RNS Number : 4862V
Oriel Resources PLC
29 May 2008
AIM: ORI
TSX: ORL
PRESS RELEASE
28 May 2008
Oriel Resources plc
Final Results for the year ended 31 December 2007
_________________________________________________________________________ _____________
Oriel Resources plc, ("Oriel", or the "Company") the London-based chrome and nickel mining and processing company, announces its
unaudited results for the year ended 31 December 2007. All amounts are presented in US Dollars.
Financial highlights
* Total of $60.0m drawn down from Voskhod funding.
* Commencement of smelting at the Company's Tikhvin ferrochrome smelting plant
Post year-end
* Mechel cash offer for all of the shares in Oriel goes unconditional
The annual general meeting of the Company will be held at Ground Floor, 1 Red Place, London W1K 6PL at 12.00 noon on Friday 29 August
2008.
Executive Chairman, Dr Sergey V Kurzin commented:
"2007 and the first five months of 2008 have proved to be yet another significant period of development for Oriel Resources.
From the continuing development at the Voskhod chrome project, the successful commissioning of the four furnaces at the Tikhvin high
carbon ferrochrome ("HC FeCr") smelter ("Tikhvin"), the completion of a US$96 million private share placement for the assessment, evaluation
and engineering works for additional FeCr production and further progressing of the Shevchenko project, the choice of continuous atmospheric
tank leach technology to process Shevchenko ores, the initial sale of HC FeCr product from Tikhvin and the signing of a chrome ore off take
contract from Voskhod, the completion of a US$50 million secured debt facility for working capital requirements of Tikhvin to, of course,
the wholly unconditional acceptance by Oriel's shareholders of the cash offer from Mechel for the entire issued share capital of Oriel."
Executive Chairman's Statement
Emergence of a new, integrated stainless steel industry supplier
I am pleased to present Oriel Resources plc's financial results for the year ended 31 December 2007. Needless to say, the Company's
directors and I are extremely pleased to confirm that the Cash Offer from Mechel for the entire issued share capital of Oriel has been
accepted by the shareholders.
The Offer values the entire issued and to be issued share capital of Oriel at approximately US$1,498 million (�749 million).
In the four years since Oriel's formation, management has successfully built a valuable portfolio of significant ferroalloy assets and a
platform to become a premier supplier to the stainless steel industry. It was against this background the Directors believed the Offer from
Mechel provided an attractive opportunity for Oriel shareholders to realise their investment.
In addition to negotiating and completing the Mechel Offer, this has been an immensely busy and challenging year for Oriel.
Period and post period highlights include:
* the on-going development of the Voskhod chrome project,
* the commencement of high carbon ferrochrome production at the Tikhvin smelter and successful commissioning of all four furnaces,
* the choice of atmospheric acid tank leach technology to process Shevchenko ores,
* the completion of a US$96 million private placement for general working capital and for the assessment, evaluation and engineering
works for additional FeCr production at Tikhvin and further progressing of Shevchenko project and;
* the securing of a US$50 million loan for the continuing development of the Tikhvin plant.
Mechel Offer
On 26 March 2008, Mechel offered a cash payment of 219.86 US cents for each Oriel share. The Offer valued the entire issued and to be
issued share capital of Oriel at approximately US$1,498 million (�749 million) and represented a premium of approximately 13.7% to the
closing price of 96.75 pence per Oriel share on 29 February 2008 and a premium of approximately 90.2% to 57.83 pence, being the average
closing middle market price of an Oriel share for the six-month period prior to the same date.
Further to Mechel's announcement on 17 April which advised the market that the cancellation of admission to trading of Oriel shares on
The London Stock Exchange was to take effect on or around 6 May 2008, Oriel released an update on 2 May, advising that the trading will not
be cancelled on that date, but is now intended to take effect at or around the end of June 2008. Oriel is due to notify the market of the
revised date once ongoing discussions relating to the Company's continuing financing arrangements have been concluded.
Development continues at Voskhod
I am very pleased to report that on-going development of the Voskhod chrome project is advancing exceptionally well. Subsequent to the
completion of the box-cut in Q4 2006 and installation of supporting steel arches, development of the decline face has now reached 1,386m
from the surface portal. Thanks to Central Asia Mining's aggressive work schedule, current decline advancement rates are in excess of
scheduled forecasts. In that light the project is on track to achieve first production and sales during Q3 2008. The installation of power
infrastructure as well as of temporary roads, offices, fuel tank farm and a concrete batching plant has been completed. Considerable
progress is being made in the construction of process plant buildings, permanent roads, tailings dam, railhead and railhead access road.
Construction of the plant is on schedule to start production in Q3 2008.
