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Highlights

Black Iron Inc. has released the results of a Bankable Feasibility Study (“BFS”) completed on its Shymanivske Iron Ore Project located in Kryviy Rih, Ukraine.  The BFS outlines an operation producing 9.9 million tonnes per year of high-grade 68% iron ore concentrate, projecting a 48% internal rate of return (“IRR”) and a U.S. $3.3 billion net present value (“NPV”) at an 8% discount rate. 

This BFS was an update to the previous report filed in December 2012 and includes results from pilot plant test work conducted throughout 2013, which resulted in an optimized process design and layout, along with revised infrastructure usage rates confirmed through several recently signed protocols of intent.  The most significant changes implemented are: changing from dry cobbing to more efficient wet cobbing at a finer particle size resulting in an increase from 10% to 40% rejection of waste rock prior to grinding; elimination of the second grinding stage resulting in a 14% reduction in total operational running active power; reducing the plant footprint through a more optimal layout; and an 8% increase in iron ore concentrate production from 9.2 to 9.9 million tonnes per year with essentially no change in capital cost. 

Financial metrics contained in the BFS report are shown on a pre and after tax basis and in both cases are inclusive of royalties.  Ukraine will have a corporate tax rate of 16% effective January 1, 2016 and a mining royalty rate of $0.09 per tonne of ore mined (<1%) payable to the State.

The Table below summarizes the key elements of the BFS:

High-Grade 68% Concentrate (all currency is US$)

Measured and Indicated Resources (at 31.6% Total Fe)* 646 Mt
Proven and Probable Reserves (at 31.1% Total Fe)* 449 Mt
Annual Production Rate (average life of mine, post ramp-up year) 9.9 Mt
Estimated Mine Life (based on Proven and Probable Reserves only) 14 years
Final Product Iron Grade (Fine Iron Ore Concentrate) 68% Fe
Projected Plant Start-up and Commissioning Q4 2016
Projected Commencement of Revenue Generation Q1 2017
Long Term CFR Benchmark Iron Ore Concentrate Price Estimate (62% Fe) $95 /t
Total Estimated Capital Costs (excluding sustaining capital) $1,097 million
Life of Mine FOB OPEX (Beneficiation, Mine, Transportation & Loading)
Mine Gate OPEX (Beneficiation & Mine)
$44.54 /t
$29.64 /t
Average Annual Cash Flow (pre-tax)
Average Annual Cash Flow (after-tax)
$630 million
$536 million
NPV at 8% discount (pre-tax)
NPV at 8% discount (after-tax)
$3.3 billion
$2.6 billion
IRR (pre-tax)
IRR (after-tax)
48.0%
39.1%
Projected Years to Payback (at 8% Discount Rate, pre-tax)
Projected Years to Payback (at 8% Discount Rate, after-tax)
2.0 years
2.5 years

The Project has favourable economic potential across a range of discount rates.  The operations outlined in this BFS are projected to generate over U.S. $1,216 million in average annual revenue over the life of mine. 

The life of mine strip ratio is estimated at 1.64:1.  On the basis of the metallurgical test and beneficiation plant design work completed for this BFS, it is estimated that the 449 million tonnes of reserves will result in a project life of 14 years based on the average 9.9 million tonnes per year iron ore concentrate production rate.  The Company believes that additional exploration and definition drilling work have the potential to expand the existing resource and upgrade the 188 Mt of Inferred mineral resources to the Measured and Indicated classification, potentially adding up to five years to the Project life.  With successful exploration in the North end of Shymanivske and the addition of resources from the nearly adjacent Zelenivske Project, Black Iron expects to be able to support an even higher annual production rate through a potential second phase expansion, which would be expected to further increase the Project NPV.


3D Model Overall Image of Shymanivske Project

Project Flowsheet

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The Shymanivske iron ore deposit is strategically well-positioned in Ukraine between markets in Europe, Russia, Asia and the Middle East. It is located 330 kms southeast from Kiev in central Ukraine, in the heart of the KrivBass iron ore mining district. The Shymanivske deposit is located in the southern part of KrivBass, 2 or 3 kms away from two open pit mines, the No. 3 mine of NKODPE and Novaya which are primarily magnetite quartzites deposits owned by other companies. There are currently seven operating mines in the district, including the adjacent ArcelorMittal operations purchased in 2005.

The Shymanivske Project operates under Special Permit No. 4537, granted on February 13, 2007, which covers an area of 2.56 square kms and is valid until 2024. This permit authorizes the extraction of the subsurface ferriferous quartzite minerals from the Shymanivske deposit. The Company does not currently have the necessary surface rights to conduct mining activities on the Shymanivske Project. However, the Company does not need surface rights to conduct its proposed exploration activities. Surface rights use approval for the Shymanivske Project will be obtained after completion of a feasibility study.

Geology

The banded iron formation (ferriferous quartzites) is comprised of magnetite, magnetite-hematite, and hematite varieties, the most economically significant being the unoxidized magnetite and magnetite-hematite varieties. The high grade ores consist mainly of iron oxides and hydroxides which form column-like, less commonly stock, and lens-like, and more rarely layer-like segregations and bodies within the banded iron formation units, the characteristics of which vary from location to location within the basin. The high grade ore was formed by the leaching of quartz and oxidation of iron silicate within the banded iron formations.

The richest concentrations of ore in the main Saksagan ore field are associated with the fifth and sixth banded iron formation units, which contain higher grade primary mineralization, and have thinner bedding which contributed to the development of the deformation.

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NI 43-101 Compliant Measured & Indicated Resource Estimate*

The resource is defined by approximately 37,000 meters of historical drilling.

Potential for resource expansion from further drilling at depth.

Extensive Soviet style engineering studies were completed.

* Resource estimate complied using historical Soviet data by Hugues de Corta of Genivar, who is a qualified person as defined by NI 43-101. The technical contents of this website have been prepared under the supervision of Matthew Simpson, President & Chief Executive Officer of Black Iron Inc., who is a Qualified Person as defined by NI 43-101.


3D Model Overall Image of Shymanivske Project


Concentrator Footprint

Excellent Infrastructure

Rail access to Western Europe and port access via Black Sea to global seaborne iron ore markets. Target markets may include Asia, Western Europe, Turkey, Middle East and Russia.

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Several dry bulk tonnage ports, the closest being 140 kms from mine site, which is approximately 20% to 25% shorter transport distance to China compared to North and South American producers.

Power, port and rail access, combined with the local skilled workforce, provide potential to accelerate development and manage the amount of capital investment.



 
  • Paved roads to site, located 35 kms away from the major city of Krivyi Rih which has skilled work force
  • Confirmation in October 2012 from Ukrainian Government that there is sufficient capacity to haul at least an additional 20 million tonnes of iron ore concentrate per annum
 
  • Surplus of low-cost electricity readily accessible from high voltage power lines that run beside the property
  • 2 kms from main state-owned rail line
 
  • 5 deep water ports accessible by rail with iron ore facilities available
  • 140 kms to nearest water port providing access to Black Sea and global seaborne iron ore market