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Black Iron Updates Bankable Feasibility Study Showing 48% IRR, 2 Year Payback and US$3.3 Billion NPV for Shymanivske Project

Feasibility study outlines an operation producing 9.9 million tonnes per year of high-grade 68% iron ore concentrate, projecting a 48% IRR, 2 year payback and a US$3.3 billion NPV at an 8% discount rate

TORONTO, ONTARIO -- (Marketwired) -- 01/23/14 -- Black Iron Inc. ("Black Iron" or the "Company") (TSX:BKI) (FRANKFURT:BIN) has updated its current Bankable Feasibility Study ("BFS"), incorporating pilot plant test work, completed on its Shymanivske Iron Ore Project located in Krivoy Rog, Ukraine (the "Project"). The updated BFS outlines an operation producing 9.9 million tonnes per year of high-grade 68% iron ore concentrate, projecting a 48% internal rate of return ("IRR"), two year payback and a US$3.3 billion net present value ("NPV") at an 8% discount rate.

The primary reason for updating the previous report filed in December 2012 is to include results from pilot plant test work conducted throughout 2013, which resulted in an optimized process design and layout, along with revised infrastructure usage rates confirmed through several recently signed protocols of intent. The most significant changes implemented are: changing from dry cobbing to more efficient wet cobbing at a finer particle size resulting in an increase from 10% to 40% rejection of waste rock prior to grinding; elimination of the second grinding stage resulting in a 14% reduction in total operational running active power; reducing the plant footprint through a more optimal layout; and an 8% increase in iron ore concentrate production from 9.2 to 9.9 million tonnes per year with essentially no change in capital cost.

Financial metrics contained in the BFS report are shown on a pre and after tax basis and in both cases are inclusive of royalties. Ukraine has a corporate tax rate of 16% effective January 1, 2014 and a mining royalty rate of $0.09 per tonne of ore mined (less than 1%) payable to the State.

The Table below summarizes the key elements of the BFS:

High-Grade 68% Concentrate (all currency is US$)

Measured and Indicated Resources (at 31.6% Total Fe)(i)  646 Mt             
Proven and Probable Reserves (at 31.1% Total Fe)(i)      449 Mt             
Annual Production Rate (average life of mine, post ramp- 9.9 Mt             
up year)                                                                    
Estimated Mine Life (based on Proven and Probable        14 years           
Reserves only)                                                              
Final Product Iron Grade (Fine Iron Ore Concentrate)     68% Fe             
Projected Plant Start-up and Commissioning               Q4 2016            
Projected Commencement of Revenue Generation             Q1 2017            
Long Term CFR Benchmark Iron Ore Concentrate Price       $95 /t             
Estimate (62% Fe)                                                           
Total Estimated Capital Costs (excluding sustaining      $1,097 million     
Life of Mine FOB OPEX (Beneficiation, Mine,              $44.54 /t          
Transportation & Loading)                                $29.64 /t          
Mine Gate OPEX (Beneficiation & Mine)                                       
Average Annual Cash Flow (pre-tax)                       $630 million       
Average Annual Cash Flow (after-tax)                     $536 million       
NPV at 8% discount (pre-tax)                             $3.3 billion       
NPV at 8% discount (after-tax)                           $2.6 billion       
IRR (pre-tax)                                            48.0%              
IRR (after-tax)                                          39.1%              
Projected Years to Payback (at 8% Discount Rate, pre-    2.0 years          
tax)                                                     2.5 years          
Projected Years to Payback (at 8% Discount Rate, after-                     
(i) See "About Black Iron" section at end of this press release             

Matt Simpson, Black Iron's President and CEO, commented, "The operation outlined by this BFS for the Shymanivske Project continues to clearly illustrate the potential for a high-value, low net cost iron ore development project. The optimized process design and layout developed for this new study, based on significant pilot scale test work, results in increased annual iron ore concentrate production of approximately 8%, while holding initial capital costs virtually unchanged. As a result of these improvements, the Project's access to significant existing infrastructure (railway, power lines and port), and the availability of competitively-priced skilled labour, the BFS continues to show extremely attractive and robust economics."

