Chromium...ORL.TO has a property, LIM is going ahead with Nkomati but their mkt cap is $1bn+
Oriel Resources' SRK Study Appears Promising
By Karl Heilman
06 Jun 2006 at 02:46 PM EDT
St. Louis (Resource Investor) -- Oriel Resources [TSX:ORL; AIM:ORI] announced in a company press release the outcome of a recent SRK Feasibility Study that indeed appears to be optimistic. The positive outcome of the study is leading the company to “fast-track development of the Voskhod Project,” according to a press release today.
In February of last year, Oriel Resources purchased the Voskhod chrome mine in northwestern Kazakhstan for $15 million. The study released today estimates operation cash flow for the life of the mine to be $1.2 billion with average annual cash flow of $85 million. Even with a capital expenditure estimated at $131 million, it’s not a shabby return.
Highlights
The SRK study highlights are numerous, however the most notable being the potential for significant production increases, which could make Oriel Resources one of the three top chrome suppliers in the world.
The study stated that there were resources for an 80% increase in saleable chrome-ore per annum, reaching 900,000 tonnes.
Additionally, the chrome-ore at the Voskhod mine is considered to be of a high quality, generally up to 48% Cr2O3, while up to 57% Cr2O3 grade concentrate is anticipated to be produced.
The study shows an indicated resource of 19.51 million tonnes at 48.47% Cr2O3, a 9.5% increase of contained chrome content over the Preliminary Assessment Study (PAS), and an inferred resource of 1.57 million tonnes at 41.05% Cr2O3, a six-fold increase of contained chrome content over the PAS.
SRK used an ore price of $145 per tonne in the study financial model. According to the release, Heinz Pariser forecast a price of $154-$224 (average of $183) per tonne through to 2015.
According to the company, capital expenditure is estimated at $131 million. Endeavour Financial are advising on project finance options and is confident that the Voskhod Project will support a debt facility of more than $100 million.
As mentioned earlier, the study estimates operation cash flow for the life of the mine to be $1.2 billion with average annual cash flow of $85 million. The project is expected to have a mine life of 14 years with the potential of extension over 20 years.
Notes From the Top
The executive chairman of Oriel Resources, Dr. Sergey Kurzin commented on the SRK feasibility study in the release:
“Results from the SRK feasibility study are extremely encouraging with an almost 100% increase in the mine’s output from our initial studies. Heinz Pariser’s extremely positive market report shows growing ore demand especially in Asia which, in conjunction with our own advanced negotiations with potential off-takers, exceeded our initial expectations and this demand is significantly greater than Voskhod’s production output. This has resulted in the company decision to increase the output of saleable chrome ore product by 80%, therefore considerably enhancing the project’s economics.”
Additionally, the mine is slated to be prepared relatively soon, and the location of the project is deemed as favourable for a number of reasons, according to the company.
“We have made excellent progress in a short space of time and will have the mine in production in early 2008; only 3 years from acquisition. The development of the road, rail and power-supply infrastructure, whilst increasing the capital cost, will give us the security of independent and long-term production.” Kurzin stated.
The mine, located in a region close to road and rail infrastructure, is also situated between Eastern Europe and resource-hungry China.
Additionally, the world’s largest chrome mine, Donskoy GOK, owned by KazChrome, is located approximately three kilometres north from the Oriel project, giving the region a great deal of experience when it comes to the critical metal we have come to rely upon for a number of applications.
Chromium
Chromium’s uses are numerous, including its uses in creating stainless steel, heat-resisting metals and super-alloys, as seen in a recent ResourceInvestor article.
Basically, for a metal such as chromium, there exists no simple substitute, as it is a practical, technologically critical and a widely used metal.
Conclusion
Oriel shares closed out at C$0.65 cents for the day, up 4 cents.
Judging from Oriel’s latest release, it appears that it may be beneficial to keep an eye on the Voskhod project. Oriel’s expected 80% increase in saleable chrome-ore per year certainly seems shiny. |
