Final Audit by consultant envisions $5.21 per barrel operating cost for Solv-Ex Alberta oil sands production facility; Expansion, pipeline extension would further improve cash flow.

ALBUQUERQUE, N.M.--(BUSINESS WIRE)--Sept. 26, 1995--The operating cost of the first-stage oil extraction plant to be built by Solv-Ex Corporation (NASDAQ-SOLV) on its oil sands lease in Alberta, Canada is projected at $5.21 per barrel at planned capacity of 14,000 barrels a day, according to the final audit report by The Pace Consultants, John Rendall, Solv-Ex chairman and chief executive officer announced.

Pace, a member of the Jacobs Engineering Group, was commissioned in January 1995 to conduct an independent review and audit of the feasibility study for the project in connection with financing requirements.

In its final audit, Pace placed the capital cost of the plant at $97.4 million. Shell's soaker visbreaker, a commercially proven technology, has been adopted for upgrading the bitumen into marketable oil. This step, together with the marketing arrangement with Calgary-based Gibson Petroleum announced in June, assures product marketability and should yield production in excess of design capacity of 14,000 barrels a day of heavy oil, Rendall said.

Under the pricing formula in the Gibson arrangement, Solv-Ex will receive a netback price for its oil at the plant gate which can be expected to vary with West Texas Intermediate crude oil prices. Assuming a WTI price of $19 per barrel and operating costs as reviewed by Pace, operating cash flow approaches $7.50 per barrel before debt service, Rendall said. Availability of pipeline capacity into the area, expected to coincide with future plant expansion, would increase cash flow by an additional $2 per barrel, he said.

Solv-Ex has already been granted a preliminary permit to perform site clearing, drainage work, grading and graveling for the plant site. The process for issuance of final permits is also proceeding on schedule, and Solv-Ex, having received initial comments and questions from governmental agencies, will be responding in the next few days to complete required documentation, Rendall said.

Solv-Ex will utilize modular design to permit prefabrication and construction to proceed during the winter months. Following plant commissioning, which is targeted for late 1996, a minerals extraction circuit will be added for co-production of alumina, by-product sulfates and synthetic minerals from the fine clay residues collected after oil extraction.

Jack Hentschel, principal of Charter Oak Capital, Solv-Ex financial consultant, has informed Solv-Ex and United Tri-Star, a 10% partner in the project, that presentations have been well received by various prospective lenders and that he is confident the debt package will be finalized within a reasonable period. "The Pace report," said Hentschel, "is an integral part of lender evaluation of the project. The report is a tribute to the simplicity and effectiveness of the Solv-Ex technology, as well as to the financial strength of the project. These factors have not gone unnoticed by lenders."

With acquisition of the adjoining Petro-Canada oil sands lease in July, Solv-Ex now controls a resource base approximating 4 billion barrels and possesses co-production technology capable of recovering the full range of marketable mineral products also known to be contained in the Athabasca oil sands.

CONTACT: Solv-Ex Corporation

Peter F. Butler, 505/243-7701