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Black Iron Reports on Shymanivske Project Progress


TORONTO, ONTARIO--(Marketwire - March 29, 2012) - Black Iron Inc. ("Black Iron" or the "Company") (TSX:BKI)(FRANKFURT:BIN) is pleased to provide an update on progress at its Shymanivske Iron Ore Project ("Shymanivske" or the "Project") located in Kryviy Rih, Ukraine.

"Our technical and corporate development teams have made significant strides since Black Iron debuted on the Toronto Stock Exchange on March 29, 2011," said Matt Simpson, President and CEO of Black Iron. "Our first year as a public company has been very busy with respect to technical and political advancements. We completed a ground gravity and geophysical survey over the Project and identified opportunities to potentially increase the hosted resource size. We conducted a 6,042 meter confirmation and metallurgical diamond drill "twin hole" program that confirmed the accuracy of historical geological data for the Project. We successfully completed initial metallurgical test work on the ore including the production of high quality sample iron ore pellets. At the end of October we assembled all of the technical work completed at that time and released a Preliminary Economic Assessment ("PEA"). The PEA report included a detailed geological overview and open pit mine plan for the Project, preliminary processing flow sheets and site layout, overview of connections to key infrastructure including rail, port and power, and sensitivities of the Project to changes in iron price, operating and capital costs. The PEA reinforced the major infrastructure advantage of Black Iron's Project by outlining the opportunity to construct an open-pit iron ore mine producing 7.3 million tonnes a year of 67% iron pellet feed freight on board for only $896 million; this results in a 42.1% internal rate of return ("IRR") and a $3.0 billion net present value ("NPV") at an 8% discount rate. The PEA also outlines Black Iron's option to produce 7.6 million tonnes per year of 65% iron pellets, which generates a higher NPV of $4.1 billion, along with a reduced IRR of 35.2%, due to approximately $675 million of additional construction costs. Black Iron is now working with WorleyParsons Services Canada Ltd. to complete a Feasibility Study. The entire team is working hard to deliver an updated resource estimate, land acquisition from Ministry of Defense, Feasibility Study, off take partner and resolution of permitting issues as major milestones for this year."

The PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the estimates of the PEA will be realized.

Simpson also added, "Since completion of our IPO we have been very active recruiting an experienced and qualified team and currently have 18 full time people working on the project, of which 12 are based in Ukraine. Adding key hires such as George Mover as our Chief Operating Officer, who previously worked for Ferrexpo, and Nikolay Bairak as our VP, Government & Community Relations has tremendously strengthened our senior management team. To help us operate more effectively in Ukraine we have also assembled a highly-experienced Ukraine Advisory Board consisting of Daniel Bilak, a partner of the international law firm CMS Cameron McKenna LLP, Jaroslav Kinach, an independent director of the Company and former Ukraine Country Head of the European Bank of Reconstruction and Development ("EBRD"), and Igor Buchatskiy, former CEO at Smart-Holdings and General Manager, International Business Development for ArcelorMittal S.A all of whom are based in Ukraine. However, operating in Ukraine has been challenging due to a high number of Government inspections and dynamic permitting and licensing frameworks that management hopes to address by continuing to build and strengthen our relationships in Ukraine."

Feasibility Study Update

In December 2011, the Company engaged WorleyParsons Services Canada Ltd. to complete a NI 43-101 compliant Feasibility Study jointly with several local Ukraine consultants who will complete Ukraine's version of this document as required for permitting known as a Tehniko Ekonomicheskoe Obosnovanie ("TEO"). It is anticipated these documents will be completed for submission in the fourth quarter of this year. To date, WorleyParsons has identified a number of opportunities to further improve the Project economics, and they are currently working through these opportunities with a view to simplifying the process flow sheet to allow for a higher annual tonnage along with minimizing both the operating and capital intensity costs of the Project. Phasing the mine development and introducing HPGR technology in place of SAG mills in the concentrator are expected to have a meaningful positive impact on the projected economics of the Project.

Efforts are also focused on completing the required work for the Company to apply for its mining allotment which is the next major step in Ukraine's mine permitting process.

The decision on which final product to produce, pellet plant feed or pellet, will be kept open for the Feasibility Study and driven by discussions with future off-take partner requirements.

Land Update

Black Iron is seeking to acquire additional land to host the Shymanivske Project's processing plants, waste dump and tailings. The Company has identified a preferred parcel of land adjacent to the Project and has held a number of meetings and negotiations with respect to acquiring this land. The subject land is currently owned by the Ukrainian Ministry of Defence. On February 8, 2012, a new Defense Minister was appointed and the Company has re-commenced negotiations with the new Minister. In parallel, the Company is evaluating alternative lands in the event the Ministry of Defense land cannot be acquired.

Black Iron has also met with the management of Southern Mining (YuGOK), one of the neighbouring iron ore mines and commenced discussions about the relocation of their old mine service garage and waste dumps located on a portion of the Shymanivske property and on obtaining certain land lease rights required for the Shymanivske Project that the Company believes were erroneously granted to YuGOK by the Kryviy Rih City Council. In this respect, the Company has initiated a legal proceeding to challenge the legitimacy of the processes of the Kryviy Rih City Council, as land owner, in granting these leases, as well. The Company initiated a second proceeding to assert its rights as rights as the only entity, along with its subcontractors, authorized to perform project development work on the Shymanivske land. This second proceeding was heard by the courts on March 27 and was rejected; however, the Company and its counsel believes that its legal position is strong and intends on appealing this decision. Discussions in respect of the garage and waste dumps are ongoing and the Company hopes to settle both matters in the near future. While neither matter is expected to impact the Company's critical development path during 2012, resolution of these matters is essential for long-term plans to bring the Shymanivske Project into operation.

