-- DEVELOPMENT ARRANGEMENT AND US$20 MILLION INVESTMENT POTENTIALLY
POSITIONS METINVEST AS AN INFLUENTIAL SHAREHOLDER OF BLACK IRON'S
DEVELOPMENT PROJECTS
-- THE ARRANGEMENT WILL COME INTO FORCE AFTER OBTAINING ALL NECESSARY
PERMITS FROM GOVERNMENT AGENCIES INCLUDING ANTIMONOPOLY
-- ADDITIONAL POTENTIAL INVESTMENT BY METINVEST COULD REACH AS MUCH AS
US$536 MILLION
-- METINVEST IS A VERTICALLY INTEGRATED STEEL AND MINING GROUP OF
COMPANIES, WHICH PRODUCED 36.2Mt IRON ORE, 11.6Mt COAL AND 12.5Mt STEEL
IN 2012 (UKRAINE'S LARGEST COMPANY)
Black Iron Inc. ("Black Iron" or the "Company") (TSX:BKI)
(FRANKFURT:BIN) is pleased to announce that Metinvest B.V.
("Metinvest"), Ukraine's largest mining and steel producer, has
executed definitive agreements to form a development arrangement
with Black Iron and to invest in Black Iron (Cyprus) Ltd ("BKI
Cyprus"), which is currently a wholly-owned subsidiary of Black
Iron. The agreements create a defined path for Metinvest to become
a prominent shareholder of Black Iron's development projects, the
Shymanivske Project and the Zelenivske Project (collectively, the
"Projects"), each located in Kryvyi Rih, Ukraine.
Provisions of the agreements between Black Iron and Metinvest
require Metinvest to make an initial investment of US$20 million in
BKI Cyprus to help fund the Projects, with potential investment
amounts thereafter expected to increase during construction of the
Projects to approximately US$536 million.
Metinvest's investments will be structured as follows:
-- Subject to final regulatory approvals, Metinvest will immediately take
up an initial private placement of shares in BKI Cyprus, which holds
100% participatory interest in two Ukrainian companies - Shymanivske
Steel LLC and Zelenivske Steel LLC, for aggregate gross proceeds of
US$20 million. This investment will give Metinvest a 49% shareholding of
BKI Cyprus' share capital. There is no increase in shares outstanding in
Black Iron Inc. as a result of these agreements. Black Iron remains the
operator and developer of both Projects.
-- Each of Metinvest and Black Iron will have the option to participate in
the funding of the development of the Projects based on its
proportionate interest in BKI Cyprus or be diluted down. Using the
projected total capital investment requirements as outlined in the
Company's Bankable Feasibility Study (filed on SEDAR in December 2012)
of US$1,094 million, and assuming the development capital is 100% equity
financed, Metinvest's future capital contribution could increase by up
to US$536 million (being 49% of US$1,094 million) for the development of
the Shymanivske Project. The agreements contain strict dilution
provisions designed to create a strong incentive for continued
participation in any future equity financings for the Projects.
-- In addition to the private placement of BKI Cyprus shares, Metinvest
will also be granted a non-transferable option to acquire additional
shares in BKI Cyprus to increase their effective ownership to 51% post
achieving full run rate production of 9.2 million tonnes per annum
concentrate for three consecutive months. The option exercise price will
represent a 30% premium over the fair full net asset value as determined
by an independent third party, and will expire twelve months after
vesting.
Black Iron plans to use all of the proceeds received from the
Metinvest subscription in BKI Cyprus shares to finance the
development of its Shymanivske Project and for general working
capital purposes.
Completion of this transaction is subject to receipt of all
necessary regulatory approvals, including the Government of
Ukraine's anti-monopoly division.
Metinvest has a proven track record of developing and operating
iron ore projects in Ukraine, which will prove invaluable to Black
Iron in the advancement of its Projects. It will also serve in
helping attract future foreign investment to Ukraine.
Matt Simpson, President and CEO of Black Iron said, "Black Iron
selected Metinvest for its industry-leading experience in iron ore
mining and steel making, as well as its operational history in
Ukraine. This agreement greatly strengthens our development team
and I look forward to being closely associated with Metinvest.
Together, we will help bring new world class iron ore processing,
safety and environmental technologies to Ukraine."
Igor Syry, General Director and CEO of Metinvest added,
"Metinvest believes that development of Black Iron's Shymanivske
Project will be important for Ukraine and its economy. It will
represent a major investment in Ukraine, resulting in increased
local employment, the improvement of local infrastructure and
environmental level standards in Kryvyi Rih, and become a catalyst
for regional and national social and economic development."
Black Iron Analyst and Shareholder Conference Call
Black Iron will host a conference call today at 8:30 a.m., EDT
(July 23, 2013) to discuss the arrangement. To participate in the
call please dial the following:
International: +1 416 340 8018
Toll Free North America: 1 866 223 7781
To register and listen to the webcast of the call, please go to
Black Iron's website at www.blackiron.com.
