Black Iron offers more info on Shymanivske iron ore project

Black Iron (BKI CN),
a Canadian iron ore exploration and development company, presented on Dec. 14
its full Preliminary Economic Assessment (PEA) for its Shymanivske iron ore
project in Ukraine. A short presentation on the PEA was revealed on Nov. 21.

Assuming a CFR China
62% concentrate price of 61.88 USD/t and an Fe content premium of 7.2 USD/dmtu,
the PEA yields an NPV of USD 1.7 bln and an IRR of 36%, calculated post tax
with a 10% discount rate. During the first few years, the company plans to
produce 4 mmt per year of the premium-quality 68% concentrate, later expanding
capacity to 8 mmt per year.

Dmytro Khoroshun: The full PEA provides much more
details that better enable following the project’s progress once it is
launched, a date that has yet to be determined. This modern project promises to
be much more efficient than the existing Ukrainian mining enterprises. Particularly,
we note that Ukrainian mining peers currently produce about up to 2 kt per
worker per year, whereas the Shymanivske project is anticipated to produce
about 25 kt per worker per year, being therefore more than ten times more
efficient.

Nevertheless, we think that the assessment of the external environment
provided in the PEA, particularly the product prices outlook, might be too
optimistic. Namely, the most pessimistic set of price parameters, which are
considered unlikely to occur, was the 62% concentrate price of 50 USD/t and an
Fe content premium of 4 USD/dmtu, which we consider to be not conservative
enough.