Big picture - Why invest in Black Iron Inc.
Black Iron Inc. Snapshot
Black Iron is a Canadian iron ore exploration and development company advancing its 100% owned Shymanivske Project located in Krivyi Rih, Ukraine, to production. The Shymanivske Project contains 646 million tonnes measured and indicated resources grading 31.6% iron and 188 million tonnes inferred resources grading 30.1% iron. A bankable feasibility study for the Shymanivske Project demonstrates excellent economics for 9.9 million tonnes per year of 68% iron ore concentrate production, including an NPV of US$3.3 billion (8% discount), an IRR of 48% and a 2 year payback period based on a conservative long term iron ore benchmark price of $95/tonne, as published to SEDAR.com on January 24, 2014. The project is in a mining friendly region as it is surrounded by five other operating iron ore mines including ArcelorMittal. Existing infrastructure with surplus capacity, including confirmed access to power, rail and port facilities, allows for a quick and relatively low cost development to production.
Black Iron Inc. has released the results of a Bankable Feasibility Study (“BFS”) completed on its Shymanivske Iron Ore Project located in Kryviy Rih, Ukraine. The BFS outlines an operation producing 9.9 million tonnes per year of high-grade 68% iron ore concentrate, projecting a 48% internal rate of return (“IRR”) and a U.S. $3.3 billion net present value (“NPV”) at an 8% discount rate.
This BFS was an update to the previous report filed in December 2012 and includes results from pilot plant test work conducted throughout 2013, which resulted in an optimized process design and layout, along with revised infrastructure usage rates confirmed through several recently signed protocols of intent. The most significant changes implemented are: changing from dry cobbing to more efficient wet cobbing at a finer particle size resulting in an increase from 10% to 40% rejection of waste rock prior to grinding; elimination of the second grinding stage resulting in a 14% reduction in total operational running active power; reducing the plant footprint through a more optimal layout; and an 8% increase in iron ore concentrate production from 9.2 to 9.9 million tonnes per year with essentially no change in capital cost.
Financial metrics contained in the BFS report are shown on a pre and after tax basis and in both cases are inclusive of royalties. Ukraine will have a corporate tax rate of 16% effective January 1, 2016 and a mining royalty rate of $0.09 per tonne of ore mined (<1%) payable to the State.
The Table below summarizes the key elements of the BFS:
High-Grade 68% Concentrate (all currency is US$)
The Project has favourable economic potential across a range of discount rates. The operations outlined in this BFS are projected to generate over U.S. $1,216 million in average annual revenue over the life of mine.
The life of mine strip ratio is estimated at 1.63:1. On the basis of the metallurgical test and beneficiation plant design work completed for this BFS, it is estimated that the 449 million tonnes of reserves will result in a project life of 14 years based on the average 9.9 million tonnes per year iron ore concentrate production rate. The Company believes that additional exploration and definition drilling work have the potential to expand the existing resource and upgrade the 188 Mt of Inferred mineral resources to the Measured and Indicated classification, potentially adding up to five years to the Project life. With successful exploration in the north end of Shymanivske, Black Iron expects to be able to support an even higher annual production rate through a potential second phase expansion, which would be expected to further increase the Project NPV.
The Shymanivske iron ore deposit is strategically well-positioned in Ukraine between markets in Europe, Russia, Asia and the Middle East. It is located 330 kms southeast from Kiev in central Ukraine, in the heart of the KrivBass iron ore mining district. The Shymanivske deposit is located in the southern part of KrivBass, 2 or 3 kms away from two open pit mines, the No. 3 mine of NKODPE and Novaya which are primarily magnetite quartzites deposits owned by other companies. There are currently seven operating mines in the district, including the adjacent ArcelorMittal operations purchased in 2005.
The Shymanivske Project operates under Special Permit No. 4537, granted on February 13, 2007, which covers an area of 2.56 square kms and is valid until 2024. This permit authorizes the extraction of the subsurface ferriferous quartzite minerals from the Shymanivske deposit. The Company does not currently have the necessary surface rights to conduct mining activities on the Shymanivske Project. However, the Company does not need surface rights to conduct its proposed exploration activities. Surface rights use approval for the Shymanivske Project will be obtained after completion of a feasibility study.
