Metinvest finalizes acquisition of 49% stake in Black Iron

The Ukrainian vertically integrated steel and mining company Metinvest (METINV) has transferred the final USD 5 mln portion of a total USD 20 mln payment to finalize the acquisition of a 49% stake in Black Iron, a Cyprus-based company that is developing the Shymanivske and Zelenivske iron ore projects in the Dnipropetrovsk region in Ukraine. As previously reported, Metinvest may provide financing of up to USD 536 mln for the project, based on its ownership stake in Black Iron, while total CapEx requirements are around USD 1.097 bln.

Roman Topolyuk: The deal’s finalization is an important milestone for Black Iron (BKI CN), which has been struggling to spur the development of its iron ore projects without the support of a local partner ever since its 2011 IPO. After its deal with Metinvest was announced in the summer of 2013, permitting seems to have become easier for Black Iron in Ukraine. The next important steps to be taken are the acquisition of land plots, the signing of an off-take agreement and the securing of necessary permits. As for Metinvest, we think that cash outflows for the project in 2014 will be limited, since all the paper work needs to be done by the year end. We expect the total CapEx of Metinvest to remain at around USD 700 mln in 2014, compared to USD 747 mln in 2013.