Black Iron Announces Convertible Security Funding and Provides Land + Construction Funding Update
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BLACK IRON ANNOUNCES CONVERTIBLE SECURITY FUNDING AND PROVIDES
LAND + CONSTRUCTION FUNDING UPDATE
THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT INTENDED FOR
DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION TO THE UNITED STATES
For Immediate Release
TORONTO, CANADA, September 18, 2019 – Black Iron Inc. (“Black Ir on” or the “Company”)
(TSX: BKI) reports it has executed a convertible security funding agreement (the “Agreement”)
with Lind Global Macro Fund LP (“Lind”) pursuant to which Black Iron may issue to Lind
convertible securities in the principal amount of up to CAD$11 million.
Under the terms of the Agreement, Lind will make an initial investment of CAD$2.25 million less
a commitment fee of CAD$78,750, in exchange for a convertible security (the “First Convertible
Security”) with a principal amount of CAD$ 2.7 million (the “Face Value” or “Principal” )
representing a principal amount of CAD$2.25 million and a pre -paid interest amount of
CAD$450,000. The First Convertible Security will be repaid by Black Iron through the issuance of
common shares at pre-agreed conversion limits to Lind over a 24-month period. Lind will have
the option to convert up to 1/20 th of the Face Value per month at a price equal to 85% of Black
Iron’s five-day volume weighted average share price (“VWAP”) immediately prior to each time
Lind notifies Black Iron of its intent to convert . Lind will be restricted from selling any Black Iron
shares it receives in connection with the First Convertible Security for a period of four months and
a day from the date of issuance of the First Convertible Security and is prohibited from short
selling Black Iron’s shares during the term of the Agreement.
The Agreement also includes an option, subject to Black Iron having repaid a minimum of 75% of
the First Convertible Security and the mutual agreement of Black Iron and Lind, for an additional
investment by Lind of up to C AD$9 million (CAD$7.5 million funded amount) in exchange for a
convertible security with similar terms to the First Convertible Security.
Black Iron has the option to buy -back the outstanding convertible securities in cash at any time
with no penalty. If Black Iron exercises the buy back option, Lind will have the option to convert
a maximum of 33% of the outstanding face value of the convertible securities amount into Black
Iron shares.
“Lind’s investment puts Black Iron in a strong financial position while current positive discussions
with investors for project construction financing and Ukraine’s Government to secure land are on
ongoing. There is currently a major disconnect between Black Iron’s current market cap of
US$11 million (CAD$14 million) and the after tax net present value of its Shymanivske project of
US$1,662 million as outlined in the Company’s Preliminary Economic Assessment. With so many
positive discussions currently occurring, given the 24-month term of the First Convertible Security
and that the conversion price is linked to Black Iron’s share price over this period, I believe this
financing will be less dilutive to shareh olders than a traditional equity raise as it provides a good
amount of time to make announcements that I expect will increase Black Iron’s share price .
Further, having an option to increase Lind’s investment by an additional CAD$7.5 million on short
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notice is important to ensure any payments required to secure land can be made with less market
risk” said Matt Simpson, CEO of Black Iron.
Phillip Valliere, Managing Director at The Lind Partners stated “We have been following Black
Iron for several years and now is the right time for us to invest due to positive macro s – stronger
iron ore prices, favorable new Ukraine majority government and substantial new foreign direct
investment into Ukrainian iron ore – and Black Iron gaining traction with key development
initiatives like construction financing and land acquisition. We look forward to seeing where this
investment will take them.”
As part of the First Convertible Security financing, Black Iron will issue Lind 13,081,395 warrants
exercisable for a term of 48 months at an exercise price of $0.1 1 per share. The number of
warrants issued is equal to 50% of the Funded Amount divided by the 20-day VWAP of Black
Iron’s shares as traded on the Toronto Stock Exchange. Lind can increase the face value of the
First Convertible Security by an additional CAD$1.25 million during the 24-month agreement term
by funding Black Iron an additional CAD$1.25 million less a closing fee of CAD$43,750.
The First Convertible Security is to be secured by a general security agreement from the Company
and a pledge of the shares of its wholly-owned Cypriot subsidiary.
Closing of the First Convertible Security is expected to occur on or about October 2, 2019, subject
to customary closing conditions.
Project Update
Substantial progress is being made on the two main areas of management focus to increase
shareholder value being: 1) securing financing for project construction and 2) secur ing essential
land rights for the Shymanivske project. Expressions of interest have and continue to be received
from mainly European banks and export credit agencies to provide debt funding for construction
of the project. The two Asia based construction companies that expressed an interest to invest
US$50 million of equity during project construction are visiting the project site the week of
September 23 rd as part of their due diligence. Black Iron’s CEO i s meeting with the CEO of a
large Middle East headquartered steel company that has expressed serious interest to invest
equity for project construction alongside Glencore. Finally, new potential large equity investors
for project construction have initiated due diligence reviews on the project.
