Black Iron's shares skyrocket after inking MOU with Glencore on Ukraine iron ore project

Canadian junior Black Iron Inc.'s (TSX: BKI; US-OTC: BKIRF) shares soared over 35% Wednesday, after announcing it had signed memorandum of understanding (MOU) with mining giant Glencore (LON: GLEN).

The companies are in talks to finance construction of Black Iron's  Shymanivske iron ore project in the Ukraine, and are set to begin formal negotiations on the financing-offtake package.

The MOU envisions Glencore making an investment to help fund construction of the project in exchange for securing the offtake of up to the full phase one planned annual production of four million tonnes with the terms and amount still to be negotiated. The MOU also outlines cooperation between Black Iron and Glencore to leverage their relationships to source the balance of funds required to construct the Project.

The project in Kryvyi Rih, a highly developed iron ore mining region in Ukraine, benefits from well-established infrastructure well away from conflict zones.

The Shymanivske iron ore deposit is well-positioned in Ukraine between markets in Europe, Russia, Asia and the Middle East. It is located 330 kms southeast from Kiev in central Ukraine, in the heart of the KrivBass iron ore mining district.

A PEA released in November 2017 envisioned building in two phases, starting at 4 million tonnes of dry concentrate per year, and ramping up to 8 million tonnes per year. Including a 17% contingency, the PEA estimated capital investment would be $436 million for phase one and another $312 million for phase two, for a minimum 20-year mine life from open pits, which are open for resource expansion.

Under the terms of the MOU, Glencore has also agreed to work with Black Iron to leverage their relationships to source the balance of funds required. Black Iron can also allocate offtake to other equity investors if the investment terms are equal or superior to these proposed by Glencore. Separately, Black Iron continues its debt financing discussions with international financial institutions and banks in Europe.

Glencore’s involvement strengthens Black Iron’s capability and draws on the commodity giant’s extensive international network, experience and market knowledge, Black Iron says.

Black Iron plans to produce a 68% iron content pellet feed concentrate with very low levels of trace elements that can be used to produce high-quality iron ore blast furnace pellets or premium direct reduction grade pellets. It can also be used as a sweetener in the feed for sinter production, which is then processed to iron in blast furnaces.

The Shymanivske project contains a NI 43-101 compliant resource estimated to be 646 Mt Measured and Indicated mineral resources, consisting of 355 Mt Measured mineral resources grading 31.6% total iron and 18.8% magnetic iron, and Indicated mineral resources of 290 Mt grading 31.1% total iron and 17.9% magnetic iron, using a cut-off grade of 10% magnetic iron. Additionally, the Shymanivske project contains 188 million inferred tonnes grading 30.1% total iron and 18.4% magnetic iron.

A version of this story first appeared in The Northern Miner