Black Iron Inc. and Metinvest B.V. Finalize Arrangement to Develop Ukrainian Iron Ore Assets

TORONTO, ONTARIO--(Marketwired - Jul 23, 2013) -

• DEVELOPMENT ARRANGEMENT AND US$20 MILLION INVESTMENT POTENTIALLY POSITIONS METINVEST AS AN INFLUENTIAL SHAREHOLDER OF BLACK IRON'S DEVELOPMENT PROJECTS
  
  
• THE ARRANGEMENT WILL COME INTO FORCE AFTER OBTAINING ALL NECESSARY PERMITS FROM GOVERNMENT AGENCIES INCLUDING ANTIMONOPOLY
  
  
• ADDITIONAL POTENTIAL INVESTMENT BY METINVEST COULD REACH AS MUCH AS US$536 MILLION
  
  
• METINVEST IS A VERTICALLY INTEGRATED STEEL AND MINING GROUP OF COMPANIES, WHICH PRODUCED 36.2Mt IRON ORE, 11.6Mt COAL AND 12.5Mt STEEL IN 2012 (UKRAINE'S LARGEST COMPANY)
  
  

Black Iron Inc. ("Black Iron" or the "Company") (TSX:BKI) (FRANKFURT:BIN) is pleased to announce that Metinvest B.V. ("Metinvest"), Ukraine's largest mining and steel producer, has executed definitive agreements to form a development arrangement with Black Iron and to invest in Black Iron (Cyprus) Ltd ("BKI Cyprus"), which is currently a wholly-owned subsidiary of Black Iron. The agreements create a defined path for Metinvest to become a prominent shareholder of Black Iron's development projects, the Shymanivske Project and the Zelenivske Project (collectively, the "Projects"), each located in Kryvyi Rih, Ukraine.

Provisions of the agreements between Black Iron and Metinvest require Metinvest to make an initial investment of US$20 million in BKI Cyprus to help fund the Projects, with potential investment amounts thereafter expected to increase during construction of the Projects to approximately US$536 million.

Metinvest's investments will be structured as follows:

• Subject to final regulatory approvals, Metinvest will immediately take up an initial private placement of shares in BKI Cyprus, which holds 100% participatory interest in two Ukrainian companies - Shymanivske Steel LLC and Zelenivske Steel LLC, for aggregate gross proceeds of US$20 million. This investment will give Metinvest a 49% shareholding of BKI Cyprus' share capital. There is no increase in shares outstanding in Black Iron Inc. as a result of these agreements. Black Iron remains the operator and developer of both Projects.
  
  
• Each of Metinvest and Black Iron will have the option to participate in the funding of the development of the Projects based on its 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 (filed on SEDAR in December 2012) of US$1,094 million, and assuming the development capital is 100% equity financed, Metinvest's future capital contribution could increase by up to US$536 million (being 49% of US$1,094 million) for the development of the Shymanivske Project. The agreements contain strict dilution provisions designed to create a strong incentive for continued participation in any future equity financings for the Projects.
  
  
• In addition to the private placement of BKI Cyprus shares, Metinvest will also be granted a non-transferable option to acquire additional shares in BKI Cyprus to increase their effective ownership to 51% post achieving full run rate production of 9.2 million tonnes per annum concentrate for three consecutive months. The option exercise price will represent a 30% premium over the fair full net asset value as determined by an independent third party, and will expire twelve months after vesting.
  
  

Black Iron plans to use all of the proceeds received from the Metinvest subscription in BKI Cyprus shares to finance the development of its Shymanivske Project and for general working capital purposes.

Completion of this transaction is subject to receipt of all necessary regulatory approvals, including the Government of Ukraine's anti-monopoly division.

Metinvest has a proven track record of developing and operating iron ore projects in Ukraine, which will prove invaluable to Black Iron in the advancement of its Projects. It will also serve in helping attract future foreign investment to Ukraine.

Matt Simpson, President and CEO of Black Iron said, "Black Iron selected Metinvest for its industry-leading experience in iron ore mining and steel making, as well as its operational history in Ukraine. This agreement greatly strengthens our development team and I look forward to being closely associated with Metinvest. Together, we will help bring new world class iron ore processing, safety and environmental technologies to Ukraine."

