TORONTO, ONTARIO--(Marketwired - Dec 14, 2017) - Black Iron Inc. ("Black Iron" or the "Company") (TSX:BKI)(OTC PINK:BKIRF) has
filed on SEDAR its National Instrument 43-101 Technical Report entitled "Preliminary Economic Assessment of the Re-scoped
Shymanivske Iron Ore Deposit" effective November 21, 2017 (the "re-scoped PEA") for its Shymanivske iron ore project located in
Kryvyi Rih, Ukraine (the "Project").
The re-scoped PEA is based on a two-phased build out of the mine and production plant with the first phase operation producing
4MT per year of ultra high-grade 68% iron concentrate expanding to 8MT per year starting in the fifth year of production. By
phasing the build, it significantly reduces the up-front construction costs of the Project thus increasing the projected returns
of the Project. The Project is able to exhibit superior projected economics due to its proximity to major infrastructure
including, railway, electrical power and a deep-sea port.
A long-term iron ore benchmark price of US$61.88/t for products containing 62% iron was used in the re-scoped PEA and adjusted
using the three-month average trailing spot iron premium of US$7.21 per 1% Fe above 62% as of November 7, 2017. Based on this
pricing, the Project forecasts a pre-tax unlevered IRR of 42.6% and a NPV of US$2,115 million using a 10% discount rate as seen
in the table below. The after-tax unlevered IRR using this price and premium is 36.1% and NPV is US1,662 million.
Matt Simpson, Black Iron's CEO, commented: "The long-term price used in the re-scoped PEA is lower than the December month to
date average price of US$69.95/t as reported by Metal Bulletin, which as seen in the table below results in significant investor
return projections. Further, once debt leverage is added, the projected returns should further increase."
Pre-Tax IRR and NPV at 10% Discount Rate
Sensitivity to Base 62% Fe CFR and %Fe Grade Premium |
|
62% Fe
$/dmt |
|
Fe Premium ($/dmt per 1% Fe) |
|
|
$4.00 |
|
$5.00 |
|
$6.00 |
|
$7.21 |
|
$8.00 |
|
$9.00 |
|
$50.00 |
IRR |
|
22.2 |
% |
|
26.4 |
% |
|
30.4 |
% |
|
35.2 |
% |
|
38.2 |
% |
|
41.9 |
% |
NPV 10% |
$ |
706M |
|
$ |
977M |
|
$ |
1,249M |
|
$ |
1,577 M |
|
$ |
1,792M |
|
$ |
2,063M |
|
$61.88 |
IRR |
|
30.4 |
% |
|
34.3 |
% |
|
38.1 |
% |
|
42.6 |
% |
|
45.5 |
% |
|
49.1 |
% |
NPV 10% |
$ |
1,243M |
|
$ |
1,515M |
|
$ |
1,786M |
|
$ |
2,115M |
|
$ |
2,329M |
|
$ |
2,600M |
|
$70.00 |
IRR |
|
35.6 |
% |
|
39.4 |
% |
|
43.1 |
% |
|
47.6 |
% |
|
50.4 |
% |
|
53.9 |
% |
NPV 10% |
$ |
1,611M |
|
$ |
1,882M |
|
$ |
2,153M |
|
$ |
2,482M |
|
$ |
2,696M |
|
$ |
2,967M |
|
$80.00 |
IRR |
|
41.9 |
% |
|
45.6 |
% |
|
49.2 |
% |
|
53.5 |
% |
|
56.3 |
% |
|
59.7 |
% |
NPV 10% |
$ |
2,063M |
|
$ |
2,334M |
|
$ |
2,606M |
|
$ |
2,934M |
|
$ |
3,148M |
|
$ |
3,420M |
|
$90.00 |
IRR |
|
48.0 |
% |
|
51.8 |
% |
|
55.1 |
% |
|
59.3 |
% |
|
62.0 |
% |
|
65.4 |
% |
NPV 10% |
$ |
2,515M |
|
$ |
2,787M |
|
$ |
3,058M |
|
$ |
3,386M |
|
$ |
3,601M |
|
$ |
3,872M |
|
Conditions considered to be extreme (combinations of low and high 62% benchmark price and %Fe grade premium) are highlighted
in brown in the above table as they are considered unlikely to occur.