Production and revenue generation commences at Tikhvin
Following commencement of high carbon ferrochrome production at Tikhvin in April 2007 and subsequent generation of Oriel's first
revenue, Tikhvin's management worked extremely hard to ensure that the operation's production successfully increased with construction
completion on furnaces three and four and start up of furnace two during the year. As reported in 2007, the global chromite ore shortages
made it difficult for the smelter to source at reasonable process, but by the end of Q1 2008, ore was procured and the last two furnaces
started operation. Overall the operation is continuing its ramp up towards full capacity which should be reached when ore from the Voskhod
mine arrives in Q3 2008.
Shevchenko process technology chosen
After extensive comparative analysis of all appropriate technologies for the processing of Shevchenko ores, the Board announced in
October 2007 the decision to proceed with continuous atmospheric acid tank leach technology, as it provided significantly better economic
and technical performance compared to other technologies. Leach tests indicated up to 90% nickel recovery on screened and upgraded
Shevchenko ores.
Management and Staff
I would like to thank Oriel's staff, management and consultants for their hard work, dedication and drive during 2007 and 2008. Not only
is the London team to be congratulated, but staff, management and contractors at Tikhvin and Voskhod have worked tirelessly and in some
cases, under extremely tough conditions to have successfully brought the projects to the stages the market finds them at today. In
particular, my thanks go to Nick Clarke, Randy Reichert, Dr Nic Barcza, Petro Mychalkiw and David Swan in London and to Takhir Baratov, Ray
Oates and Chris Power at the Voskhod project in Kazakhstan and Yvgeny Neshcheret at the Tikhvin plant near St Petersburg.
Dr Sergey V Kurzin
Executive Chairman
28 May, 2008
Oriel Resources Plc
Consolidated income statement for the year ended 31 December 2007
Year ended Year ended
31 December 31 December
2007 2006
Note
$'000 $'000
Revenues 36,328 -
Cost of Sales (37,282) -
Gross loss (954) -
Other income 5,328 407
Distribution costs (1,251) -
Administrative costs (32,152) (5,855)
Other expenses (11,895) (1,692)
Operating loss (40,924) (7,140)
Finance income 17,046 139
Finance expenses (9,858) (183)
Loss before taxation (33,736) (7,184)
Taxation (4,813) 1,843
Net loss for the year (38,549) (5,341)
Attributable to:
Equity shareholders of the parent (36,048) (5,257)
Minority interest (2,501) (84)
(38,549) (5,341)
Loss per share
Basic and diluted 2 (6.000)c (1.882)c
All amounts above relate to continued operations.
Oriel Resources Plc
Consolidated statement of recognised income and expenditure for the year ended 31 December 2007
Year ended Year ended
31 December 31 December
2007 2006
$'000 $'000
Exchange translation differences on 2,047 (666)
consolidation of Group entities
Net income/(expense) recognised directly in 2,047 (666)
equity
Loss for the financial year (38,549) (5,341)
Total recognised income and expense for the (36,502) (6,007)
financial year
Attributable to:
Equity shareholders of the parent (34,001) (5,923)
Minority interest (2,501) (84)
(36,502) (6,007)
Oriel Resources Plc
Consolidated balance sheet at 31 December 2007
At 31 December At 31 December
2007 2006
$'000 $'000
ASSETS
Non-current assets
Property, plant and equipment 401,753 296,374
Intangible assets 35,993 38,221
Other non-current assets 9,208 15,722
Total non-current assets 446,954 350,317
Current assets
Inventories 30,511 2,587
Trade and other receivables 77,574 21,382
Cash and cash equivalents 65,934 113,682
Total current assets 174,019 137,651
Total assets 620,973 487,968
EQUITY AND LIABILITIES
Non-current liabilities
Borrowings 149,226 89,754
Deferred tax liabilities 31,109 31,359
Trade and other payables 10,409 3,853
Provisions 714 407
Total non-current liabilities 191,458 125,373
Current liabilities
Borrowings 17,689 12,353
Trade and other payables 31,501 34,844
Income tax payable 5,081 -
Total current liabilities 54,271 47,197
Total liabilities 245,729 172,570
Capital and reserves
Called up share capital 7,076 5,475
Share premium account 399,889 309,096
Foreign currency translation reserve 2,320 273
Retained earnings (35,190) (4,296)
Equity attributable to shareholders of 374,095 310,548
the parent
Minority interests 1,149 4,850
Total equity 375,244 315,398
Total equity and liabilities 620,973 487,968
Oriel Resources Plc
Consolidated cash flow statement for the year ended 31 December 2007
Year ended Year ended
31 December 31 December
2007 2006
$'000 $'000
Cash flows from operating activities
Operating loss (40,924) (7,140)
Adjustments for:
Depreciation of property, plant and equipment 5,482 48
Amortisation of intangible assets 26 2
Taxation - (62)
Profit on disposal of subsidiary undertaking (4,700) (264)
Loss on sale of property, plant and equipment 1,900 -
Share based payments 5,154 424
Foreign exchange differences 6,567 151
Operating loss before changes in working (26,495) (6,841)
capital
(Increase) in trade and other receivables (49,770) (27,133)
