Ukraine is a socially stable parliamentary presidential republic which achieved independence in 1991 with the dissolution of the Soviet Union. Peacefully-conducted democratic elections in 2010 enhanced prospects for political stability.

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Ukraine covers a total area of 603,550 square kms located in Eastern Europe bordering the Black Sea. The population is approximately 45 million people, making it the 28th largest country by population in the world. Steel is the largest industry in Ukraine and represents Ukraine’s top export. According to the World Steel Association, Ukraine was the world’s 8th largest producer in 2009 and according to England Steel Statistics Bureau was the 4th largest steel exporter. The Ukrainian economy was severely affected by the global economic recession that began in late 2008. The economy has recovered since the end of 2009 with expected GDP growth in 2010 and 2011 of 3.3% and 4.5%, respectively, according to Moody’s. Ukraine is rich in natural resources with production focused on ferrous minerals (iron ore and manganese), coal and ilmenite. As a result of the politics of the Soviet Union, the country’s mineral deposits are relatively well explored but substantially under-exploited. The country’s iron ore district is characterized by a 300 km trend of sedimentary rock hosting a banded iron formation referred to as the Dnenpovskog complex. There are an estimated 15 major iron ore mines located with the country’s major iron ore district with seven operating mines located in the central Kryviy Rih Iron Basin.

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According to U.S. Geological Survey, Ukraine produced 66 million tonnes of iron ore in 2009 and was expected to produce 72 million tonnes in 2010. Public iron ore/steel companies operating in Ukraine include ArcelorMittal, which spent US$4.8 billion acquiring Kryviy Rih iron ore complex in 2005 which produced 7.07 million tonnes of iron ore concentrate in 2009 and Ferrexpo plc which operated the Poltava iron ore mine located in Central Ukraine which produced 10.50 million tonnes of iron ore concentrate in 2009.

Black Iron benefits from the location of its operations in Ukraine, because of a well-educated and cost-competitive workforce, a depreciating local currency and the efforts of the government to take measures to ensure the survival of its large mining and metallurgical industry. With expectations of being primarily an exporter, Black Iron anticipates minimal exposure to the Ukrainian steel industry. Ukraine is conveniently situated close to prime export markets of Western Europe, Turkey, Russia, Asia and the Middle East. Any further weakening of the local currency is likely to have a positive effect on our cost base.

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