Black Iron Signs Binding Documentation with Anglo American FOR a Royalty Investment with Associated Offtake and Right to Participate IN Construction Funding
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[OFFICIAL]
BLACK IRON SIGNS BINDING DOCUMENTATION WITH ANGLO
AMERICAN FOR A ROYALTY INVESTMENT WITH ASSOCIATED
OFFTAKE AND RIGHT TO PARTICIPATE IN CONSTRUCTION
FUNDING
For Immediate Release
• Royalty investment of US$4 million strengthens Black Iron’s balance sheet
• Anglo American secures offtake rights to at least 2.4 million tonnes per year
for life of mine
• Anglo American has first offer and refusal rights to secure further offtake
rights in exchange for funding at least 15% of the cost to construct each
phase of the Shymanivske Iron Ore Project, which will produce an ultra-high-
grade ~68% iron, uniquely positioned to meet the increasing global demand
for green steel
TORONTO, CANADA , November 7 , 2024 – Black Iron Inc. (“ Black Iron ” or the
“Company”) (TSX: BKI; OTC: BKIRF; FWB: BIN) is pleased to announce the signing of
a legally binding royalty agreement and offtake agreement (together, the “Transaction
Documents”) with Anglo American for a US$4 million royalty investment, offtake rights
and future potential construction prepayments (the “Transaction”).
Background
Black Iron’s Shymanivske Iron Ore Project (the “Project”) located in Kryvyi Rih, central
Ukraine, will be developed in two phases – with Phase 1 producing approximately 4
million tonnes per annum and Phase 2 production increasing to approximately 8 million
tonnes per annum.
Terms of the Transaction
Certain key terms of the Transaction that have been agreed upon include:
- Anglo American will invest US$4 million in two tranches in exchange for a gross
revenue royalty of 1.0% should the prevailing 65% iron CFR China iron ore price
be less than US$120 per tonne and 1.5% should the price be equal to or higher
than US$120 per tonne for Black Iron’s first 60 million tonnes of production at the
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[OFFICIAL]
Project (the “ Royalty”). The first tranche consisting of US$2.6 million will be
invested now and the balance upon Black Iron renewing its permits;
- Black Iron reserves the right to buy back this Royalty at any time at a buyback price
that provides a pre-agreed internal rate of return to Anglo American;
- Anglo American’s investment in the Royalty secures it offtake rights to the higher
of (a) 60% or (b) 2.4 million tonnes per year of the Phase 1 production for life of
mine (the “Offtake”);
- The agreement also provides for a right of first offer for Anglo American to further
invest at least 15% of the Phase 1 construction cost as part of a consortium after
the conflict in Ukraine ends. Such additional investment by Anglo American would
result in the increase of its offtake to 100% of the Phase 1 production for an
expected 4 million tonnes per annum.
- Additionally, Anglo American also has first refusal rights to fund a further 15% of
expansion construction cost for Phase 2 of the Project. Provision of such funding
would secure Anglo American 100% of the life of mine offtake rights for Phase 2
of the Project, for an expected 8 million tonnes per annum.
- The Offtake includes a profit-sharing component which aligns the interests of both
parties and thereby generate s a strong interdependent relationship of mutual
benefit. Black Iron and Anglo American will also mutually benefit from any realized
shipping cost savings by selling the product to steel mills located closer to Ukraine
than China, such as those in the Middle East where there is strong demand for
such high purity direct reduction iron ore.
Black Iron’s CEO Matt Simpson stated: “Black Iron is excited to welcome Anglo American
as an investor and offtake partner given their extensive global experience in the mining
sector. Raising US$4 million through a royalty structure relative to Black Iron’s current
market capitalization without issuing additional shares to strengthen our finances during
the ongoing war in Ukraine is a great outcome for shareholders. The majority of the initial
US$2.6 million of funds from th e Transaction will be used to renew the permit for our
Project which will expire six months after the end of martial law in Ukraine . Further, the
future potential funding for project construction from such a highly credible mining
company as Anglo American is important to demonstrate a clear path forward to build the
Shymanivske Iron Ore project into an operating mine after the war in Ukraine comes to
an end.”
Anglo American is a leading global mining company focused on the responsible
production of copper, premium iron ore and crop nutrients – future-enabling products that
are essential for decarbonising the global economy, improving living standards, and food
security. Its portfolio of world -class operations and outstanding resource endowments
offers value -accretive growth potential across all three businesses, positioning the
company to deliver into structurally attractive major demand growth trends.
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Black Iron had previously selected Cargill as the offtake purchaser in May 2021. However,
a definitive agreement was fully negotiated but not executed, and Cargill’s May 2021 non-
binding memorandum of understanding has since expired , leading to a competitive
investment and offtake process being re -tendered. In selecting Anglo American, Black
Iron engaged Bacchus Capital Advisers to run a global competitive process resulting in
several interested leading mining and trading companies signing confidentiality
agreements. This confirms the strong interest in the Project given its compelling projected
economics and high purity product despite the uncertainly associated with the war in
Ukraine.
About Black Iron
Black Iron is an iron ore exploration and development company, advancing its 100%
owned Shymanivske Iron Ore Project located in Kryviy Rih, Ukraine. Full mineral resource
details and projected project economics can be found in the NI 43 -101 technical report
entitled “(Amended) Preliminary Economic Assessment of the Re -scoped Shymanivske
Iron Ore Deposit” published in March 2020 with an effective date of November 21, 2017
under the Company’s profile on SEDAR at www.sedar.com. The Project is surrounded by
five other operating mines, including Metinvest’s YuGOK and ArcelorMittal's iron ore
complex. Please visit the Company's website at www.blackiron.com for more information.
For more information, please contact:
Matt Simpson
Chief Executive Officer
Black Iron Inc.
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 entering into the Offtake, the Transaction and the
Transaction Documents, Phase 1 and Phase 2 of the Project, renewal of mining permits for the Project,
use of proceeds from the Transaction, declaration of martial law in Ukraine, outcome of the war in Ukraine,
the permitting of the S hymanivske Iron Ore Project and grade and use of iron ore from the Shymanivske
Iron Ore Project. 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 f rom those expressed or implied by such forward -
looking information, including but not limited to: general business, economic, competitive, geopolitical and
social uncertainties; progress of the Company’s service providers; negotiations with third parties; 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 anticipated in such
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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 are not mineral reserves and do not
have demonstrated economic viability.