Black Iron Inc’s Shymanivske new preliminary economic assessment pegs NPV at US$1.66bn

Black Iron Inc (TSE:BKI) has released the new preliminary economic assessment (PEA) for its Shymanivske iron ore project in Kryviy Rih, in Ukraine, which shows highly favourable returns.

In a statement released Tuesday, the company said the assessment from BBA Inc outlines a first phase operation producing 4Mtpa of ultra high-grade, low impurity, 68% Fe concentrate expanding to 8Mtpa starting in the fifth year of production.

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It noted that by phasing the build, it significantly reduces the up-front construction costs while still being highly economic given all high cost major infrastructure including railway, powerline and deep-sea port are located in very close proximity to the deposit.

The report projects pre-tax, post royalty, internal rate of return of 42.6%, a payback period of 2.6 years and a US$2.12bn net present value at a 10% discount rate.

The post tax unlevered economics show a compelling 36.1% IRR, 2.9 year payback period and US$1.66bn NPV at a 10% discount rate.

Matt Simpson, Black Iron‘s CEO, said: “By building the Project in phases, it also allows for a portion of the costs for the second phase expansion to 8Mtpa to be funded using internal cash that is expected to be generated from operations during the first phase which is expected to reduce dilution, maximize shareholder returns and reduce project financing risks.

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The new PEA replaces the 2014 feasibility study, and is targeted to inform investors, that the Project’s economics remain very strong, even with the benchmark 62% iron content product selling for US$62/t (CFR Port in China) as compared to the spot plus broker outlook of US$95/t back in 2014.

At the reference date of November 10th 2017, Black Iron‘s ultra high-grade 68% product is indicated to receive a total premium of approximately $46.85/dmt over the 62% iron content benchmark price.

Story by ProactiveInvestors