(Increase) in inventories (27,925) (2,453)
Increase in trade and other payables 4,650 27,613
Net cash used by operations (99,540) (8,814)
Investing activities
Purchases of property, plant and equipment and (103,570) (49,601)
construction in progress
Proceeds from sale of property, plant and - 92
equipment and construction in progress
Purchases of intangible assets (4,022) (49)
Purchase of subsidiary undertaking (net of cash - 11,956
acquired)
Proceeds from sale of subsidiary (net of cash 7,000 (1)
disposed)
Interest income 4,115 89
Cash flows from investing activities (96,477) (37,514)
Financing activities
Issue of ordinary shares (net of issue costs) 92,394 100,000
Proceeds from borrowings 64,808 59,972
Interest paid (8,898) (185)
Repayment of finance lease creditors (35) (68)
Cash flows from financing activities 148,269 159,719
(Decrease)/increase in cash (47,748) 113,391
Cash and cash equivalents at beginning of the 113,682 301
year
Effect of exchange rate changes on cash and - (10)
cash equivalents
Cash and cash equivalents at end of the year 65,934 113,682
Oriel Resources Plc
Notes forming part of the financial statements for the year ended 31 December 2007
1. Authorisation of financial statements and statement of compliance with IFRS
The Group and Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The
Group*s financial statements have been prepared in accordance with IFRS as adopted by the European Union (*IFRS*) and as applied in
accordance with the provisions of the Companies Act 1985.
2. Loss Per Share
The basic loss per share is calculated on the loss attributable to equity shareholders of the parent and on ordinary shares being the
weighted average number of ordinary shares on issue during the period. The diluted loss per share is calculated on profit attributable to
equity shareholders and on the weighted average diluted number of ordinary shares during the period.
2006 2006
Loss per share - basic and diluted (6.000)c (1.882)c
$'000 $'000
Loss attributable to equity shareholders of the 36,048 5,257
parent
Number Number
Weighted average number of ordinary shares at 600,786,569 279,360,356
31 December
Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary equity holders by the parent by the
weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be
issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. There is no difference between the diluted loss
per share and the loss per share presented as due to the loss for the year the potential shares are anti-dilutive.
In line with IFRS 3 Appendix B, following the RTO the equity structure of the Group reflects the equity of the legal parent, including
the shares issued by it to effect the business combination. In the year ended 31 December 2006, the weighted average number of ordinary
shares has been calculated as follows:
(a) Number of ordinary shares from beginning of period to date of RTO is the number of shares issued by the Company to the owners of IPH
and Croweley.
(b) from acquisition date to end of period the number of shares is the actual number of shares of the Company outstanding during the
period.
The full financial report & accounts are available on SEDAR (www.sedar.com) or on the Company's website (www.orielresources.com).and
thereafter will be available from the Company's registered office: 1 Red Place, London W1K 6PL.
ENDS
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Notes to Editors:
Oriel Resources was formed in July 2003 with Dr Sergey V. Kurzin as Executive Chairman and CEO and is a London-based chrome and nickel
mining and processing company with its Ordinary Shares and Warrants admitted to trading on London's Alternative Investment Market (AIM) and
its Ordinary Shares listed on the Toronto Stock Exchange.
The Company's 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 The Republic of Kazakhstan and The Russian Federation. The Oriel group
currently has three projects, namely the Tikhvin ferrochrome smelter project, Russia, the Voskhod chrome project and the Shevchenko nickel
project, both situated in north-western Kazakhstan. Following the results of recent feasibility studies for the Russia and Kazakh-based
projects and given the current high demand for chrome and nickel products, the directors are fast-tracking the Voskhod chrome project into
production while further developing the Shevchenko nickel project. The Tikhvin ferrochrome smelter project near St Petersburg, Russia
commenced operations in April 2007.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
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For further information please contact:
Dr Sergey V Kurzin, Executive Chairman, Oriel Resources plc
Tel: +44 (0) 20 7514 0590
Nick Clarke, Managing Director, Oriel Resources plc
Tel: +44 (0) 20 7514 0590
David Swan, Company Secretary, Oriel Resources plc
Tel: +44 (0) 20 7514 0590
Gavin Dallas, Investor Relations, Oriel Resources plc
Tel: +44 (0) 20 7514 0590
Michael Padley / Michael Spriggs, Bankside Consultants
Tel: +44 (0) 20 7367 8888
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
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