Industrial growth is built on steel, and steel comes from iron ore, which makes it essential to our way of life. Over two billion tonnes of iron ore are mined every year with a value in excess of US$160 billion to produce items people touch everyday ranging from forks and chairs all the way through to cars, bridges and skyscrapers.
The market for iron ore is strong with commodity sales price up roughly 30% over the last year. Big mining companies focused on iron ore have seen a rally of investor support because of their high earnings and large dividends whereas the share price of most juniors is just starting to move presenting a big opportunity for investors.
Price increases are being supported by fundamentals with demand driven by global economic growth and limited supply caused by a tailings dam failure at a large Brazilian iron ore mine in January 2019 resulting in several other mines with similar tailings designs being shut down and cyclones in Australia which are the top two iron ore mining countries globally.
This is why investors should take a hard look at Black Iron Inc. (TSX: BKI; OTC: BKIRF; FRANKFURT: BIN) which is developing its Shymanivske iron ore project ranked by highly respected commodity analysis groups CRU and Wood MacKenzie as having the highest economic return and lowest cost undeveloped iron ore project globally.
Black Iron Inc. (TSX: BKI; OTC: BKIRF; FRANKFURT: BIN) is advancing its 100% owned Shymanivske iron ore project located in Ukraine to production that has several things going for it:
For large production rate mining projects, to cost effectively mine and process the ore, you need ready access to railway and a deep seaport to move the product to markets, a secure power source and a reliable skilled labor force. Being able to access all these at low cost makes or breaks the project!
Highlights From The Recent Independent Preliminary Economic Assessment*
As seen in the table below, Black Iron Inc. (TSX: BKI; OTC: BKIRF; FRANKFURT: BIN) has a conservative Net Present Value of US$1.7 billion using a conservative long term iron ore price of US$62 per tonne but is currently trading at a market capitalization of only ~US$11 million (~CAD$15 million) presenting major upside potential in the share price for investors on a company that has completed several economic and technical studies to bring it to the brink of starting construction. When current actual higher benchmark iron ore prices are used the return on investment is even greater than predicted in the preliminary economic assessment as shown below.
Path to Production
The company’s management team has already shown these projected economics to large steel mills and global trading houses resulting in the signing of a memorandum of understanding with Glencore, one of the world’s largest trading companies with US$87 billion market capitalization, for offtake in exchange for significant construction investment. Discussions are also currently ongoing with several mainly European based banks and exports credit agencies to secure construction funding, some of which have a mandate to help Ukraine with its transition towards European values and integration.
From a sequence standpoint, discussions are being held simultaneously with equity and debt investors as both are ultimately required to fund construction. It is likely the anchor equity and offtake investor will be announced first followed by completion of an updated feasibility study and environmental impact assessment upon which the debt financing can be secured to allow for construction start around the end of 2020.
Matt Simpson — CEO and Director
Matt Simpson is the former General Manager of Mining for Rio Tinto’s Iron Ore Company of Canada, where he managed a team of over 620 people and multi-hundred million dollar per year budget. Prior to Rio Tinto, he worked for Hatch where designed and constructed global metallurgical refineries.
Les Kwasik — COO
Les Kwasik has over 40 years of hands-on experience in building and operating mines globally with companies such as INCO (Vale) and Xstrata Colombia. He has constructed nine mines over his career including two in the former Soviet Union.
Paul Bozoki — CFO
Paul Bozoki is the former CFO of CD Capital Partners, operating in the Soviet Union and Ukraine.
Bill Hart — SVP Corporate Development
Bill Hart has 30 years of experience selling iron ore while working for Rio Tinto, Cliffs Natural Resources and, most recently, Roy Hill Holdings Ltd.
Ivan Markovich — VP Government and Community Relations
Ivan Markovich has an extensive network of Ukraine government relationships.
Bruce Humphrey — Chairman
Bruce Humphrey is the former chairman of Consolidated Thompson Iron Ore and Chief Operating Officer of Goldcorp.
Dave Porter — Director
Dave Porter is the former VP of Rio Tinto’s Iron Ore Company of Canada and COO of Algoma Street.
John Detmold — Director
John Detmold is the Chairman and Founder of Invecture Group S.A. de C.V., which owns Frontera Copper Corporation.
Pierre Pettigrew — Director
Pierre Pettigrew is the former Canadian Minister for Foreign Affairs and International Trade.
Tormont 50 recently initiated coverage of Black Iron. The report was authored by Jim McFadden who worked as an analyst with Bear Stearns and Goldman Sachs prior to heading JP Morgan’s North American equity proprietary trading desk. In the report, Jim states: “BKI's (Black Iron) current EV (enterprise value) of US$9 million seems far too low given the economic opportunities described… given BKI’s tremendous economic opportunities, the company should currently trade at perhaps a US$100 million enterprise value, implying a present fair share price of about C$0.75 per share or US$0.55-US$0.60 per share. Furthermore, as Shymanivske construction gets closer, we think the market will start putting perhaps a 1x multiple on the company’s projected annual EBIDTA of around US$385 million." A copy of this report can be found on Black Iron’s website (https://blackiron.com/wp-content/uploads/2019/05/201905-Tormont50-initiation-on-BKI.pdf).
The technical and scientific contents of this note have been reviewed and approved by Matt Simpson, P.Eng., CEO of Black Iron, who is a Qualified Person as defined by NI 43-101.
* Full details can be found in the NI 43-101 compliant technical report entitled “Preliminary Economic Assessment of the Re-scoped Shymanivske Iron Ore Deposit” effective November 21, 2017 (the “PEA”), under the Company's profile on SEDAR at www.sedar.com.
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.
This document 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, 2018 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 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. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
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