Black Iron Inc. (TSX:BKI,OTC:BKIRF,FWB:BIN) has launched its campaign on the Investing News Network’s resource channel.
Black Iron is working towards putting the Shymanivske iron ore project into production in Ukraine. The project has access to skilled labor, power, rail and ports that provide entrance into the markets in Europe, Russia, Asia and the Middle East. The existing infrastructure at Shymanivske is expected to help reduce the overall capital costs of putting the project into production. The Shymanivske project’s 2017 preliminary economic assessment (PEA) outlines a two-phased mine development plan that allows for a relatively quick and lower initial capital construction cost to achieve positive cash flow through production.
The first phase of development is expected to produce 4 million tonnes of ultra-high-grade 68 percent iron concentrate per year before expanding to 8 million tonnes per year in the fifth year of production. The project also boasts encouraging economics such as an after-tax NPV of US$1.7 billion and an IRR of 36 percent based on a conservative long-term iron ore price of US$62 per tonne for a 62 percent iron product. The iron produced from the Shymanivske deposit can be concentrated to 68 percent with very low impurities, making it ideal for the production of more environmentally sustainable high-grade steel.
Black Iron is currently in the process of obtaining the surface rights for its mine, refinery and tailings facilities. The company is working to secure offtake agreements and financial partners to help fund the development of the mine, which is expected to be in production by 2023. To date, Black Iron has signed an MOU with Glencore (LSE:GLEN) in exchange for an investment into project construction for the full phase one planned annual production of 4 million tonnes. The company is currently in discussions with other interested parties to secure the balance of funding required for project construction.
Black Iron’s company highlights include the following:
- Ukraine has demonstrated its desire to move closer to European integration and is combating corruption within the country.
- The World Bank ranks Ukraine 64 out of 190 countries in its 2020 “Ease of Doing Business Index,” which is an improvement over its 156-place ranking 10 years ago.
- The country is a mining-friendly jurisdiction with strong local and national support.
- In 2014, Black Iron brought the project to the brink of starting construction, having secured US$511 million from the world’s ninth-largest iron ore mining company, Metinvest. Metinvest divested their ownership back to Black Iron in 2016 when they fell under temporary financial distress.
- Black Iron temporarily put the project on care and maintenance when war broke out in eastern Ukraine.
- The project is over 450 kilometers away from the conflict zone, where the front line has not moved in over five years, which has resulted in the return of foreign investors to Ukraine, including Brookfield Asset Management.
- Black Iron’s Shymanivske iron ore project is located close to steel mills located in Europe, Turkey, Russia, Asia and the Middle East.
- The project is also located in an established mining region surrounded by seven operating iron ore mines owned by ArcelorMittal, Metinvest and Evraz.
- The project has excellent access to skilled labor, power, rail and ports.
- The Shymanivske deposit has a measured and indicated resource of 646 million tonnes grading 31.6 percent iron and an inferred resource of 188 million tonnes grading 30.1 percent iron.
- The 2017 PEA suggests phased development of the mine, creating a low-capital construction scenario.
- Phase one development to produce 4 million tonnes of ultra-high-grade 68 percent iron concentrate per year before expanding to 8 million tonnes per year in the fifth year of production.
- The PEA outlined an after-tax NPV of US$1.7 billion and an IRR of 36 percent.
- The iron produced from the Shymanivske deposit can be concentrated to a 68 percent purity, making it ideal for the production of more environmentally sustainable steel.
- There is potential to expand the resource to the north, south and at depth.
- Black Iron’s cost to mine, process, rail and load a ship is estimated at US$31 per tonne for an ultra-high-grade 68 percent iron content product (top four percent globally)
- Black Iron is currently securing the balance of the funding and land required for construction.
- Black Iron plans to be in production by 2023.
- A non-binding offtake agreement with equity investment has been signed for the full phase one production of 4 million tonnes with Glencore, and there is substantial interest from other groups to round out the balance of funding required for construction.
- Black Iron is led by an experienced management team and board with a history of creating value at companies like Rio Tinto and Consolidated Thompson.