The table below shows the highlights from the re-scoped PEA, which are further elaborated in the detailed technical report
filed on www.sedar.com under the Company's profile.
PEA Highlights (all currency is US$)
IRR (pre-tax unlevered)IRR (after-tax unlevered) |
42.6%
36.1% |
NPV at 10% discount (pre-tax unlevered)NPV at 10% discount (after-tax unlevered) |
$2.12 billion
$1.66 billion |
Projected Years to Payback Projected Years to Payback |
2.6 years
2.9 years |
Annual Production Rate: Phase 1 Phase 2 |
4 Mt
8 Mt |
Capital Cost to build: Phase 1 Phase 2 |
$435.8 million
$312.2 million |
Long Term Benchmark Iron Ore Price (62% Fe CFR Port in China) |
$61.88 /dmt |
Final Product Iron Grade |
68% Fe |
Black Iron Projected Sale Price FOB Ukraine Port Yuzhny(Including product quality adjustments and net
shipping costs) |
$97.19/dmt |
Life of Mine FOB OPEX (Includes mining, beneficiation, rail, ship loading and G&A costs) |
$31.46/t |
Proposed Initiation of Phase 2 Construction Post Phase 1 Startup |
Year 3 |
Estimated Mine Life (based on in-pit resources) |
20 Years |
The re-scoped NI 43-101 PEA Report replaces the Company's 2014 bankable feasibility study ("2014 BFS") as the current
technical report for the Project. Significant portions of the PEA remain unchanged from the 2014 BFS, including sections relating
to geology, exploration, drilling, sampling and data verification, and the mineral resource estimate. Consistent with practice in
the industry, this PEA has been prepared with an engineering accuracy of +/-35%. Please see the Company's press release dated
November 21, 2017 for a summary of the assumptions used in the re-scoped PEA.
Re-scoped Preliminary Economic Estimate Study Report
The re-scoped PEA has been prepared in accordance with the guidelines of National Instrument 43-101 by the independent firms
BBA Inc. and Watts, Griffis and McOuat Limited (with the individual authors identified below) and is effective as of November
21st, 2017. The results of the re-scoped PEA are based on 100% ownership of the Project by Black Iron.
Qualified Persons
The contents of this press release have been reviewed and approved by Qualified Persons, as follows:
- Angelo Grandillo, P. Eng. of BBA Inc. QP for Study Supervisor.
- Jeffrey Cassoff, P.Eng. of BBA Inc. QP for In-Pit Resource estimate and mining engineering.
- Michael Kociumbas, P.Geo. and Rick Risto, P.Geo., Watts, Griffis and McOuat Limited, QPs for mineral resources estimate and
QA/QC and data verification;
These persons are Qualified Persons as defined by NI 43-101, are independent of Black Iron, and have authored the technical
report in respect of the re-scoped PEA.
Cautionary Statement
The PEA is preliminary in nature, and it includes inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves.
There is no certainty that the PEA will be realized.
Forward-Looking Information
This press release contains forward-looking information. Forward-looking information is based on what management believes
to be reasonable assumptions, opinions and estimates of the date such statements are made based on information available to them
at that time, including those factors discussed in the section entitled "Risk Factors" in the Company's annual information form
for the year ended December 31, 2016 or as may be identified in the Company's public disclosure from time to time, as filed under
the Company's profile on SEDAR at www.sedar.com. Forward-looking information
may include, but is not limited to, statements with respect to the Project, the mineralization of the Project, the results of the
PEA, the realization of the PEA, the expectations of future cash flows, the expected economics forecast, the geo-political
climate in Ukraine, the Company's ability to obtain the requisite land rights for the Project and other requisite permits or
approvals, and future plans for the Company's development. Generally, forward looking information can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state
that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied
by such forward-looking information, including but not limited to: general business, economic, competitive, geopolitical and
social uncertainties; the actual results of current exploration activities; other risks of the mining industry and the risks
described in the annual information form of the Company. Although the Company has attempted to identify important factors that
could cause actual results to differ materially from those contained in forward-looking information, there may be other factors
that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to
be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward looking information. The Company does not undertake to update any
forward-looking information, except in accordance with applicable securities laws.