Canadian Mining Journal

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Black Iron advances offtake and construction agreements for Ukraine project



Shymanivske deposit Credit: Black Iron

Shymanivske deposit Credit: Black Iron

Ukraine-focused iron developer Black Iron has provided an update on the progress of a formal offtake process and construction and investment agreements for its Shymanivske iron ore project.

Black Iron is reviewing proposals from the first round of submissions from groups looking to secure rights to purchase the entirety of the 4 million tonnes of pellet feed expected from the asset each year, at a slight discount to the market price. The selected party would make an investment towards project construction. After the reviews are completed, some of the groups will be invited to participate in a second round of discussions, which would include more detailed data and potential for site visits.

This second round is expected to be completed early next year and will be followed by binding submissions to invest and secure offtake rights.

The company has also signed a second heads of agreement with a construction company, which includes a US$60-million investment package. While only one construction company would be selected to build the mine and make an investment towards construction, Black Iron expects this arrangement to align the interests of the construction company with those of its existing shareholders. A binding construction and investment agreement is expected once the offtake investment in secured.

Black Iron is also issuing requests for proposals to engineering firms for the relocation of a training facility held by Ukraine’s Ministry of Defense, which is situated where the processing plant and tailings and waste rock stockpiles are expected.

Black Iron wholly owns the Shymanivske iron project, with total in-pit measured and indicated resources of 389 million tonnes grading 31.4% total iron and 19.3% magnetic iron. Additional in-pit inferred resources stand at 22 million tonnes at 31.2% total iron and 19.6% magnetic iron.

A 2017 preliminary economic assessment for Shymanivske outlined a 17-year, two-phase mine and process plant build, with the first, 4-million-tonne-per-year phase producing a high-grade, low-impurity concentrate at 68% iron for steel production. An expansion to 8 million tonnes per year would start up in the fifth year. With average operating costs to produce the iron concentrate pegged at US$33 per dry metric tonne, the initial capital cost estimate stands at US$452 million, with an additional US$364 million required for the expansion. The resulting after-tax net present value estimate stands at US$1.4 billion, based on a 10% discount rate, with a 34% internal rate of return.

For more information, visit www.BlackIron.com.