Drilling Update

A total of 19,266 meters have been drilled since IPO. Black Iron commenced and concluded its confirmation ("twin hole") and metallurgical diamond drill program at Shymanivske and announced the results as compared to historically drilled holes (see Press Release dated October 4, 2011 for a complete summary of the twin hole drill program). Based on an independent professional evaluation by geological consultant Watts, Griffis and McOuat Limited, lithologies and assay patterns in the twin drill holes align very well with historic work.

Black Iron also initiated a 20,000 meter definition and exploration diamond drill program and completed approximately 13,224 meters. The new drill program is designed to target the northern extent of the Shymanivske property, as well as the broader land package at depth, with the aim of increasing the compliant resource size and upgrading its resource classification (i.e. convert a portion of the inferred resources to measured and indicated status). The initial focus of this drill program is to convert the majority of the current inferred mineral resources to measured and indicated mineral resources as required for inclusion in the feasibility study and while assay results are still pending, preliminary indications suggest sufficient data has been collected for the purposes of completing the feasibility study.

The exploration portion of the new drill program is currently on hold while the Company obtains additional permissions required to drill and addresses a recently received notice from Ukraine's Dnepropetrovsk Region Ecological Inspectorate that temporarily suspends work on the Shymanivske and Zelenivske land plots. Management is currently working to obtain the required permissions and to resolve this issue with the Ecological Inspectorate; however, it is unclear as to how long this process may take. In particular, the Kryviy Rih City Council recently changed their legislative requirements for drilling, and access to the land located under the neighbouring mines waste dump and old mine service garage is still being negotiated. The Company believes the timing for the recommencement of this drill program should not affect the project's current development path, but it does limit the Company's ability to upgrade its mineral resources estimate in support of a future potential increase in annual production.

Capital and Offtake Update

The Company still holds the bulk of the funds raised during IPO, which are intended for development activities in 2012. The current cash balance is approximately US$23 million and the Company is debt free. Management believes that cash on hand is sufficient to complete the ongoing Feasibility Study and planned drilling and metallurgical work in support of a production decision within the calendar year. Should the Company make a production determination, or should it identify opportunities to fast track the Project development timeline, it may seek additional capital to realize these opportunities.

Black Iron has also engaged in a broad review and solicitation of interest for iron ore offtake arrangements from the Shymanivske Project. The Company anticipates partnering with an offtake partner to help raise the majority of the funds required for construction. While the offtake discussions are still in their infancy, a number of groups have expressed interest and are reviewing the opportunity.

While the changing regulations, work inspections, and additional administrative requirements in Ukraine are distracting, they are to be expected in a developing legal framework such as Ukraine. Black Iron is working closely with its Ukrainian counsel on these matters and remains optimistic about the legal merits of its position and its ability to navigate through these challenges to achieve its objectives. The Company is also optimistic that by continuing to build its local team and strengthening its community relationships and profile within the Ukraine, the Shymanivske Project can be developed, which will unlock substantial value for shareholders.

About Black Iron

Black Iron is an iron ore exploration and development company advancing its 100%-owned Shymanivske project located in Kryviy Rih, Ukraine. This project contains a NI 43-101 compliant resource with 373 Mt measured and indicated resources grading 31.3% iron and 480 Mt of inferred resources grading 30.2% iron. The project is surrounded by five other operating mines including ArcelorMittal's iron ore complex. The Company believes that existing infrastructure, including access to power, rail and port facilities, will allow for a quick development timeline to production. Further, the Company holds an exploration permit for the adjacent Zelenivske project which it intends to further explore to determine its potential. Please visit the Company's website at or write us at for more information.

Regulatory Notes

The technical contents of this press release have been prepared under the supervision of and has been reviewed and approved by Farshid Ghazanfari, P.Geo., Chief Geologist, who is a Qualified Person as defined by NI 43-101. For further information, please see the technical report of the Company, which is available on SEDAR at

The PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the estimates of the PEA will be realized.

This press release contains "forward-looking information" which may include, but is not limited to, statements with respect to the development potential of the Company and its projects, the timing and amount of future exploration and development of the project, resolution of land issues at the project, and the future financial or operating performance of the Company and its projects. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "believes" or variations (including negative variations) of such words and phrases, or by the use of words or phrases that state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

Forward-looking information is based on certain assumptions and analyses made by the Company based on known facts at the time. Forward-looking information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained in this press release, including, without limitation those described in the Company's public disclosure documents which may be found under the Company's profile on SEDAR. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in such forward-looking information, there may be other factors that may cause actions, events or results to differ from those anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize or should assumptions underlying such forward-looking information prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by the forward-looking information contained in this press release. The forward-looking information contained herein are made as of the date of this press release and the Company disclaims any obligation to update or review such information or statements, whether as a result of new information, future events or results of otherwise, except as required by law.

        Investor Cubed
        Investor Relations
        +1 (647) 258-3311 or Toll Free: 1 888 258 3323

        Black Iron Inc.
        Matt Simpson
        President & Chief Executive Officer
        +1 (416) 309-2138

Source: Black Iron Inc.