Financial Sensitivities at Various Discount Rates

                           (pre-tax)                    (after-tax)         
IRR (pre-tax)                48.0%                         39.1%            
                               NPV     Payback               NPV     Payback
Discount Rate       US$ (Millions)     (Years)    US$ (Millions)     (Years)
0%                $          7,165         1.8  $          5,877         2.1
6%                $          3,997         1.9  $          3,177         2.4
8%                $          3,304         2.0  $          2,609         2.5
10%               $          2,756         2.1  $          2,148         2.6

The Project has favourable economic potential across a range of discount rates. The operations outlined in this BFS are projected to generate over U.S. $1,216 million in average annual revenue over the life of mine.

The life of mine strip ratio is estimated at 1.64:1, which is essentially unchanged from the December 2012 reported value of 1.63:1. On the basis of the metallurgical test and beneficiation plant design work completed for this BFS, it is estimated that the 449 million tonnes of reserves will result in a project life of 14 years based on the average 9.9 million tonnes per year iron ore concentrate production rate. The Company believes that additional exploration and definition drilling work have the potential to expand the existing resource and upgrade the 188 Mt of Inferred mineral resources to the Measured and Indicated classification, potentially adding up to five years to the Project life. With successful exploration in the North end of Shymanivske and the addition of resources from the nearly adjacent Zelenivske Project, Black Iron expects to be able to support an even higher annual production rate through a potential second phase expansion, which would be expected to further increase the Project NPV.

George Mover, Black Iron's Chief Operating Officer, added, "We are pleased with the level of detailed engineering proficiency and precision that went into this BFS. Through this process, we confirmed and implemented several improvements to the work completed in the previous BFS study. As a result, we are now considering an initial operation with 8% higher annual production, relatively unchanged initial capital requirements, and only a modest 1.3% increase in operating costs relative to our previous study. The updated operating costs are inclusive of firm letters of intent signed with several infrastructure and utility service providers and were benchmarked against our development partner's actual operating experience. The Project's capital intensity is improving, positioning it even lower into the first quartile of worldwide development projects that should bode well to source project financing; particularly when coupled with our relatively low operating cost, and proximity to end-user markets of Turkey, Middle East and Europe."

Details and Assumptions

The total capital expenditure to develop the mine, concentrator and infrastructure tie-ins is estimated at U.S. $1,097 million to produce 9.9 million tonnes per year of high-grade 68% iron ore concentrate. The capital cost estimate excludes the sustaining capital cost of U.S. $483 million spread over the life of mine. Assessment of the preferred port facility, backed up by a formal protocol (letter) of intent, confirms that sufficient capacity exists for the planned production.

Summary of Estimated Initial Capital Costs                 (US$ in Millions)
Mine                                                                     162
Beneficiation Plant                                                      475
Tailings and Waste                                                        21
Project Infrastructure                                                   113
Project In-directs (mainly EPCM)                                         102
Owner's Costs (includes land acquisition)                                 81
Contingencies (15%)                                                      143
TOTAL                                                                  1,097

The 15% contingency estimate includes a 5% design allowance. The total average Freight On Board operating costs over 14 years are estimated at U.S. $44.54 per tonne of high grade 68% iron ore concentrate broken out as follows:

Summary of Estimated Operating Costs                US$/tonne of Concentrate
                                                        (Average Mine Life )
Mine                                              $                    15.46
Beneficiation Plant                               $                    12.50
Tailings & Waste                                  $                     0.08
Environmental                                     $                     0.26
Infrastructure (primarily rail & port)            $                    15.65
General & Administration                          $                     0.59
      TOTAL                                       $                    44.54

Consistent with practice in the industry, this BFS has been prepared with an engineering accuracy of +/-15%.

