Black Iron Inc (TSE:BKI) (OTCMKTS:BKIRF) (FRA:BIN) is launching a competitive bid process for a guaranteed share of production from its Shymanivske iron ore project in response to “substantial” investor interest.
The Toronto-based company announced Tuesday that it is seeing an increase in interest from investors looking to secure iron ore, including big names such as Glencore PLC (LON:GLEN) (OTCMKTS:GLCNF) (JSE:GLN) and several new steel mills.
In exchange for an offtake agreement, the company is asking investors to help fund the estimated US$450 million construction of the project in Ukraine.
READ: Black Iron says discussions ongoing with potential funding partners for its large Shymanivske iron ore project
The price of iron ore hit a one-year high of US$112 per tonne in August, up around 22% since the beginning of 2020 as demand from China’s factories continues to be strong.
“Black Iron has kicked off a formal two-stage competitive process with bid submission deadline dates to obtain definitive investment proposals from qualified companies which are seeking a guaranteed share of production from the Shymanivske project in exchange for making an investment towards construction of the project,” it said in a statement.
“This process will complement advanced ongoing discussions with debt providers, royalty funds, and construction companies, flagged in previous media releases, aimed at raising all necessary capital for construction to commence post securing necessary land and permits.”
Shymanivske has a resource estimate of 646 million tons (Mt) of measured and indicated mineral resources, consisting of 355 Mt in the measured category, grading 31.6% total iron and 18.8% magnetic iron. A further 188 Mt of inferred at 30.1% iron, which will be concentrated to around 68% iron.
A 2017 preliminary economic assessment estimated that Shymanivske will have an un-levered after-tax net present value of US$1.7 billion using a 10% discount rate and an internal rate of return of 36%.
Black Iron said that in response to COVID-19 travel limitations, it is proposing to conduct virtual site tours of the project in real-time and access to an independent engineering firm that has conducted a site visit as part of the due diligence process.
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