legally commence and
continue prior to commissioning taking place, there is a risk that if production continues for an extended
period without commissioning taking place, the Russian authorities may seek to subject the TSP to a
supervision regime. If the Russian authorities were to take such action, it could adversely affect the
profitability of the TSP.

The Enlarged Group will require additional financing which may not be available on economic terms.
The Enlarged Group will require additional finance to complete the development of the VCP. The Enlarged
Group is required to fund approved exploration expenditure on certain of the properties on which it has
exploration rights, failing which the Enlarged Group's exploration rights in the relevant property may be
either reduced or forfeited. The Enlarged Group may acquire exploration rights in other exploration
properties which may require acquisition payments to be made and exploration expenditures to be
incurred. In addition, the TSP may require additional funding for upgrades, repairs and expansion. The
sources of funding currently available to the Enlarged Group are through the issue of additional equity
capital, project finance or borrowing. There is no assurance that the Enlarged Group will be successful in
raising sufficient funds to meet its requirements.
In addition, there can be no assurance that the Enlarged Group will be able to refinance existing facilities
on economic terms when they expire.

And I am not sure that the cashflow from the smelter prior to production from Voshkod is going to be of any great significance. As for the $100M, it doesn't seem a high price for 63% and control of Oriel, without having to buy the rest.

[frontiercapital] 15/11/2006 11:16

Oriel Resources gets funding of to 120 mln usd for Kazakhstan Voskhod project

LONDON (AFX) - Chrome and nickel exploration and mining company Oriel
Resources PLC said it has received a loan facility for up to 120 mln usd for its
Voskhod chrome project in north western Kazakhstan.
The company will receive 100 mln usd in the first trance of financing for
the development and operation of Voskhod. The second tranche comprises 20 mln
usd for potential overruns related to capital and working capital costs at the
site.
The facility is expected to close by the end of this year, with the first
drawdown expected in the first quarter of 2007.

[e-mail]

[unionhall] 15/11/2006 11:14

Well I've taken my profit - Don't know enough to be comfortable with all the complexities here.

Better to keep to my comfort zone....

Best of luck to holders.

[adam] 15/11/2006 11:07

"The Re-Admission Document does not support your view about financing"

Where? I said

"The early cashflow from TPS and the $100m has enhanced their ability to get the funding"

Where does it dispute that? It is common sense by the way that early cash flow from TPS in addition to the cash and assets acquired will encourage a lender to offer more agreeable terms.

[grgkecer] 15/11/2006 10:51

The Re-Admission Document does not support your view about financing, adam. And you ignore these risks it lists; I don't think these risks are worth taking:

Risks relating to the business of the Enlarged Group

IPH is subject to litigation which may result in the construction of the TSP being prohibited or delayed or
in significant additional expenditure for the IPH Group or result in senior management being distracted
from the commercial business of the IPH Group.

IPH is party to an investment agreement which will have the effect of reducing its rate of corporation tax
from 24 per cent. to 6.5 per cent. for the period until the investment by TFZ in the TSP has been recouped
and for two years thereafter. This reduced tax rate has been taken into account in valuing the TSP for the
purposes of the IPH Acquisition. If the investment contract with the Leningrad Region is found to be invalid,
TFZ is likely to have to pay more tax than currently anticipated and its financial results will be adversely
affected.

Pollution from hexavalent chromium may adversely affect the Enlarged Group.

Time and cost overruns in the construction of the TSP or the development of the VCP may adversely affect
the Enlarged Group.

The Enlarged Group will require additional financing which may not be available on economic terms.

The Enlarged Group needs to retain its key employees and to attract further suitably qualified key employees.
A failure to do so may adversely affect it's financial position.

The Enlarged Group will have a number of large shareholders whose interests could conflict with those of
other shareholders.

The state of Kazakhstan is granted a pre-emptive right to buy out a share in assets acquired by the Group
or in relation to transfers of shares in the Company's subsidiaries.

The Enlarged Group could be subject to excess profits tax if its profit exceeds certain thresholds specified in
certain of its subsurface contracts.

Risks relating to the tax consequences of structuring the holding in the VCP

[frontiercapital] 15/11/2006 10:50

Great news!

[adam] 15/11/2006 10:15

The early cashflow from TPS and the $100m has enhanced their ability to get the funding. I'm not sure if it would have been quite that easy otherwise. People need to look forwards 12 months. What will a fair price for ORI be then? The key questions seem to be 1) The price of Nickel, chrome, 2) Slippage in schedule for build of Voskhod - i.e. operational risks 3) Getting screwed by Nesis. 4) Country risk. The flip side of course to the possibility of Nesis screwing minorities is that he does the opposite and brings his prodigous political and financial clout to our mutual benefit.