Currency Sensitivity

For the purpose of the BFS an exchange rate of 8.2 UAH per US$ has been used for the CAPEX (up to January 2016) and 9.5 UAH per US$ for the OPEX and Sustaining Capital (2017 and beyond) based on review of several economic forecasts. Variations in the exchange rates from year 2016 onward impact the financial analysis as follows:

Impact of Ukraine Hryvna Exposure - BFS Currency Sensitivity (US$)

Exchange Rate as of year 2016 onward                (UAH/US$)               
                                         8:1     9:1   9.5:1    10:1    11:1
NPV @ 8% discount                                                           
 pre-tax (billion)                    $  3.2  $  3.3  $  3.3  $  3.3  $  3.4
 after-tax (billion)                  $  2.5  $  2.6  $  2.6  $  2.6  $  2.7
Total Estimated Capital Cost                                                
 (million)                            $ 1097  $ 1097  $ 1097  $ 1097  $ 1097
Estimated Operating Cost (per tonne)  $47.71  $45.48  $44.54  $43.70  $42.24
Average Annual Cash Flow                                                    
 pre-tax (million)                    $  575  $  586  $  590  $  594  $  601
 after-tax (million)                  $  494  $  502  $  506  $  509  $  515

Updated Bankable Feasibility Study Report

The updated BFS has been prepared in accordance with the guidelines of National Instrument 43-101 by the independent firms of Lycopodium Minerals Canada Ltd.; Soutex Mineral & Metallurgical Consultants; Watts, Griffis and McOuat Limited; and P&E Mining Consultants Inc. The final BFS technical report, which will also include the current mineral resource and reserve estimate, will be filed on SEDAR within 45 days of the publication of this news release.

Analyst and Shareholder Conference Call

Black Iron will host a conference call today, January 23, 2014, at 8:30 a.m., EST (1:30 p.m., GMT and 3:30 p.m., EET) to discuss the updated BFS results. To participate in the call please dial the following:

International: +1 647 788 4901

Toll Free (North America): 1 877 201 0168

To register and listen to the webcast of the call, please go to Black Iron's website at

Qualified Persons

The contents of this press release have been prepared under the supervision of and reviewed and approved by Qualified Persons, as follows:

--  Balaji Thangavel, P.Eng., Mauro Batista, P.Eng. and Enayat Shahrokni,
    P.Eng., Lycopodium Minerals Canada Ltd., QP for the Plant
    Infrastructure, CAPEX, and OPEX; 
--  Daniel Roy, P.Eng, Soutex Inc., QP for Metallurgical testing and Process
--  Michael Kociumbas, P.Geo. and Rick Risto, P.Geo., Watts, Griffis and
    McOuat Limited, QPs for mineral resources estimate and QA/QC and data
--  Eugene Puritch, P.Eng., P&E Mining Consultants Inc., QP for the mine
    engineering aspects and the mineral reserves estimate. 

These persons are Qualified Persons as defined by NI 43-101, are independent of Black Iron, and have reviewed the content of this press release.

About Black Iron

Black Iron is an iron ore exploration and development company, advancing its 100 percent-owned Shymanivske project located in Kryviy 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. Please visit the Company's website at or write us at [email protected] for more information.

Forward-Looking Information

This press release contains forward-looking information which may include, but is not limited to, statements about the results of the BFS and the development potential of the Company and its project; the timing and amount of future exploration and development of the project; and the future financial or operating performance of the Company and its projects. Often, but not always, forward-looking information can be identified by the use of words such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates" or "believes" or variations (including negative variations) of such words and phrases, or by the use of words or phrases that state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved.

Forward-looking information is based on certain assumptions and analyses made by the Company and based on known facts at the time. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained in this press release, including, without limitation, those described in the Company's public disclosure documents which may be found under the Company's profile on SEDAR. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in such forward-looking information, there may be other factors that may cause actions, events or results to differ from those anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should assumptions underlying such forward-looking information prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by the forward-looking information contained in this press release. The forward-looking information contained herein is made as of the date of this press release and the Company disclaims any obligation to update or review such information or statements, whether as a result of new information, future events or results or otherwise, except as required by law.

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