Black Iron is a TSX-listed, Canada-based company with a globally top-ranked iron ore project in Ukraine.
The Shymanivske project is surrounded by five operating iron ore mines, including several owned by Metinvest and ArcelorMittal’s iron ore complex. People are generally becoming much more concerned about climate change and this has resulted in the iron ore market evolving to favour higher iron grade products (i.e. >62% Fe), such as Black Iron’s ultra-high grade of 68% iron product, at the detriment of lower grades. This is mainly driven by China’s government forcing its steel mills to become more energy efficient and reduce their environmental footprint. There is a prevailing sentiment that this trend will not subside and higher grade iron ore will continue to attract greater premiums.
Given these factors, Black Iron has taken the initiative of seeking to advance its Project by building it in phases with initial reduced scale, hence lower initial capital requirements and time to construct the Project. This is economically viable in Black Iron’s case given the close proximity of major infrastructure including rail, power, water and ports coupled with the use of local highly skilled low cost labour to construct and operate the Project.
The Project considers a mining and mineral processing operation having an initial nominal capacity of 4.0 Mtpa of dry 68% iron content blast furnace pellet feed concentrate. The flowsheet and process equipment for the initial 4.0 Mtpa of concentrate will be replicated in order to double the production capacity with construction starting in year 3 to allow for production of 8.0 Mtpa starting in year 5 of production. This present re-scoped PEA replaces the previous 2014 Feasibility Study NI 43-101 Report as the current report for the Shymanivske Project.
Preliminary Economic Assessment of the Re-scoped
Shymanivske Iron Ore Deposit
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. Mineral resources are not mineral reserves and do not have demonstrated economic viability.
Geology & Mineralization
Exploration & Drilling
Mineral Resource Estimates
Capital & Operating Costs
The PEA assumes a long term selling price of US$61.88/dmt for product containing 62% iron content delivered (i.e. CFR) North China adjusting using a premium of US$7.21/dmt per 1% Fe above 62% Fe, which equates to $43.28/dmt for Black Iron’s 68% Fe product, and applying a trace element premium (for silica, phosphorus and alumina), net of penalties, of $3.57/dmt of concentrate. Shipping costs to north China of US$11.54/dmt are then subtracted resulting in the FOB selling price of $97.19/dmt. The economic return at various 62% iron benchmark prices and grade premiums are shown in the table below. As can be seen, the projected economics are spectacular at higher iron ore prices while still being quite compelling in depressed pricing scenarios.