Company Profiles
Black Iron
Black Iron is an iron ore exploration and development company,
advancing its Shymanivske project located in Kryviy Rih, Ukraine to
production. On November 15, 2012, the Company announced completion
of its NI 43-101 compliant bankable feasibility study ("BFS") on
the Shymanivske Project. The BFS outlines an operation producing
9.2 million tonnes per year of high-grade 68% iron ore concentrate,
projecting a 45.9% internal rate of return ("IRR"), US$3.5 billion
net present value ("NPV") at an 8% discount rate and 2.2 year
payback for a capital investment of US$1.1 billion. The project is
surrounded by five other operating mines, including ArcelorMittal's
iron ore complex. The Company believes that existing
infrastructure, including access to power, rail and port
facilities, coupled with locally available skilled labour will
allow for a relatively quick and low cost development timeline to
production.
This project contains an NI 43-101 compliant resource, with 646
Mt Measured and Indicated mineral resources, consisting of 355 Mt
Measured mineral resources grading 32.0% Total iron and 19.5%
Magnetic iron, and Indicated mineral resources of 291 Mt grading
31.1% Total iron and 17.9% Magnetic iron, using a cut-off grade of
10% Magnetic iron. Additionally, the project contains 188 Mt of
Inferred mineral resources grading 30.1% Total iron and 18.4%
Magnetic iron. Further, the Company holds an exploration permit for
the adjacent Zelenivske project, which it intends to further
explore to determine its potential.
Please visit the Company's website at www.blackiron.com, follow
us on Facebook: BlackIronInc or Twitter: @BlackIronBKI or write us
at info@blackiron.com for more information.
Metinvest Group
Metinvest Group is a vertically integrated steel and mining
group of companies, managing every link of the value chain, from
mining and processing iron ore and coal to making and selling
semi-finished and finished steel products. The Group comprises
steel and mining production facilities located in Ukraine, Europe
and the USA and has a sales network covering all key markets.
Metinvest's Strategic Vision: Metinvest strives to become the
leading integrated steel maker in Europe demonstrating sustainable
growth and profitability independently from the phases of economic
cycle and providing the return on investment above the average
industry levels. Metinvest Group is structured into two operating
divisions: Metallurgical Division and Mining Division. Metinvest is
made up of more than 100,000 employees globally and in 2012
produced 36.2 million tonnes of iron ore, 11.6 million tonnes of
coal and 12.5 million tonnes of steel.
The major shareholder of Metinvest Group is Metinvest B.V., a
holding company owned by System Capital Management Group (71.25%)
and Smart-Holding (23.75%).
The technical and scientific contents of this press release have
been prepared under the supervision of and have been reviewed and
approved by Matt Simpson, P.Eng, President and CEO of Black Iron
Inc., who is a Qualified Person as defined by NI 43-101. For
further information, please see the technical report of the
Company, which is available on SEDAR at www.sedar.com.
Forward-Looking Information
This press release contains forward-looking information within
the meaning set out in Canadian securities laws. 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, 2012 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 may include, but is not
limited to, statements with respect to results of the feasibility
study dated December 17, 2012 (the "Feasibility Study", as filed
under the Company's profile on SEDAR at www.sedar.com) and the
mineral reserve and resource estimate, the future financial or
operating performance of the Company, its subsidiaries and its
projects, the development of and the anticipated timing with
respect to the Shymanivske project, the ability to obtain
financing; and the impact of concerns relating to permitting,
regulation, governmental and local community relations. Generally,
forward looking information can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might"
or "will be taken", "occur" or "be achieved".
Estimates underlying the results of the Feasibility Study arise
from engineering, geological and costing work of WorleyParsons
Canada Services Ltd. ("WorleyParsons"), Watts, Griffis and McOuat
Limited ("WGM"), Consulting Geologists and Engineers of Toronto,
P&E Mining Consultants Inc. ("P&E") and the Company. See
the technical report relating to the Feasibility Study for a
description of all relevant estimates, assumptions and parameters.
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, including but not limited to: general
business, economic, competitive, geopolitical and social
uncertainties; the actual results of current exploration
activities; other risks of the mining industry and the risks
described in the annual information form of the Company. Although
the Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such information will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward looking information. The Company
does not undertake to update any forward-looking information,
except in accordance with applicable securities laws.
Contacts: Black Iron Inc. Michael McAllister Manager, Investor
Relations +1 (416) 309-2950info@blackiron.com Black Iron Inc. Matt
Simpson President & CEO +1 (416) 309-2138 www.blackiron.com
Metinvest Holdings LLC Alexey Komlyk Head of media and marketing
communications +380623881703press@metinvestholding.com
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