- The latest industry developments and production slowdowns have contributed to upward iron ore price pressures
- As of March 2019, the price of iron ore has registered one of its highest levels in almost a year
- Iron ore production companies like Black Iron Inc. are positioned to benefit from the opportunities created by the high prices and the latest market dynamics
- Black Iron expects to sell the premium iron pellet feed it will extract from the Shymanivske Project at rates exceeding the benchmark iron ore price in the coming years
Production disruptions in Brazil and other market dynamics have contributed to surging iron ore prices (http://ibn.fm/t8gFk). According to the Commonwealth Bank, iron ore prices could be heading back to $100 a ton, a level that has not been reported since 2014.
Since November 2018, iron ore prices have increased by nearly 40 percent. The Vale-BHP Brumadinho Corrego do Feijao mine accident in Brazil contributed to the complete halting of 11 operations by Vale (NYSE: VALE), the world’s largest iron ore miner, as per National Mining Agency orders (http://ibn.fm/hXcbb). This created a massive threat to global iron ore supply, increasing the price per ton by an additional $12 since January 2019. As of March 12, iron ore traded at $85.31 on the spot market, in comparison to $74.30 in January 2019. This is one of the highest levels registered in almost a year (http://ibn.fm/84ILF).
These market dynamics have created stimuli for iron ore miners to enhance their extraction and production efforts. Black Iron Inc. (TSX: BKI) (OTC: BKIRF) (GR: BIN) is already seeing 2019 as a pivotal year for the company’s development and for its primary project – the Shymanivske Iron Ore Mine.
The Canadian iron ore exploration and development company is looking forward to the initiation of construction at the iron ore project in Ukraine. The ultra-high-grade iron ore mine is situated in the southern part of the KrivBass iron ore mining district. The region is highly developed, and it features all of the necessary infrastructure for sustainable, cost-effective iron ore production.
Black Iron plans to begin construction at the Shymanivske Iron Ore Mine in roughly one year. According to CEO Matt Simpson, discussions to secure the surface rights for the project and construction financing are well advanced.
In particular, Black Iron has signed a memorandum of understanding for the purpose of securing construction financing resources. The memorandum is between the company and a subsidiary of commodities giant Glencore plc (OTC: GLCNF) (OTC: GLNCY) (http://ibn.fm/cUWRe). As per the memorandum conditions, Glencore will make an investment in the Shymanivske project’s construction in exchange for securing the offtake of up to the full phase one planned annual production of four million tons.
Black Iron has reaffirmed the Shymanivske Project’s economic projections. The mine is to produce premium 68 percent iron pellet feed that is expected to sell at a significantly higher price than the benchmark iron ore value in the coming two to three years.
For more information, visit the company’s website at www.BlackIron.com
The technical and scientific contents of this article have been reviewed and approved by Matt Simpson, P.Eng., CEO of Black Iron, who is a Qualified Person as defined by NI 43-101.