[frontiercapital] 15/11/2006 09:10

Oriel Resources PLC
15 November 2006


AIM: ORI
TSX: ORL
PRESS RELEASE
November 15, 2006

Oriel Resources plc

Operations update on the development of the
Voskhod Chrome Project, Kazakhstan

Funding agreed
--------------------------------------------------------------------------------

The Directors of Oriel Resources Plc ('Oriel' or 'the Company'), the
London-based chrome and nickel exploration and mining company, are pleased to
advise an update on the progress of the development of its Voskhod chrome
project ('Voskhod'), in north western Kazakhstan. We are pleased to confirm that
the funding for the development of the project has been agreed and that the
project remains on schedule.


Debt Financing

Oriel is pleased to announce that it has received and accepted credit approved
commitments from UniCredit Markets & Investment Banking acting through
Bayerische HypoVereinsbank AG ('UniCredit Group (HVB)') and WestLB AG ('WestLB')
to jointly arrange and underwrite a Project Term Loan Facility for up to a total
of US$120 million for its Voskhod Chrome Project ('Facility'). The Facility
consists of two tranches:

• Tranche 1 - US$100 million for the construction, development and
operation of Voskhod; and
• Tranche 2 - US$20 million for potential overruns related to capital
and working capital costs at Voskhod.

The Facility will be subject to the satisfaction of certain conditions including
the securing by Oriel of all requisite regulatory permits and licenses and
completion of final loan documentation.

The Facility is expected to close by the end of this year, with first drawdown
expected in the first quarter of 2007.

Endeavour Financial is advising on the debt finance and will be working with
Oriel to complete the document as soon as possible.


Chrome Ore Off-take

Conditional Letters of Intent ('LOI') for the supply of chrome ore and
beneficiated chrome ore from the Voskhod Chrome Plant have been signed by the
Company with five groups within the stainless steel and ferro-chrome industry:
two end-users in Europe and Russia and three major traders in Europe and China.

The excellent quality of the Voskhod chrome ore is confirmed by the high level
of interest in off-take demand. Demand has exceeded output by almost double the
expected average production of 900,000 tonnes per year. The quality of the ore
has been evaluated by SRK from hundreds of samples from the core drilling
programme completed earlier this year as well as feed back from prospective
consumers.

Off-take agreements are also now well advanced with three of the parties with
whom LOI's have already been signed. One of these parties is the recently
acquired Tikhvin ferro-chrome smelter plant near St Petersburg in Russia.

Demand for beneficiated chrome ore from the Tikhvin plant will be satisfied from
approximately one-third of the Voskhod production, thus leaving the other two
thirds of Voskhod's production for sale to other producers. Oriel is confident
that off-take agreements for 70% of production will be finalised before the end
of the year.


Voskhod Mine Development

Management is pleased to report on the following progress of mine development at
Oriel's Voskhod Chrome Project:

• Successful completion of the box cut enabling underground contractors
(Byrnecut Mining and Vostokshakhtstroy, a local Kazakh contractor) to
establish the portal and initiate development of the decline.

• Commencement of the foundation work for the first ventilation shaft.

• Near completion of a temporary road from the box cut to the ventilation
shaft opening.

• Completion of and start of operations at Voskhod's shotcrete batching
plant that will manufacture concrete required for decline and cross cut
developments.

• Advanced stage of upgrading Voskhod's 70-room employee accommodation
facility in Chromtau.

• Nearing completion of the mining contract and process and engineering
contract.


Dr Sergey V Kurzin, Executive Chairman of Oriel commented:

'The Board are extremely pleased that we have been able to secure a financing
commitment from such world-class financial institutions and we look forward to
working with the Lenders in completing the documentation for the US$120 million
financing, as soon as possible.

'Also, I am happy to report that Oriel's experienced project management team is
keeping Voskhod's mine development on schedule.

'The conclusion of the financing along with the recent acquisition announcement,
subject to shareholder approval, means that we will have everything in place,
including off-take agreements, to allow us to develop what is a world class
deposit. The enlarged group will have a strong cash position and this will give
us the ability to advance the Shevchenko Nickel Project, another potential world
class deposit that we have in Kazakhstan.'


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

[grgkecer] 15/11/2006 07:41

So with Voshkod development funding in place, who needs the takeover?

[vino] 13/11/2006 17:32

This seems to smell of protection thinly disguised to protect the ongoing interests of the old ORI. As you say above 11 pages of risk- I hope that they have the minority shareholders in mind rather than the majors who can at any time after 12 months do the Russian roulette.

[grgkecer] 12/11/2006 11:01

Much of the document relates to the valuation of Oriel. 11 pages are devoted to risk factors, which would appear to be significantly enhanced if the deal proceeds. It is not at all obvious to me that existing shareholders benefit from it. The demand for the products would surely enable finance to be obtained from other sources, and the benefits to both parties of selling to TSP would be there anyway, if the smelter is actually completed. If it isn't, the Russians would appear to get 63% of the company for $100M, without having to pay the same price for the rest of the shares.

[supersturrock] 11/11/2006 18:03

Document is over 350 pages !!! Dont know where to start but cashflow from Q1 next year is a v. pleasant surprise.