Updated March 27, 2008

    Mechel

Group stated that has arranged with the British Oriel Resources directors' board and almost half of stockholders about the purchase of the company stocks on the assumption of $1,498 billion value. The unnamed source was quoted as saying that Mechel already has the consent of more than 51% of the company stockholders.

ICT Group of Alexandr Nesis, owning 25,6% of the company stocks, is among them. The experts consider the transaction, envisaging 13,7% bonus, rather favorable for Mechel.

   Mechel Group has also declared recently that has come to the agreement with the company directors' board and 46,6% of stockholders about its offer support to purchase 100% of the British Oriel Resources. The company stockholders have also agreed to sell the stocks belonging to them even in case of competitive

offer receipt. The source, close to Oriel, asserts that Mechel has already enlisted the consent of stockholders, owning more than the controlling interest. "Their verbal consent is already carried, but it is not documented yet", he says.

   Mechel will offer each Oriel stockholder $2,1986 per stock. This sum corresponds $1,498 billion for 100% of the company, which capitalization at the alternative investment market (AIM) of the London Stock Exchange has gone 0,5% up and has totaled $1,35 billion as of March, 27. In Mechel statement goes about the offer that envisages 13,7% bonus to the market value of the company as of February, 29.

This day Mechel declared about the intention to issue the offer to 90% to the average Oriel quotations for the last half-year.

   ICT Group vice-president (owns 25,6% Oriel stocks) Nikolay Dobrinov said that the Group was absolutely pleased with

the transaction. "Judging by the offered price, both the buyer and the market estimated the project as extremely successful", he says. "To my mind, any sound businessman should not refuse such favorable offer". The source, close to Oriel, adds that the chairman of Oriel board Sergey Kurzin (owns 1,4%) was among the agreed.

   Oriel Resources is a chrome and nickel mining and processing company formed in 2003. It owns the Tikhvin ferrochrome smelting plant near St.

Petersburg and two deposits in Kazakhstan – Voskhod (chrome reserves are 19,51 million tons) and Shevchenko (nickel reserves are 21,4 million tons). The operating profit for the first 2007 half totaled $609 000, the net loss was $6,8 million. The company stocks are listed at AIM and the Toronto Stock Exchange (TSX). The largest stockholder is ICT Group of Alexandr Nesis, which has purchased 63% of company stocks in 2006, and now owns 25,6%. Also the coowners comprise businessman Alexander Mamut, Israeli Baran Group and the family of Israeli businessman Ekhud Riger.

   Analysts are convinced that Mechel offer is favorable, in spite of the relatively high bonus.

"The company makes the important strategic purchase in terms of Mechel plans to increase the production of rust-resistant rolled products up to 200 000 tons a year", explains Maxim Khudalov from Metropol Investment Company.

Experts do not consider that the transaction is onerous for Mechel. "According to the forecast indices the company's ratio debt/EBITDA is 1,25, and that is very good", explains SobinBank analyst Nikolay Sosnovsky. "Even if all $1,5 billion is loaned, this coefficient will grow only by 1,4, and that will allow the company to resort to the further borrowings". Mr. Sosnovsky considers that Mechel will receive the huge 5-7% bonus to the capitalization after it realizes the projects set by Oriel and integrates them into the Group.

However, investors do not believe in the quick return from the purchase, as on March, 26 Mechel stocks have fallen 4,08% down at the New York Stock Exchange (NYSE).