Black Iron
Black Iron is a Canadian iron ore exploration and development company advancing its 100% owned Shymanivske Project located in Krivoy Rog, Ukraine, to production.
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Black Iron retains WorleyParsons for Shymanivske feasibility study
Black Iron (TSE:BKI) said Tuesday that it has hired resource and engineering firm WorleyParsons Services Canada to complete a feasibility study for its Shymanivske iron ore project in Kryviy Rih, Ukraine.
"This is an important milestone for Black Iron as we move into the final stage of project evaluation and preparation before we formally commence construction at Shymanivske," said president and CEO of Black Iron, Matt Simpson.
"WorleyParsons' comprehensive capacity and broad experience in all aspects of project development from engineering to, procurement, logistics, contracts administration, safety, risk and construction management, will be invaluable to successfully developing the project.
"Further, the company has substantial experience working in the CIS having undertaken development work in the past."
The feasibility study will build on the preliminary economic assessment of the project released in December, which showed a low cost pellet plant feed operation with a projected high value and net cash flows.
The preliminary report, completed by BBA of Montreal, Quebec, considered two production scenarios over a 28 year mine life, the first being a 7.3 million tonne per year iron ore pellet plant feed, and the second being a production alternative for producing 7.6 million tonnes per year of iron ore pellets.
The first option dictated a projected 42.1 percent internal rate of return (IRR), with a whopping US$3 billion net present value, at an 8 percent discount rate. Total capital costs came in just shy of $900 million, with a payback period of 2.2 years, and an estimated operating cost for the average initial 20 years of $52.40 per tonne.
The second scenario for Shymanivske outlined the option to produce a higher margin pellet product of 65 percent iron grade, generating a much higher net present value of US$4.1 billion at the same discounted rate, but with a reduced 35.2 percent internal rate of return, due to raised construction costs, Black Iron said.
Average annual cash flows for the first 20 years are pegged at $382.8 million for the pellet feed operation, versus $540.7 million for the pellet production case.
The main purpose of the feasibility study will be to further refine the preferred mine to port flow sheet, the company said, with an accuracy on both operating and capital costs estimates of plus or minus 15 percent, in support of raising the capital required to bring Shymanivske into commercial operation.
The feasibility study is slated for release in the fourth quarter of this year. WorleyParsons will be responsible for the report, as well as a NI 43-101 technical report for the implementation of the project, including the development of the open pit mining operation, the ore processing facilities, rail plus port tie-ins, and all supporting site infrastructure to produce roughly 7.5 million tonnes per year of final product, initially.
Work to further streamline and simplify operations, as well as reduce mining and concentrator costs for the pellet producing option, is expected to lower capital costs.
Iron ore is the raw material used to make pig iron, which is one of the main raw materials used to make steel, and is therefore one of the most integral commodities to the global economy.
The 100-percent owned Shymanivske project contains an NI 43-101 compliant resource of 373 million measured and indicated tonnes grading 31.3% iron and 480 million inferred tonnes grading 30.2% iron. The project is surrounded by five other operating mines, including ArcelorMittal's (NYSE:MT) iron ore complex.
The company is working on a definition and exploration program at the site, which is aiming to upgrade and increase the size of the resource at the property to 1.0 to 1.8 billion tonnes at a grade of 28% to 32% iron, including the nearby exploration permit located adjacent to Shymanivske, known as the Zelenivske project.
Other Black Iron news
- Black Iron hits 97.0 metres at 33.1% iron at Shymanivske
2012-05-04 - Black Iron reports 3 more infill holes from Shymanivske with iron grades of over 30%
2012-04-19 - Black Iron hires Buchatskiy as VP of strategy
2012-04-12 - Black Iron intersects over 30% iron in first 3 infill holes at Shymanivske
2012-04-03 - Eavex Capital starts coverage on Black Iron
2012-02-15
