DGAP-News: Black Iron / Key word(s): Miscellaneous
Black Iron Selects Cargill As Ukraine High-Grade Iron Ore Offtake Purchaser With a USUSD75M Finance Facility
2021-05-10 / 07:18
The issuer is solely responsible for the content of this announcement.
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BLACK IRON SELECTS CARGILL AS UKRAINE HIGH-GRADE IRON ORE OFFTAKE PURCHASER WITH A USUSD75M FINANCE FACILITY
For Immediate Release
TORONTO, ON, May 10, 2021 - Black Iron Inc. ("Black Iron" or the "Company") (TSX: BKI)(OTC PINK:BKIRF)(FWB:BIN) is
pleased to announce that it has selected Cargill, Incorporated ("Cargill") for offtake rights on the initial four
million tonnes per year of production from its Shymanivske iron ore project (the "Project") and a USUSD75 million finance
facility to be used for Project construction.
Subject to completion of due diligence and successful conclusion of negotiations, Cargill will offtake the production
and extend financing of USUSD75 million for the construction of the Project through a finance facility. Drawdown on this
funding will be subject to certain conditions being met, as is customary for this type of transaction, mainly related
to the Project being fully permitted and financed for construction. Black Iron and Cargill will now start work on
definitive binding offtake and financing agreements which reflect the Proposal. Based on the proposal agreed between
Black Iron and Cargill (the "Proposal"), the offtake agreement will be for an initial term of ten years and will
include a profit-sharing component which will align the interests of both parties and thereby generate a strong
interdependent relationship of benefit to both parties. On the profit share, Black Iron will receive 100% of the 65%
iron content fines benchmark price, currently USD230 per tonne, and share with Cargill a portion of the incremental sale
price of its 3% higher (68%) iron content and low impurity magnetite product.
Cargill's metals business ("Cargill Metals") focuses on iron ore and steel trading. Connecting iron ore miners around
the world with steel mills and steel end users in key markets, Cargill Metals trades over 50 million tonnes of iron
ore per year and is also a strategic investor of a number of mining operations in North America and Northern Europe.
Black Iron and Cargill Metals agree that, as the world is becoming more environmentally conscious it will naturally
turn to ores with a higher iron content and in forms such as pellets/pellet feed that reduce emissions in the
production of steel.
Black Iron's planned 68% iron content magnetite pellet feed is in the top 4% of global production by iron content and
is anticipated to reduce emissions generated in the production of steel by an estimated 30% as compared to the more
commonly consumed 62% iron content hematite fines. It is envisaged that the high-quality product from the Shymanivske
iron ore project will attract a premium price in a variety of markets.
Black Iron's CEO Matt Simpson stated: "Black Iron received several offtake and investment proposals and chose Cargill
based on its proposal striking the optimal balance of investment quantum, structure and shared vision on the increasing
demand for high-grade ore as the global ferrous industry is shifting to become greener. Cargill brings tremendous value
not only in strengthening the project funding with a USUSD75 million financing facility but, more importantly, its global
network and local footprints, unique industry insight and successful experience in the technical marketing of
high-grade ore to customers around the world."
"We are very pleased to help finance Black Iron's Shymanivske Project," Lee Kirk, Managing Director, Cargill Metals
said. "A relationship with Black Iron would be an excellent fit with Cargill Metals' growth strategy to develop a
high-grade and CO2 reducing iron ore portfolio, to help customers navigate the environmental and carbon challenges and
opportunities ahead, and to support the sustainability efforts and low carbon ambitions of the ferrous industry."
Cargill has operated in Ukraine since 1991 with offices in several cities to support its more than 500 in-country
employees. Cargill's main Ukraine businesses are in the agricultural sector and include a deep-sea vessel terminal at
Port Yuzhny close to the terminal Black Iron plans to use to ship its iron ore.
The selection of Cargill as Black Iron's preferred offtake purchaser has triggered the following activities to bring
the Project to a fully financed state for construction:
- Update of the Project's feasibility study will commence upon receipt and review of proposals already requested.
- Selection and negotiation of binding terms with the preferred engineering, procurement and construction contractor
who proposes to invest USUSD65 million in the Project.
- Commencement of third-party due diligence with a consortium of major international financial institutions on binding
agreements for senior debt, USUSD100 million royalty investment and political risk insurance.
The above activities will be supported by the outputs from the environmental impact assessment and Ukraine land
transfer work currently ongoing which were previously announced.
About Black Iron
Black Iron is an iron ore exploration and development company, advancing its 100% owned Shymanivske project located in
Kryviy Rih, Ukraine. The Shymanivske project contains a NI 43-101 compliant mineral resource estimated to be 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 290 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. Full mineral resource details can be found in the NI 43-101 compliant
technical report entitled "(Amended) Preliminary Economic Assessment of the Re-scoped Shymanivske Iron Ore Deposit"
effective November 21, 2017 (the "PEA") under the Company's profile on SEDAR at www.sedar.com. The Shymanivske project
is surrounded by five other operating mines, including ArcelorMittal's iron ore complex. The PEA is preliminary in
nature, and it includes inferred mineral resources that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no
certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated
economic viability. Please visit the Company's website at www.blackiron.com for more information.
About Cargill
Cargill's 155,000 employees across 70 countries work relentlessly to achieve our purpose of nourishing the world in a
safe, responsible, and sustainable way. Every day, we connect farmers with markets, customers with ingredients, and
people and animals with the food they need to thrive. We combine 155 years of experience with new technologies and
insights to serve as a trusted partner for food, agriculture, financial and industrial customers in more than 125
countries. Side-by-side, we are building a stronger, sustainable future for agriculture.
About Cargill Metals
Headquartered in Singapore, Cargill's metals business provides value-add services and solutions along the global
ferrous supply chain. Combining over 150 years track record of risk management in global commodities markets with more
than 40 years unique insights in the ferrous industry, we provide our customers the support they need to thrive. We
connect iron ore miners around the world with steel mills in key markets and provide a broad range of services from
technical marketing to customized risk management solutions along the supply chain including to end users of steel.
With around 130 dedicated experts, an established global network and hubs in China, Singapore, U.K. and Vietnam to
serve our customers, Cargill operates across over 25 ports and more than 50 warehouses globally, providing physical and
financial solutions to over 2,500 customers in 40 countries. Each year we move around 50 million tons of physical iron
ore and 6 million tons of physical steel globally. For more information, visit Cargill Metals Supply Chain or
Cargill.com.
For more information, please contact:
Matt Simpson
Chief Executive Officer
Black Iron Inc.
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 the financial viability of the Shymanivske project (the "Project"), the Proposal and the offtake agreement to be negotiated between Cargill and the Company, the price of iron ore, the demand for iron ore, the Company's ability to obtain adequate financing, including offtake financing, the process to be followed to obtain offtake financing, updating of the Project's feasibility study, engagement of engineering, procurement and construction contractors, third-party due diligence with senior debt providers, the Company's ability to acquire the requisite land for Project construction, the Company's ability to develop the Project, the ceasefire of conflict in Ukraine and the Company's future plans.
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