Black Iron Inc (TSE:BKI) (OTCMKTS:BKIRF) (FRA:BIN) updated Tuesday on its efforts to advance its giant Shymanivske iron ore project in Ukraine, revealing that a second 'Heads of Agreement' had been inked with a construction firm, which includes an investment of around US$60 million.
The resource group noted though that only one of its current two construction companies will be selected to build the project, but by having this company make a material investment, its interests become fully aligned with existing investors to achieve it on time and on budget.
The group also added that "multiple" groups had taken part in the first round of the offtake process and that it had received expressions of interest to invest in exchange for securing offtake rights.
This allows groups to purchase Black Iron's initial entire expected annual production of 4 million tonnes of pellet feed at a slight discount to market price, in exchange for investing towards the site's construction.
Proposals are currently being reviewed, said Black Iron, and firms selected will be invited to take part in the second round, which includes access to a more detailed data room and to site visits - either virtually or in person.
"Black Iron expects to conclude a binding construction/investment agreement after the offtake investment has been secured," it also told investors.
Updating on the land transfer status, Black Iron reminded the market that the area where it wants to locate its processing plant, tailings and waste rock stockpiles is currently owned by Ukraine's Central Government and is being used by the Ministry of Defense for training.
A request for proposal (RFP) is being issued to engineering firms with expertise in the design of training bases for weapons firing and storage so the current training base's functionality can be maintained, the firm said.
Completing this engineering design work is a critical step to negotiating a compensation package for the land transfer to occur, it added.
An allocation for these costs has been included within the preliminary economic assessment's (PEA) estimated US$452 million total construction cost estimate for the entire Shymanivske project.
The project has a resource estimate of 646 million tons (Mt) of measured and indicated 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 preliminary economic assessment estimated that the project 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%.
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