Black Iron Provides Update ON Go Forward Development Plan
BLACK IRON PROVIDES UPDATE ON GO FORWARD DEVELOPMENT PLAN
For Immediate Release
TORONTO, CANADA, October 29, 2017 – The following is an update on the activities Black Iron Inc.
(“Black Iron” or the “Company”) (TSX: BKI) is undertaking to increase shareholder value and move our
flagship Shymanivske iron ore project (the “Project”) forwards towards production. The following is a brief
history of the Company:
Black Iron completed a successful initial public offering in 2011 raising approximately $36 million at
$1.40/share
By 2014, Black Iron management completed a Bankable Feasibility Study showing great economics
and reached an agreement with Metinvest to finance a sizable portion of the project construction
costs
Unfortunately, also in 2014, Russia invaded Ukraine and iron ore prices subsequently fell
dramatically
Black Iron divested Metinvest’s position in January 2016 and currently owns 100% of the Project
Black Iron decided to put the Project on hold until recently, when for a number of reasons the timing
looked right to create a new go forward plan to move the Project towards production. These reasons
include:
Since November 2016, benchmark 62% iron content prices markedly inc reased from a low of
US$37/T to hit a high of US$95/T in February 2017 and averaged ~US$74/T over the year to date in
large part due to increased global steel demand.
Also, interestingly, during this period, the iron content premium and corresponding penalty relative to
the benchmark price materially increased as seen in the chart below.
Source: Bloomberg October 2017
Historically, the premium/penalty per 1% iron above or below 62% iro n was charged at US$3 to $4
per percent. This premium/penalty has significantly increased to the current US$7 to $8 per percent
due to several factors including:
1. Steel mill profitability – premiums for high grades usually rise when steel mills are profit able as the
mills are seeking to increase output by using more productive raw materials.
2. Metallurgical coal prices – high grade iron ore demand usually goes up when coking prices rise as
steel mills try to reduce fuel rates by using better quality ores.
3. Chinese environmental policy – pollution is a major issue in China forcing steel mills to curb
emissions and driving a preference for high quality raw materials to help reduce emissions.
Black Iron plans to make an ultra -high grade 68% iron content product that, using today’s prices, would
sell for US$42 to $48 per tonne more than the benchmark 62% iron content product often quoted in news
articles resulting in a current selling price of ~US$105 per tonne. Ukraine direly needs successful
examples of foreign direct investment to help kickstart the country’s economy and Black Iron’s near
shovel ready project is ideal to support investment in Ukraine while providing highly favourable returns to
shareholders.
The front line of conflict in Ukraine is located ~450k m away from the Project site and has not
geographically advanced since the invasion occurred over three years ago. During this entire period, the
iron ore mines surrounding the Project continued to operate with parents going to work and kids to school
as usual. It is Black Iron management’s view that it is highly unlikely the front line ever further advances
given Russia achieved their main objectives during the initial invasion. Major international companies are
also starting to share this view that it is safe to invest again in Ukraine. For example, ArcelorMittal which
owns an iron ore mine and steel mill located only 1km north of the Project recently announced their
intention to invest US$1.1 billion into their operation over the next few years.
When Black Iron completed its feasibility study in 2014, Ukraine’s exchange rate was fixed at
8UAH:US$1. As part of Ukraine’s International Monetary Fund bailout provisions, the exchange rate was
unpegged to the U.S. dollar and is currently sitting at ~27UAH:U S$1. Using this lower exchange rate is
expected to significantly reduce Black Iron’s construction cost and operating costs for the Project. In July
of this year Black Iron announced that it had commissioned a new Preliminary Economic Assessment
(PEA) for the Project that will be based on a much more favorable exchange rate and phased
development plan starting with 4MTpa production ramping up to 8MTpa using self-generated cash to fund
the expansion. The PEA is expected to be completed in mid-fourth quarter of this year and BKI expects it
to show extremely favourable economics. In addition to having favourable exchange rates and low highly
skilled labour costs, Black Iron benefits from not needing to build any major infrastructure such as
railways, power lin es or a port as these are all in existence within very close proximity to the ore body
allowing us to build the mine in a scalable manner while still achieving favourable economic returns.
As was done back in 2014, Black Iron will also be engaging firms to seek prepaid offtake and/or a joint
development partner to significantly reduce the amount of equity that needs to be raised to build the mine.
Additionally, we will be initiating discussions with debt finance sources including the European Bank for
Reconstruction and Development (EBRD) who have committed to invest US$350M into ArcelorMittal’s
iron ore mine and steel mill located beside the Shymanivske pit.
Finally, management continues to make good progress with both the city of Kryviy Rih on the Project and
also the Ministry of Defense of Ukraine to secure the surface rights necessary for the open pit, processing
plant, tailings and waste rock at the Project.
Please visit the Company website (www.blackiron.com) to sign up for updates on the Project.
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 Shymaniviske project contains a NI 43-101 compliant resource
estimated to be 645.8 Mt Measured and Indicated mineral resources, consisting of 355.1 Mt Measured
mineral resources grading 32.0% total iron and 19.5% magnetic iron, and Indicated mineral resources of
290.7 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 188.3 Mt of Inferred mineral resources grading 30.1% total
iron and 18.4% magnetic iron. Full mineral resource d etails can be found in the N I 43-101 compliant
technical report dated January 24, 2014 titled "Feasibility Study of the Shymanivske Iron Ore Deposit for
Black Iron Inc." 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 an d scientific 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.
For more information, please contact:
Matt Simpson Derek Wood
Chief Executive Officer Conduit Investor Relations
Tel: +1(416) 309 2138 +1 (403) 200 3569
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 inform ation available to them at that time, including those factors discussed in the
section entitled ‘‘Risk Factors’’ in the Company’s annual information form for the year ended December
31, 2016 or as may be identified in the Company’s public disclosure from t ime to time, as filed under the
Company’s profile on SEDAR at www.sedar.com. Forward -looking information may include, but is not
limited to, statements with respect to the Shymanivske project, preparation of a PEA, expected
economics forecast, timing for PEA, the Company’s ability to obtain the requisite land righ ts for the
Shymanivske project , and future plans for the Company’s development. 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 o f 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 explor ation 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 con tained 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 anticipated 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.