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08 September 2005
8 September 2005
Steffen, Robertson & Kirsten (UK) Ltd (SRK) has completed a preliminary
assessment study ("PAS") on Oriel's 100% owned Voskhod Chrome deposit located in
the Khromtau District of the Aktobe Region of western Kazakhstan. On the basis
of the PAS, Oriel has decided to proceed with the development of the project
purchased Voskhod in February 2005 for the equivalent of US$15.0 million in cash
and the allotment of 9,181,352 shares, at the time valuing Voskhod at US$25.0
million.
• Project Net Present Value (NPV) of US$329 million (pre tax) with an
Internal Rate of Return (IRR) 62%, using a 10% discount rate and a chromite
ore (high grade lumpy and fines concentrate) sale price of US$170 per ton.
• Heinz Pariser report gives chromite ore (lumpy and fines concentrate) sale
prices ranging from US$142 to US$200 per ton to markets in Russia and
China at the current time depending on the grade and penalty constituents.
August 2004 and was sufficiently confident of the data set to place them into
This resource statement complies with National Instrument (NI) 43-101 standards
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for reporting of resources and was prepared by Dr Alwyn Annels of SRK. The
economic estimate has been based entirely on the Indicated resources and was
prepared by Mr M Beare of SRK in July 2005. Dr Annels and M Beare are both
Executive Chairman, Dr Sergey V Kurzin said; "The results of the PAS study give
chrome orebody. In summary, the selling price is higher, the operating costs are
lower and as a result the project economics are better than our preliminary
estimates at the time of purchasing this high return asset. Financing of this
initial phase of the project will be provided entirely from Oriel's existing
SRK was assisted in the production of the PAS by Heinz Pariser, Alloy Metals &
Steel Market Research ("Heinz Pariser"), which provided the chrome ore marketing
and pricing data. Mintek, South Africa, was used for the process options and
preliminary plant design. The SRK study authors were Dr A Annels and M Beare,
1936. This massif is 82 km long in a NNE direction and covers an area of 920
km2. The host rocks to the deposit have been subjected to hydrothermal
dip of 28o. Two grades of ore are recognized, "Rich" and "Subordinate" which are
separated on the basis of a grade threshold of 45% Cr2O3 classified under the
State Committee of Resources (SCR). In January 2003 the SCR determined this
SRK conducted an audit of the SCR estimate and were sufficiently confident of
the data presented to place these Russian C1 plus C2 resources into the "
data and to provide geotechnical and hydrological information for developing the
totalling 12,334 metres. Ore intersections have confirmed the tenure of the
SRK notes that Voskhod is situated in a mining district generally well served by
infrastructure. Voskhod is adjacent to the Donskoy GOK mining complex and the
aptly named town of Khromtau. SRK considers that there are no significant
dedicated power line. Process water for the mine operations will be sourced
The mine will be fully mechanised and SRK has proposed a ramp access to the
orebody with mining by a sub level caving system for ore production of 700,000
tons per annum giving a projected mine life of 25 years. Mined grades delivered
to the beneficiation plant have been estimated at 43.7% Cr2O3 after mine
recovery and dilution factors have been applied. Mintek has provided process
options to produce a number of saleable chromite ore products. The plant would
units with sufficient flexibility to allow high grade ore to be crushed and
prove feasible.
It is expected that the proposed plant will be able to produce two products,
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annual sales are expected to be in the order of 511,000 tons split approximately
as to 322,000 tons for the 'lumpy' material and 189,000 tons for the fines
concentrate.
Marketing data supplied by Heinz Pariser has indicated that the sale price of
chrome ore products from Kazakhstan during the first quarter 2005 have ranged
interested consumers of the Voskhod products both in China and Russia and will
initial revenues from chromite production. This estimate does not include
financing, administration and taxation costs. Cash operating costs over the life
of the mine have been estimated at US$24.8 per ton of ore mined which equates to
a cash cost of US$34 per ton of chromite product sold, based on an assumed yield
of 73% saleable products from the run of mine ore. The project NPV, pre
financing charges and government taxes, at a chromite sale price of US$170 per
ton and a 10% discount rate is given as $329 million with an IRR of 62%. The
range of NPV's and IRR's at chromite sale prices of US$142 and US$200 per ton
are US$212 million at 46% and $454 million at 78% respectively and indicate
Our advisors, Endeavour Financial, have provided Oriel with early confidence
reserves and the amount of potential debt financing places Oriel in a position
where it does not envisage any requirement for further equity raising for the
development of Voskhod.
The SRK report has provided Oriel with sufficient confidence to proceed to the
detailed proposal to undertake the DFS for completion by 2nd quarter 2006 in
Oriel has decided to commence the design and construction of the access ramp to
the Voskhod orebody and has commissioned SRK to prepare detailed designs for the
ramp and associated development works for submission to the relevant Kazakh
authorities for approval to start engineering works during 2nd quarter 2006.
Oriel confidently expects production of chromite ore from the Voskhod deposit to
Shevchenko
Further to earlier announcements Oriel now expects that the completion of the
timetable for the completion of the DFS has been pushed out by delays in
receiving final tenders and re-engineering work on some of the more complex
This revised timetable has not impacted on progress in other areas and Oriel
with its advisor Endeavour Financial, has short listed a number of multilateral
In addition, Oriel continues to receive excellent support from both the regional
and the Federal Government in Kazakhstan for both Voskhod and Shevchenko and
this is expected to continue, as the projects develop, into material assets for
the company.
_______________________________________________________
Dr Alwyn Annels, PhD, CEng, FIMMM is a Principal Mining Geologist at SRK (UK)
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person in accordance with definitions set out in National Instrument 43-101 and
Mr Mike Beare, BEng, CEng, MIMMM, Senior Mining Engineer at SRK (UK( Ltd), and
accordance with the definitions set out in National Instrument 43-101 and he has
ENDS
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