The banded iron formation (ferriferous quartzites) is comprised of magnetite, magnetite-hematite, and hematite varieties, the most economically significant being the unoxidized magnetite and magnetite-hematite varieties. The high grade ores consist mainly of iron oxides and hydroxides which form column-like, less commonly stock, and lens-like, and more rarely layer-like segregations and bodies within the banded iron formation units, the characteristics of which vary from location to location within the basin. The high grade ore was formed by the leaching of quartz and oxidation of iron silicate within the banded iron formations.
The richest concentrations of ore in the main Saksagan ore field are associated with the fifth and sixth banded iron formation units, which contain higher grade primary mineralization, and have thinner bedding which contributed to the development of the deformation.
NI 43-101 Compliant Measured & Indicated Resource Estimate*
The resource is defined by approximately 37,000 meters of historical drilling.
Potential for resource expansion from further drilling at depth.
Extensive Soviet style engineering studies were completed.
3D Model Overall Image of Shymanivske Project
Matthew Simpson , P.Eng, MBA , - President & Chief Executive Officer
Matt Simpson joined Black Iron as CEO in 2010 and has lead the company from a grassroots story to a development one, overseeing the Company's advancement of the Shymanivske Project to now be shovel ready with a bankable feasibility study containing excellent economics. Prior to founding Black Iron, Mr. Simpson worked for the Iron Ore Company of Canada (“IOC”), a subsidiary of Rio Tinto plc and Mitsubishi Corporation. At IOC he held several progressive roles in Business Evaluation, Operations Planning, Continuous Improvement and for his last three years as the Mine General Manager where he was accountable for all of the operations, maintenance and engineering personal in the mine to safely move 70MTpa material. Prior to joining IOC, Mr. Simpson worked as a process engineer for Hatch Ltd. designing, debottlenecking and constructing metallurgical refineries around the world. Mr. Simpson has extensive experience in mine design, operations and project management. He holds a Master of Business Administration as well as a Bachelor of Science in Chemical Engineering both from Queen’s University.
Michael Spektor - President
Mr. Spektor is the former Chief Executive Officer of VS Energy International LLC, a Ukrainian conglomerate with holdings in electricity distribution, multiple hotels, a bank and Dniprospetsstal, which is one of Ukraine’s largest steel mills. Mr. Spektor has been actively involved in the development and privatization of Ukraine’s energy sector in addition to assisting the Government of Ukraine with the shaping of legislation on energy security.
Les Kwasik , P.Eng. - Chief Operating Officer
Mr. Kwasik previously worked with INCO Limited Canada (VALE Canada Limited), Xstrata Columbia, BE&K Group, Inter Invest Sp Company, NESMA Company Saudi Arabia, Maple Minerals Corporation Canada and Archipelago Resources Singapore. His tenures have included international postings in Russia, Poland, Indonesia, Colombia and Eritrea in leadership roles ranging from General Manager to COO. Mr. Kwasik is an industrial engineer and a graduate of the Opole University of Technology in Poland. He holds B.Sc. in Industrial Electrotechnology Engineering. Mr. Kwasik will be primarily based at site in Kryvyi Rih, Ukraine.
Paul Bozoki , CA, MBA , - Chief Financial Officer
Mr. Bozoki is a Chartered Accountant and holds an MBA with over twenty years of accounting, tax and corporate finance experience in Canada and Europe. From 2007 through September 2010, he was the Chief Financial Officer of CD Capital Partners, a privately held real estate development firm focused on developing mixed use retail and office real estate in Russia, Ukraine and Romania. From 2001 through 2006, he was the Chief Financial Officer of MAVA Investment Ltd., a private equity firm based in Budapest, Hungary with two funds under management and US$110 million of committed capital. Mr. Bozoki is experienced in matters of international taxation and foreign capital markets and began his career at Ernst & Young LLP where he spent six years auditing clients in mining and other industries in Canada, Australia and Hungary.
