Thursday, 11 April 2013

Black Iron posts virtual mine site tour for Shymanivske as development picks up

Black Iron (TSE:BKI) is getting closer to bringing its Shymanivske project in the Ukraine to production, just recently uploading a virtual mine site tour video to the company's website. 
“The virtual mine tour brings to life the completed 3D Engineering Drawings that outline the specific location of where each piece of equipment will be placed right down to the nuts and bolts.  This will help us mitigate any delays and cost overruns when we begin construction of the project later this year," Black Iron's manager of investor relations, Michael McAllister, told Proactive Investors Thursday. 
The virtual tour, which includes what the process plant will look like, can be viewed here:
Last month, the company's shares rose sharply after being written up in a bullish article on influential financial markets blog Seeking Alpha. 
"Black Iron is a near-term iron ore project in the Ukraine that is part of the Forbes and Manhattan group of companies. If there's one thing an investor can be certain of, it's that Forbes and Manhattan are the industry leaders in building iron ore companies for sale to majors," contributor James West wrote. 
He took note of the Forbes and Manhattan investors who invested in Consolidated Thompson Iron Mines at 22 cents a share, who were "no doubt ecstatic" when the company was acquired by Cleveland Cliffs in May 2011 for $4.9 billion or $17.25 a share, representing a return of more than 7,700 percent.
"That process is being repeated with Black Iron on an expedited basis. In December last year, the company published a feasibility study that put the Shymanivske Iron Ore Project in the top quartile of near-term iron ore projects globally in respect of IRR, while being in the bottom quartile in terms of CAPEX required per tonne of capacity."
Indeed, the study projected a whopping pre-tax 45.9% internal rate of return (IRR) and a net present value of US$3.5 billion. 
Completed by WorleyParsons Canada Services and two other firms, the feasibility report outlined an operation producing 9.2 million tonnes per year of high grade 68% iron ore concentrate -  “well above” the benchmark of 62.0 per cent.
The US$3.5 billion net present value was estimated with an 8% discount rate, and total capital costs, excluding sustaining capital of US$689 million, were projected at $1.09 billion. 
The Shymanivske property is surrounded by existing infrastructure, including access to power, rail and port facilities, which the company has said will allow for a quick development timeline to production. 
Two operating mines - ArcelorMittal’s Kryviy Rih iron ore complex and YuGOK, owned by Evraz and Smart Holding - are essentially adjacent to Black Iron’s asset, and have been successfully producing a high quality concentrate for years. 
The company believes additional exploration and definition drilling could expand the existing resource at the property, and upgrade the 188.3 million tonne inferred resource to the measured and indicated category - potentially adding up to 5 years to the project's life. 
An off-take agreement is targeted for the first half of this year. 
Physical construction of the mine is set to begin in the latter half of 2013, with plant start-up and commissioning projected for the fourth quarter of 2015. 
The NI 43-101 report estimated 2.2 years to payback, at an 8% discount rate, with revenue generation projected to start by the first quarter of 2016. Average annual revenue over the life of the mine is estimated at over $1.1 billion.

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