Ukraine appointed newly elected Ministers to its Cabinet on August 29, 2019 and the key Ministers
for Black Iron’s project including the Prime Minister, Minister of Defence, Minister of Economy and
Minister of Fore ign Affairs have all been briefed on Black Iron and are supportive. In person
meetings between Black Iron’s CEO, VP Government Relations and key senior Ukraine
Government officials are being scheduled for the week of September 23 rd to discuss formalizing
the transfer of a ~1500 ha parcel of land owned by Ukraine’s Central Government, that is currently
being used by the Ministry of Defense , for Black Iron to locate its future iron ore concentrator,
tailings and waste rock piles.
About Black Iron
Black Iron is an iron ore exploration and development company, advancing its 100% owned
Shymanivske project located in Kryviy Rih, Ukraine. The Shy manivske project contains a NI 43 -
101 compliant mineral resource estimated to be 646 Mt Measured and Indicated mineral
resources, consisting of 355 Mt Measured mineral resources grading 32.0% total iron and 19.5%
magnetic iron, and Indicated mineral resour ces of 290 Mt grading 31.1% total iron and 17.9%
magnetic iron, using a cut-off grade of 10% magnetic iron. Additionally, the Shymanivske project
contains 188 Mt of Inferred mineral resources grading 30.1% total iron and 18.4% magnetic iron.
Full mineral r esource details can be found in the NI 43 -101 compliant technical report entitled
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“Preliminary Economic Assessment of the Re -scoped Shymanivske Iron Ore Deposit” effective
November 21, 2017 (the “PEA” or “Preliminary Economic Assessment” ) under the Company ’s
profile on SEDAR at www.sedar.com. The Shymanivske project is surrounded by five other
operating mines, including ArcelorMittal's iron ore complex. Please visit the Company's website
at www.blackiron.com for more information.
The technical and scientif ic contents of this press release have been prepared under the
supervision of and have been reviewed and approved by Matt Simpson, P.Eng, CEO of Black
Iron, who is a Qualified Person as defined by NI 43-101.
About The Lind Partners
The Lind Partners is an institutional fund manager and leading provider of growth capital to small-
and mid-cap companies publicly traded in the US, Canada, Australia and the UK. Lind targets
high growth sectors such as mining, oil & gas, technology, biotech and clean-tech. Founded in
2011, Lind has a multi-faceted investment strategy: direct investments of new capital ($1 to $ 20
million initial investment); participation in syndicated equity placements; and on -market trades.
Lind has completed over 70 direct invest ments for more than $850 million in total value and has
an established reputation as a flexible and supportive capital partner to investee companies.
For more information, please contact:
Matt Simpson
Chief Executive Officer
Black Iron Inc.
Tel: +1 (416) 309-2138
Forward-Looking Information
This press release contains forward -looking information. Forward-looking information is based on what
management believes to be reasonable assumptions, opinions and estimates of the date such statements
are made based on information available to them at that time. Forward -looking information may include,
but is not limited to, statements with respect to the Company’s ability to develop the Shymanivske project,
the Company’s ability to issue the First Convertible Security and/or subsequent convertible securities under
the Agreement , the Company’s ability to rais e adequate capital, the Company’s ability to secure the
requisite land rights and the Company’s future plans . Generally, forward looking information can be
identified by the use of forward -looking terminology such as "plans", "expects" or "does not expect" , "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate",
or "believes", or variations of such words and phrases or state that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject
to known and unknown risks, uncertainties and other factors that may cause the actual results, level of
activity, performance or achievements of the Company to be materially different from those expressed or
implied by such forward -looking information, including but not limited to: general business, economic,
competitive, geopolitical and social uncertainties; the actual results of current exploration activities; other
risks of the mining industry and the risks described in the annual information form of the Company. Although
the Company has attempted to identify important factors that could cause actual results to differ materially
from those contained in forward-looking information, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance that such information will prove to be
accurate, as actual results and future events could differ materially from those antici pated in such
statements. Accordingly, readers should not place undue reliance on forward looking information. The
Company does not undertake to update any forward -looking information, except in accordance with
applicable securities laws. The Company notes that mineral resources that are not mineral reserves do not
have demonstrated economic viability.
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This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities
in the United States. The securities have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be
offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act
and applicable state securities laws or an exemption from such registration is available.