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Oriel on Reuters

[bulliongogo]

21Jun2005 RTRS-INTERVIEW-Steel firms line up for Oriel output from 2007 By Ben Harding LONDON, June 21 (Reuters) - London-listed miner Oriel Resources Plc said on Tuesday steel producers were queuing to book production from its chrome and nickel mines in Kazakhstan once the first of them begins production in 2007. Executive Chairman Sergey Kurzin told Reuters that German steelmaker ThyssenKrupp had signed a letter of intent with Oriel to take supplies of ferro-nickel when its Shevchenko mine in northern Kazakhstan starts producing in 2008. "ThyssenKrupp are keen to take up to 100 percent. We have a letter of intent with them," Kurzin said in an interview in London, adding that German and South African banks were looking to fund construction of the 31,000 tonnes a year nickel mine. Several Chinese firms were also very interested in financing the project with a view to taking production, he added. Nickel prices are near 15-year highs on strong demand and are expected to advance further as stainless steel makers vie for roughly 1.2 million tonnes churned out worldwide each year. Oriel is also talking to brokers Canaccord about a share placement to raise 20 to 40 percent of the initial construction cost, which is currently projected at $346 million. A more detailed cost estimate, expected to be higher, is due out around September when it publishes a full economic feasibility study. Kurzin said the deposit could be mined for longer than the 15 years originally stated, raising the project's net present value to around $800 million from $500 million today. "By completion of the pre-feasibility study, the company believes that we will have 25 years mine life (according to international standards) and another five to 10 years mine life resource," Kurzin said. However the rising cost of energy will push up the cost of nickel production from current estimates of $1.53 a pound, though by less than the 30 percent consultants Brook Hunt have predicted for the industry and still well below prices of around $7 a pound on the world market. Shares in Oriel, which has a market capitalisation of around 70 million pounds, have fallen as low as 21-1/2 pence since listing for 65p on London's junior AIM stock exchange in March 2004. The stock was up 7.3 percent to 37p on Tuesday. Oriel said its Voskhod chromite deposit, 400 km from Shevchenko, should be producing by 2007, just two years after acquisition. "We are talking to a number of Chinese and Russian companies. They are also prepared to build processing plants if we supply long-term demand," said Kurzin. "It's (in) advanced talks. The interest is there and it's very high." Chrome prices are hovering around seven-year highs on firm aerospace demand, although prices have softened recently. ((Editing by Bernard Halloran; email: [e-mail] Reuters Messaging: [e-mail] [phone]))