TORONTO, Sept. 04, 2018 (GLOBE NEWSWIRE) — Black Iron Inc. (“Black Iron” or the “Company”) (TSX: BKI; OTC: BKIRF; FRANKFURT: BIN) management are pleased to announce that the Company has received a formal proposal from Ukraine’s government to lease to the Company a plot of land connected to the Company’s Shymanivske iron ore body (“Shymanivske” or the “Project”) for the location of the Project’s processing plant, tailings and waste rock. This marks a significant milestone in the Project’s development and further demonstrates Ukraine governmental support for the mine to be constructed.
The parcel of land being proposed is owned by Ukraine’s central government and is currently being used by the Ministry of Defence (“MOD”) for training purposes. The land is similar in size and to the layout used in the Company’s November 2017 PEA (see “About Black Iron” below for additional details) for location of the processing plant but differs for the tailings and waste rock stockpile locations by being located further to the south. Black Iron management is currently analyzing the suitability of this land from a social and technical standpoint. To secure rights to this land, Black Iron needs to agree on a compensation package with the MOD and Ukraine’s central government that is sensible for all parties. Discussions of this nature have already started with senior government officials including Deputy Prime Minister Kubiv with support from Canada’s Embassy to Ukraine.
As part of developing the Project, Black Iron also needs to secure surface rights for its Shymanivske ore body from the Kryvyi Rih City Council who own this land. The City council has offered to lease a portion of this land to Black Iron and the signing of a lease is pending Black Iron (i) finalizing discussions with Ukraine’s central government on the MOD parcel of land, and (ii) Black Iron finalizing an agreement with a neighbouring mine, Central Ore Processing (YuGOK), on the previously agreed relocation of their mine service garage.
Black Iron management are also pleased to report that several steel mills and trading houses have expressed strong interest to buy the ultra high-grade pellet feed product expected to be produced from the Project. Many of these groups have signed confidentially agreements to review the Project in greater depth and some have completed site due diligence visits over the last two months. Discussions are currently ongoing with select parties to enter into an offtake agreement in which they will secure the rights to purchase Black Iron’s product over a period of time in exchange for a meaningful investment to help fund construction of the Project.
Although benchmark iron ore prices have recently declined slightly on the back of the United States announcing tariffs with numerous countries on steel, grade premiums for higher iron content products remain strong. According to Metal Bulletin, as of August 29, 2018, the price for 62% benchmark fines was US$67.27 per tonne and higher grade 65% iron content fines are selling for US$94.50 per tonne for product delivered to China. The current selling price for 68% iron content pellet feed, similar to what Black Iron expects to produce from the Project, are significantly higher than the price used in the PEA. The strong economic returns expected to be generated by the Shymanivske Project re-enforce the unique opportunity Black Iron presents by not having to build high cost rail, powerlines or a port as is required with majority of the other iron ore development projects globally. As noted in Black Iron’s press release dated May 2, 2018, highly regarded market analysis firm, CRU, recently ranked the Project as the lowest position on the business cost curve (i.e. normalized operating costs) and second lowest capital intensity undeveloped pellet feed iron ore project globally.