RCS - Black Iron Inc. - Black Iron Signs Binding Documentation
07/11/2024 13:00
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RNS Number : 2658L Black Iron Inc. 07 November 2024
Black Iron Signs Binding Documentation with Anglo American for a Royalty
Investment with Associated Offtake and Right to Participate in Construction
Funding
· Royalty investment of US$4 million strengthens Black Iron's
balance sheet
· Anglo American secures offtake rights to at least 2.4 million
tonnes per year for life of mine
· Anglo American has first offer and refusal rights to secure
further offtake rights in exchange for funding at least 15% of the cost to
construct each phase of the Shymanivske Iron Ore Project, which will produce
an ultra-high-grade ~68% iron, uniquely positioned to meet the increasing
global demand for green steel
TORONTO, ON / ACCESSWIRE / November 7, 2024 / Black Iron Inc. ("Black Iron" or
the "Company") (TSX:BKI)(OTC PINK:BKIRF)(FWB:BIN) is pleased to announce the
signing of a legally binding royalty agreement and offtake agreement
(together, the "Transaction Documents") with Anglo American for a US$4 million
royalty investment, offtake rights and future potential construction
prepayments (the "Transaction").
Background
Black Iron's Shymanivske Iron Ore Project (the "Project") located in Kryvyi
Rih, central Ukraine, will be developed in two phases - with Phase 1 producing
approximately 4 million tonnes per annum and Phase 2 production increasing to
approximately 8 million tonnes per annum.
Terms of the Transaction
Certain key terms of the Transaction that have been agreed upon include:
· Anglo American will invest US$4 million in two tranches in
exchange for a gross revenue royalty of 1.0% should the prevailing 65% iron
CFR China iron ore price be less than US$120 per tonne and 1.5% should the
price be equal to or higher than US$120 per tonne for Black Iron's first 60
million tonnes of production at the Project (the "Royalty"). The first tranche
consisting of US$2.6 million will be invested now and the balance upon Black
Iron renewing its permits;
· Black Iron reserves the right to buy back this Royalty at any
time at a buyback price that provides a pre-agreed internal rate of return to
Anglo American;
· Anglo American's investment in the Royalty secures it offtake
rights to the higher of (a) 60% or (b) 2.4 million tonnes per year of the
Phase 1 production for life of mine (the "Offtake");
· The agreement also provides for a right of first offer for Anglo
American to further invest at least 15% of the Phase 1 construction cost as
part of a consortium after the conflict in Ukraine ends. Such additional
investment by Anglo American would result in the increase of its offtake to
100% of the Phase 1 production for an expected 4 million tonnes per annum.
· Additionally, Anglo American also has first refusal rights to
fund a further 15% of expansion construction cost for Phase 2 of the Project.
Provision of such funding would secure Anglo American 100% of the life of mine
offtake rights for Phase 2 of the Project, for an expected 8 million tonnes
per annum.
· The Offtake includes a profit-sharing component which aligns the
interests of both parties and thereby generates a strong interdependent
relationship of mutual benefit. Black Iron and Anglo American will also
mutually benefit from any realized shipping cost savings by selling the
product to steel mills located closer to Ukraine than China, such as those in
the Middle East where there is strong demand for such high purity direct
reduction iron ore.
Black Iron's CEO Matt Simpson stated: "Black Iron is excited to welcome Anglo
American as an investor and offtake partner given their extensive global
experience in the mining sector. Raising US$4 million through a royalty
structure relative to Black Iron's current market capitalization without
issuing additional shares to strengthen our finances during the ongoing war in
Ukraine is a great outcome for shareholders. The majority of the initial
US$2.6 million of funds from the Transaction will be used to renew the permit
for our Project which will expire six months after the end of martial law in
Ukraine. Further, the future potential funding for project construction from
such a highly credible mining company as Anglo American is important to
demonstrate a clear path forward to build the Shymanivske Iron Ore project
into an operating mine after the war in Ukraine comes to an end."
Anglo American is a leading global mining company focused on the responsible
production of copper, premium iron ore and crop nutrients - future-enabling
products that are essential for decarbonising the global economy, improving
living standards, and food security. Its portfolio of world-class operations
and outstanding resource endowments offers value-accretive growth potential
across all three businesses, positioning the company to deliver into
structurally attractive major demand growth trends.
Black Iron had previously selected Cargill as the offtake purchaser in May
2021. However, a definitive agreement was fully negotiated but not executed,
and Cargill's May 2021 non-binding memorandum of understanding has since
expired, leading to a competitive investment and offtake process being
re-tendered. In selecting Anglo American, Black Iron engaged Bacchus Capital
Advisers to run a global competitive process resulting in several interested
leading mining and trading companies signing confidentiality agreements. This
confirms the strong interest in the Project given its compelling projected
economics and high purity product despite the uncertainly associated with the
war in Ukraine.
About Black Iron
Black Iron is an iron ore exploration and development company, advancing its
100% owned Shymanivske Iron Ore Project located in Kryviy Rih, Ukraine. Full
mineral resource details and projected project economics can be found in the
NI 43-101 technical report entitled "(Amended) Preliminary Economic Assessment
of the Re-scoped Shymanivske Iron Ore Deposit" published in March 2020 with an
effective date of November 21, 2017 under the Company's profile on SEDAR at
www.sedar.com (https://pr.report/427r) . The Project is surrounded by five
other operating mines, including Metinvest's YuGOK and ArcelorMittal's iron
ore complex. Please visit the Company's website at www.blackiron.com for more
information.
For more information, please contact:
Matt Simpson
Chief Executive Officer
Black Iron Inc.
info@blackiron.com (mailto:info@blackiron.com)
Forward-Looking Information
This press release contains forward-looking information. 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. Forward-looking information may
include, but is not limited to, statements with respect to entering into the
Offtake, the Transaction and the Transaction Documents, Phase 1 and Phase 2 of
the Project, renewal of mining permits for the Project, use of proceeds from
the Transaction, declaration of martial law in Ukraine, outcome of the war in
Ukraine, the permitting of the Shymanivske Iron Ore Project and grade and use
of iron ore from the Shymanivske Iron Ore Project. 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". 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; progress of the
Company's service providers; negotiations with third parties; 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. The Company
notes that mineral resources are not mineral reserves and do not have
demonstrated economic viability.
SOURCE: Black Iron Inc.
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