Canadian company Black Iron, which is implementing the investment project to create a new iron ore production facility in Kryvy Rih (Dnipropetrovsk region), has announced its decision to accelerate the expiry date of the common share purchase warrants dated March 29, 2019 and April 5, 2019.
The company said in its press release on July 30 that the warrants were issued in connection with a private placement of units, with each share purchase warrant being exercisable into one additional common share of the company at a price of $0.09 per share until March 29, 2022 and April 5, 2022, as applicable.
“The Warrants are subject to the right of the Company to accelerate the expiry date of the Warrants if the Company’s common shares close at or above $0.15 per share for more than 10 consecutive trading days on the Toronto Stock Exchange (the “Acceleration Event”). The Company is entitled to accelerate the expiry of the Warrants to that date that is 30 business days from the date of issuance of a news release announcing the exercise of the acceleration right,” it said.
Black Iron also noted that the press release constitutes notice to the holders of warrants that the Acceleration Event has occurred and the company has elected to accelerate the expiry date of the Warrants. This notice only affects the warrants dated March 29, 2019 and April 5, 2019 and not any other warrants the company has issued.
In addition, it is reported that Black Iron’s management have recently initiated discussions with institutional investors on a royalty that could contribute materially to the funding required for project construction and are receiving strong interest.
“Negotiation of a Heads of Agreement on the commercial terms to be included in a binding contract for a high potential $60 million investment in exchange for being awarded the construction contract for the Shymanivske project have concluded positively with one company and are well advanced with a second. Further details on this will be disclosed in due course noting that a binding contract would only be entered into with only one of these two companies, should the parties reach an agreement, who will then lead the future planned construction of the project,” the company said.
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.