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Black Iron receives 'game-changing' US$100 million investment to help fund construction of Shymanivske project in Ukraine

CEO Matt Simpson said the money provides the company with a "substantial portion" of the necessary construction financing, and the basis for a long-term partnership with a highly respected financial institution

Black Iron Inc. -
The US$100 million investment will be advanced once the companies sign a definitive agreement and is subject to certain closing conditions

Black Iron Inc (TSE:BKI) (OTCPINK:BKIRF) announced a major new investment on Tuesday that puts construction of its massive Shymanivske iron ore project firmly within reach.

The Toronto-based company revealed it has signed a term sheet for US$100 million with a prominent, unnamed US-based institutional investor that will help fund construction of the Ukrainian project.

Under the non-binding royalty term sheet, the investor will receive a perpetual 6.75% royalty on the phase one volume of four million tons.

READ: Black Iron updates further on offtake and construction process for its Ukraine iron ore project

"This major planned investment from a high caliber institution is game-changing for Black Iron,” CEO Matt Simpson said in a statement.

“It aims to provide the company with a substantial portion of the necessary construction financing, and, more importantly, the basis for a long-term partnership with a highly respected financial institution. As one of the lowest cost iron ore mines globally, Black Iron is poised to deliver tremendous value to its shareholders as we embark on the final stages of our capital raise and seek to begin construction in the second half of 2021."

Black Iron has now received non-binding term sheets from global investment banks for US$260 million to $300 million in first lien financing, as well as preliminary agreements with potential offtake partners that will commit to purchasing 100% of Shymanivske’s iron ore concentrate in exchange for substantial equity investment into the project.

The US$100 million investment will be advanced once the companies sign a definitive agreement and is subject to certain closing conditions.

Also on Tuesday, Black Iron said it had issued 30 million warrants to Perpetual Iron Inc, who helped support negotiations related to the most recent investment. Each warrant is valued at C$0.31 for a five-year period and are only exercisable once Black Iron signs a definitive agreement with the investor. Perpetual will also receive a US$4 million cash payment upon Black Iron’s initial drawdown of the US$100 million investment.

Shymanivske 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%.

Contact Angela at angela@proactiveinvestors.com

Follow her on Twitter @AHarmantas

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Price: 0.37 CAD

TSX:BKI
Market: TSX
Market Cap: $92.44 m
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