Canada’s Black Iron with assets in Ukraine has pointed out the increase in the attractiveness of the Shymanivske Iron Ore Project. The company said in a press release that since publishing the re-scoped Preliminary Economic Assessment, benchmark iron ore prices have rallied from $62 per tonne to $70 per tonne as of March 9, 2018.
The company said that based on prevailing iron ore prices and adjustments for product quality mainly related to iron content, Black Iron’s construction capital is estimated to have an estimated $1.4 billion Net Present Value (NPV), assuming 60% debt financing, 10% discount rate and an initial capital cost of $436 million. “Even under highly pessimistic long-term iron ore prices of $50 per tonne, the project generates Internal Rate of Return (IRR) in excess of 20%,” the press service said.
The company said that since releasing the revised project economics, the company has accelerated its efforts to secure the necessary land surface rights for the mine and plant. The leases related to three parcels of land that are required to begin construction are currently held within two Ukrainian government groups. The first parcel of land is held by the Kryvy Rih City Council who have been very supportive. Black Iron’s team and specialist consultants have completed more than 50% of the land allotment study to date.
The final parcel of land is held by Ukraine’s State Forestry, who have submitted the required documents for this land to be re-zoned and transferred to the Kryvy Rih City Council, who will in turn, lease the property to the company. The acquisition of these land packages will represent a significant milestone in beginning construction of the project and the company expects this process to be completed prior to year end. The company continues to pursue various financing options for construction of the project and has received significant interest from multiple groups which are currently conducting due diligence. The potential financiers include several multi billion-dollar steel mills, global trading houses and other mining companies.