Metinvest completes $20 million commitment, closes strategic investment and development arrangement

Metinvest B.V., the holding company of the largest metal and mining group Metinvest, has sent the fourth and final installment payment of $5 million to Black Iron Inc. (Canada) as part of the previously announced closing schedule for the strategic investment and development arrangement pertaining to Black Iron (Cyprus) Ltd. (BKI Cyprus), which has iron ore assets in Ukraine.

According to a press release of the Metinvest Group issued on Tuesday, the fourth installment was sent on July 15, 2014.

"In conjunction with the closing of the arrangement and receipt of the $20 million total, Metinvest has been issued common shares in BKI Cyprus representing an aggregate total of 49% of the share capital of BKI Cyprus. No common shares in Black Iron have been issued as part of the arrangement. Black Iron remains the operator and developer of the Shymanivske Project and the Zelenivske Project," reads the press release.

Each of Metinvest and Black Iron will have the option to participate in the funding of the development of the Shymanivske Iron Ore Project based on their proportionate interest in BKI Cyprus or be diluted down.

Using the projected total capital investment requirements as outlined in the Company’s Bankable Feasibility Study (as filed under the company’s profile on SEDAR on January 27, 2014) of $1.097 billion, Metinvest’s future capital contribution could be up to $536 million (being 49% of $1.097 billion) for the development of the projects. The arrangement contains strict dilution provisions designed to create a strong incentive for continued participation in any future equity financings for the projects.

"Metinvest and Black Iron remain devoted to helping rebuild Ukraine’s economy through the development of the Shymanivske Iron Ore Project. Apart from the creation of thousands of new jobs and tens of millions annually in tax revenues, Ukrainians will also benefit from new world class iron ore processing, safety and environmental technologies," Yuriy Ryzhenkov, General Director and CEO of Metinvest, said.

"With this strategic arrangement now closed, and our relationship with Metinvest formally in place, once there is peace in Ukraine, we look forward to building the world-class iron ore producing mine outlined in our January 2014 Feasibility Study that shows a pre-tax 48% internal rate of return, two year payback and $3.3 billion net present value. We see tremendous opportunities ahead for all stakeholders in Black Iron as this project is needed more than ever to help reinvigorate Ukraine’s economy as the country emerges from the current revolution," Matt Simpson, President and CEO of Black Iron, said.

Metinvest is a vertically integrated steel and mining group of companies, managing every link of the value chain, from mining and processing iron ore and coal to making and selling semi-finished and finished steel products.

The major shareholder of Metinvest Group is Metinvest B.V., a holding company owned by System Capital Management Group (71.24%) and Smart-Holding (23.76%).

Black Iron is an iron ore exploration and development company, advancing its 51% owned Shymanivske project located in Kryvy Rih, Ukraine. This project contains an NI 43-101 compliant resource, with 645.8 Mt Measured and Indicated mineral resources, consisting of 355.1 Mt Measured mineral resources grading 32.0% Total iron and 19.5% Magnetic iron, and Indicated mineral resources of 290.7 Mt grading 31.1% Total iron and 17.9% Magnetic iron, using a cut-off grade of 10% Magnetic iron. Additionally, the project contains 188.3 Mt of Inferred mineral resources grading 30.1% Total iron and 18.4% Magnetic iron.

The project is surrounded by five other operating mines, including ArcelorMittal's iron ore complex. The company believes that existing infrastructure, including access to power, rail and port facilities, will allow for a quick development timeline to production. Further, the company holds an exploration permit for the adjacent Zelenivske project, which it intends to further explore to determine its potential.