Black Iron signs US$100 million term sheet

Black Iron Inc. [BKI-TSX; BKIRF-OTC ; BIN-FSE] shares advanced in active trading Tuesday December 22 after the company said it has signed a non-binding royalty term sheet for US$100 million with a prominent U.S.-based institutional investor.

“This major planned investment from a high caliber institution is game-changing for Black Iron,” said the company’s CEO Matt Simpson. He said it aims to provide the company with a substantial portion of the necessary construction financing for the Shymanivske Iron Ore Project, located in Ukraine.

Black Iron shares advanced on the news, rising 1.4% or $0.005 to 35 cents on volume of just over one million. Shares are currently trading in a 52-week range of 38.5 cents and $0.05.

Black Iron is an iron ore exploration and development company, engaged in the advancement of its 100%-owned Shymanivske Project.  It contains a NI 43-101-compliant resource estimated at 646 million tonnes of measured and indicated resources. That includes a measured resource of 355 million tonnes, grading 31.6% total iron and 18.8% magnetic iron, and an indicated resource of 290 million tonnes, grading 31.1% total iron and 17.9% magnetic iron, using a cut-off grade of 10% magnetic iron.

Additionally, the Shymanivske Project contains 188 million tonnes of inferred mineral resources, grading 30.1% total iron and 18.4% magnetic iron.

A Bloomberg news report said China Iron Ore Australian Fines 62% Fe CFR North China Index was up US$4.80/tonne overnight (on December 21, 2020) to US$163.65/tonne, a move that is supported by iron ore and steel market fundamentals.

Iron ore prices have been underpinned by hopes that China, which accounts for more than 70% of the world’s seaborne iron ore trade, will spend hugely on infrastructure and construction to revive an economy devastated by the COVID-19 pandemic.

The US$100 million investment would be funded upon entering a binding definitive agreement and meeting certain closing conditions. In exchange for investing US$100 million, the investor is entitled to receive a perpetual 6.75% royalty on the phase-one volume of 4.0 million tonnes.

In conjunction with this announcement, Black Iron has issued 30 million non-transferable common share purchase warrants to Ohio-based Perpetual Iron Inc. at an exercise price of 31 cents valid for five years for facilitating and supporting negotiations between Black Iron and the investor. None of these warrants vest until binding agreements are signed with the investor.