Igor Syry, General Director and CEO of Metinvest added, "Metinvest believes that development of Black Iron's Shymanivske Project will be important for Ukraine and its economy. It will represent a major investment in Ukraine, resulting in increased local employment, the improvement of local infrastructure and environmental level standards in Kryvyi Rih, and become a catalyst for regional and national social and economic development."

Black Iron Analyst and Shareholder Conference Call

Black Iron will host a conference call today at 8:30 a.m., EDT (July 23, 2013) to discuss the arrangement. To participate in the call please dial the following:

International: +1 416 340 8018

Toll Free North America: 1 866 223 7781

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

Company Profiles

Black Iron

Black Iron is an iron ore exploration and development company, advancing its Shymanivske project located in Kryviy Rih, Ukraine to production. On November 15, 2012, the Company announced completion of its NI 43-101 compliant bankable feasibility study ("BFS") on the Shymanivske Project. The BFS outlines an operation producing 9.2 million tonnes per year of high-grade 68% iron ore concentrate, projecting a 45.9% internal rate of return ("IRR"), US$3.5 billion net present value ("NPV") at an 8% discount rate and 2.2 year payback for a capital investment of US$1.1 billion. 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, coupled with locally available skilled labour will allow for a relatively quick and low cost development timeline to production.

This project contains an NI 43-101 compliant resource, with 646 Mt Measured and Indicated mineral resources, consisting of 355 Mt Measured mineral resources grading 32.0% Total iron and 19.5% Magnetic iron, and Indicated mineral resources of 291 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 Mt of Inferred mineral resources grading 30.1% Total iron and 18.4% Magnetic iron. 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 www.blackiron.com, follow us on Facebook: BlackIronInc or Twitter: @BlackIronBKI or write us at info@blackiron.com for more information.

Metinvest Group

Metinvest Group 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 Group comprises steel and mining production facilities located in Ukraine, Europe and the USA and has a sales network covering all key markets. Metinvest's Strategic Vision: Metinvest strives to become the leading integrated steel maker in Europe demonstrating sustainable growth and profitability independently from the phases of economic cycle and providing the return on investment above the average industry levels. Metinvest Group is structured into two operating divisions: Metallurgical Division and Mining Division. Metinvest is made up of more than 100,000 employees globally and in 2012 produced 36.2 million tonnes of iron ore, 11.6 million tonnes of coal and 12.5 million tonnes of steel.

The major shareholder of Metinvest Group is Metinvest B.V., a holding company owned by System Capital Management Group (71.25%) and Smart-Holding (23.75%).

The technical and scientific contents of this press release have been prepared under the supervision of and have been reviewed and approved by Matt Simpson, P.Eng, President and CEO of Black Iron Inc., who is a Qualified Person as defined by NI 43-101. For further information, please see the technical report of the Company, which is available on SEDAR at www.sedar.com.

Forward-Looking Information

This press release contains forward-looking information within the meaning set out in Canadian securities laws. Forward-looking information is based on what management believes to be reasonable assumptions, opinions and estimates of the date such statements are made based on information available to them at that time, including those factors discussed in the section entitled ''Risk Factors'' in the Company's annual information form for the year ended December 31, 2012 or as may be identified in the Company's public disclosure from time to time, as filed under the Company's profile on SEDAR at www.sedar.com. Forward-looking information may include, but is not limited to, statements with respect to results of the feasibility study dated December 17, 2012 (the "Feasibility Study", as filed under the Company's profile on SEDAR at www.sedar.com) and the mineral reserve and resource estimate, the future financial or operating performance of the Company, its subsidiaries and its projects, the development of and the anticipated timing with respect to the Shymanivske project, the ability to obtain financing; and the impact of concerns relating to permitting, regulation, governmental and local community relations. Generally, forward looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".

Estimates underlying the results of the Feasibility Study arise from engineering, geological and costing work of WorleyParsons Canada Services Ltd. ("WorleyParsons"), Watts, Griffis and McOuat Limited ("WGM"), Consulting Geologists and Engineers of Toronto, P&E Mining Consultants Inc. ("P&E") and the Company. See the technical report relating to the Feasibility Study for a description of all relevant estimates, assumptions and parameters. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, geopolitical and social uncertainties; the actual results of current exploration activities; other risks of the mining industry and the risks described in the annual information form of the Company. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.