Resource World Magazine

26 www.resourceworld.com A U G U S T / S E P T E M B E R 2 0 1 7 Insights & Investments by Bob Leshchysen B lack Iron Inc. [BKI-TSX] is an iron ore exploration and development company advancing its 100%- owned Shymanivske Project in Kryvyi Rih, Ukraine. It is important to note that the project is located over 400 km away from the war conflict in Eastern Ukraine. The Shymaniviske Project hosts a NI 43-101 compliant 645.8 Mt resource con- sisting of 355.1 Mt measured resources grading 32.0% total iron and 19.5% mag- netic iron, and indicated resources of 290.7 Mt grading 31.1% total iron and 17.9% magnetic iron, using a cut-off grade of 10% magnetic iron. The project holds an iron ore mining extraction permit over 2.56 km 2 of land which expires November 1, 2024. The permit can be renewed in 20-year increments. Black Iron Inc. raised US $35.9 million in its initial public offer- ing at $1.40 per share. SITUATION IN UKRAINE Ukraine's political and economic situation began to deteriorate significantly when the Government decided not to sign the Association Agreement and the Deep and Comprehensive Free Trade Agreement with the European Union in late November 2013. Political and social unrest began and then escalated into violent conflicts in February 2014, which occurred at the Maidan Square in the capital of Kyiv. Then, the Russian government decided to annex the Crimea Peninsula. This resulted in pro-Russian and anti-government groups protesting in Donetsk and Luhansk oblasts of Ukraine. These protests were supported by the Russian government when they sent troops disguised as volunteers to help in the protests. The war activity resulted in a cease fire agreement called the Minsk protocol being signed September 5, 2014. The con- flict continues today even though such an agreement was signed. The war in Eastern Ukraine has led to the deepening of the ongoing economic crisis, widening of the state budget deficit, depletion of the National Bank of Ukraine's foreign currency reserves, and as a result, a further downgrading of the Ukrainian sov- ereign debt credit ratings. The war created investor uncertainty and, combined with the fall in iron ore prices, resulted in Black Iron putting the Shymanivske Project on care and mainte- nance in 2015-2016. In the meantime, senior management developed a two-pronged approach to cre- ating shareholder value. They continued to meet with several high ranking Ukraine Government officials to resolve the out- standing legal cases and acquire surface rights upon which the Shymanivske asset resides. Secondly, they began to review several opportunities of acquiring a minor- ity interest in high quality mining assets to supplement the project. The recovery process began in early January 2016 when BKI negotiated with Metinvest BV to buy back its 49% inter- est in Black Iron Cyprus, which owned 100% of the Shymanivske iron ore project for US $5.6 million. In May 2016, Black Iron acquired a 6.3% interest in Carpathia Gold [CPN-CSE] for CAD $4.0 million. Carpathian Gold has since been renamed Euro Sun Mining [ESM-TSX]. As part of this transaction, Matt Simpson, Black Iron's CEO, joined Carpathian Gold's board of directors, Black Iron's COO Les Kwasik has joined Carpathian Gold's management team and Paul Bozoki, Black Iron's CFO, has also become CFO of Carpathian Gold. In January 2017, the City of Kryvyi Rih called a public hearing to with deal sur- face rights. In March 2017, Shymanivske obtained approval from the Kryvyi Rih City Council to prepare a land allotment plan to lease the surface rights. This was a major milestone for the development of the project, which is now registered in the city's infrastructure development and land lease plans. In February 2017, Black Iron made a strategic decision to appoint Michel Spektor, a successful Ukrainian business- man as President of the company. Spektor is former CEO of VS Energy International LLC, a Ukrainian conglomerate with holdings in electrical distribution and Dniprospetsstal, one of Ukraine's largest steel mills. In his capacity as president, his top priority will be to bring the Shymanivske ore body into production by obtaining all the required permits from the Ukrainian Government and negotiating contracts with local companies for construction and supply services. Since his appointment, Spektor acquired 2,955,000 shares of Black Iron. In March 2017, Black Iron received some more good news, when it received written notice from the Dnepropetrvosk Ecology Department that the suspensions on exploration activities imposed by the Ecology Department on the Shymanivske Project in 2011 and 2012 have been lifted. PROJECT ECONOMICS On January 23, 2014, Black Iron updated its Bankable Feasibility Study incorporating pilot plant test work. The study outlines an operation producing 9.9 million tonnes/ year of high-grade 68% iron ore concen- trate, capital expenditure of $1,097 million (excluding sustaining capital), life-of-mine freight on board operating expenditure of $44.54/tonne, projecting a 48% Internal Black Iron's Shymanivske Project back on track

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