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Black Iron hopeful of first off-take agreement announcement for Shymanivske project in new year

Black Iron expects to be able to generate ultra high grade 68% iron pellet feed from the project

Iron ore pellets are used to make steel

Black Iron Inc (TSE:BKI) said it expects to be able to announce a first commercial off-take arrangement for its Shymanivske project in Ukraine early in the new year.

In a wide-ranging end-of-year update, the group said over the summer and fall, interested steel mills and global commodity trading houses visited the site as part of their due diligence.

WATCH: Black Iron Inc hails recent breakthroughs for Shymanivske development

The resource group expects to be able to generate ultra high grade 68% iron pellet feed from the project, which is also close to rail, power, ports and people.

In terms of building the project, debt finance discussions with international institutions and European banks, several of which are actively lending to producing iron ore companies in Ukraine, are ongoing, the firm added.

Black Iron says it expects to generate substantial free cash flow in a range of downside price scenarios.

It also requires a low amount of debt to produce 4MTpa (million tonnes per annum) initially, and hence is an attractive project for lenders, it reckons.

Black Iron also noted that several meetings with Ukraine government officials have been held since the firm received a proposal to secure the surface rights for a plot of land adjacent to the Shymanivske project to site the processing plant, tailings and waste rock.

Shymanivske contains an NI 43-101 mineral resource estimated to be 646 Mt (million tonnes) measured and indicated resources, consisting of 355 Mt measured resources grading 31.6% total iron and 18.8% magnetic iron.

Indicated resources are 290 Mt grading 31.1% total iron and 17.9% magnetic iron, using a cut-off grade of 10% magnetic iron.

Notably, since publishing the re-scoped preliminary economic assessment (PEA), the benchmark 62% iron content fines price remains above the US$62 per tonne used in the PEA and is currently at US$69 per tonne, the company noted. 

READ: Black Iron's lease proposal from Ukraine government marks a milestone for Shymanivske's development

Iron grade content premiums remain high with several credible sources reinforcing the structural shift in the market towards higher grade iron ores, given they reduce the amount of emissions generated per tonne of steel produced.

Very recently, Vale changed its price basis for pellets from the 62% iron content benchmark to a newer 65% iron content index that the Singapore Exchange (SGX) is now offering futures contracts on. 

"This is good news for Black Iron as it further supports the shift globally to higher grade iron feed products and value of its expected ultra-premium 68% iron content product," said the company.

Shares in Toronto were unchanged at $0.055.

Contact Giles Gwinnett at [email protected]

Follow him on Twitter @Gile74

Quick facts: Black Iron Inc.

Price: 0.32 CAD

Market: TSX
Market Cap: $79.95 m

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