BOARD OF DIRECTORS
Bruce Humphrey , P.Eng , - Chairman
Mr. Humphrey is a mining engineer with over 40 years’ experience working in senior management roles with both junior and senior mining companies. From 2007 to 2009 he served as Chairman of Consolidated Thompson Iron Mines Limited. He served as the President and Chief Executive Officer of Desert Sun Mining Corp. from October 2004 to April 2006. From May 1998 to May 2004, Mr. Humphrey served as Senior Vice President and Chief Operating Officer of Goldcorp Inc. Mr. Humphrey currently sits on the board of Alderon Resources Corp., B2Gold Corp., Crocodile Gold Corp. and Sulliden Gold Corporation Ltd. He is a member of the Professional Engineers of Ontario.
John Detmold , BA (Hons) , - Independent Director
John Detmold has over 30 years’ of corporate finance experience, including cross border transactions. Currently, Mr. Detmold is also the Chairman of Invecture Group, S.A. de C.V., the Chairman of Communicacion Xersa, S.A. de C.V. and is an active member of the Young Presidents Organization and the World Presidents Organization. From 2001 to 2009, Mr. Detmold was the founder and Chairman of Invecture Group S.A. de C.V., an asset management, private equity fund and merger and acquisition advisory firm. Mr. Detmold was involved in the takeover of Frontera Copper Corporation between November 2008 and May 2009, and is now managing the turnaround of the copper mining corporation. From 1999 to 2001, Mr. Detmold was the Chairman and Chief Executive Officer of Banca Quadrum. Mr. Detmold held various roles, including Director of Finance and General Manager of Grupo Tiger, S.A. de C.V. from 1982 to 1999. Mr. Detmold graduated from McGill University with a bachelors degree with honours in Economics.
Hon. Pierre Pettigrew , M.Phil, LLD (honorary) , - Director
The Honourable Pierre S. Pettigrew has had a distinguished career as a Canadian federal cabinet minister, serving as Minister of Foreign Affairs from 2004 to 2006 and Minister for International Trade from 1999 to 2003. He also served as Minister of Health and Minister of Intergovernmental Affairs from 2003 to 2004 and Minister of Human Resources Development and Minister of International Cooperation from 1996 to 1999. As a cabinet minister, he chaired numerous working groups on difficult international trade issues and lead trade missions to China, India, Russia, Germany, Algeria, Morocco, South Africa, Nigeria, Mexico and other countries. From 1985 to 1995, he was an International Business Consultant with Deloitte & Touche LLP and from 2006 to present he has been an Executive Advisor, International at Deloitte & Touche LLP. Mr. Pettigrew currently sits on the boards of Aberdeen International Inc., Avion Gold Corporation, Longford Energy Inc., Eurocontrol Technics Inc. and IC Potash Corp.
Dave Porter , MBA , - Independent Director
Mr. Porter holds an MBA and is a seasoned executive who has served as Vice President Human Resources & Organizational Effectiveness for Rio Tinto’s Iron Ore Company (IOC) from 1992 to 2008. Since January, 2009 Mr. Porter has been a Principal at Atlee Services. He has also been responsible for Operations, Safety, Health, Sustainable Development, Communications and Community Relations across the mining and steel sectors for over 33 years. Mr. Porter has lead the development and execution of business strategy, negotiated agreements with international unions, governments and communities and lead business transformation initiatives.
Matthew Simpson , P.Eng, MBA , - President & Chief Executive Officer
From 2002 to 2010, Mr. Simpson worked for the Iron Ore Company of Canada (IOC), a subsidiary of Rio Tinto plc with annual production capacity of 17.5 million tonnes of iron ore concentrate as publicly reported in 2009. At IOC he held several progressive roles in Business Evaluation, Operations Planning, Continuous Improvement and for the past three years as Mine General Manager. His work with the IOC primarily took place at their Carol Lake iron ore deposit in Labrador. Prior to joining IOC, Mr. Simpson worked as a process engineer for Hatch Ltd. designing and debottlenecking metallurgical refineries around the world. Mr. Simpson has extensive experience in mine design, operations and project management. He holds a Master of Business Administration as well as a Bachelor of Science in Chemical Engineering both from Queen’s University.
65 Queen Street West, 8th Floor
Toronto, Ontario, Canada
Email: [email protected]
Tel: 416-309-2138 OR (+38) (056) 409 25 36