Canada-based Black Iron has secured a significant partnership with global mining giant Anglo American through a $4-million royalty and offtake agreement for its Shymanivske iron-ore project in Ukraine.

The deal, which includes a revenue royalty and an offtake agreement, is seen as a key milestone for the project, despite the ongoing challenges posed by the war in Ukraine.

Located in the Kryvyi Rih region of Ukraine, the Shymanivske project will be developed in two phases. Phase 1 aims to produce four-million tonnes of iron-ore a year, while Phase 2 will double output to eight-million tonnes a year.

Under the terms of the agreement, Anglo American will invest a total of $4-million in two tranches. The first tranche, worth $2.6-million, will be injected immediately, with the balance of $1.4-million to be paid upon Black Iron renewing its permits. In exchange for the investment, Anglo will receive a gross revenue royalty: 1.0% of revenues if the prevailing iron ore price (CFR China 65% iron) is below $120/t, and 1.5% if the price is equal to or higher than $120/t. This royalty will apply to Black Iron’s first 60-million tonnes of production at Shymanivske.

“Raising $4-million through a royalty structure relative to Black Iron’s current market capitalisation without issuing additional shares to strengthen our finances during the ongoing war in Ukraine is a great outcome for shareholders,” said Black Iron CEO Matt Simpson.

The majority of the initial $2.6-million will be used to renew the necessary permits for the Shymanivske project. These permits are set to expire six months after the end of martial law in Ukraine.

Simpson also emphasised the strategic importance of having Anglo American, one of the world’s biggest mining companies, involved in the project.

“The future potential funding for project construction from such a highly credible mining company as Anglo American is important to demonstrate a clear path forward to build the Shymanivske iron-ore project into an operating mine after the war in Ukraine comes to an end,” he said.

Black Iron had previously selected Cargill as the offtake purchaser in May 2021, but after Cargill’s non-binding memorandum of understanding expired, Black Iron launched a competitive process to find a new partner.

The partnership with Anglo American underscores the strong global interest in the Shymanivske project, which boasts compelling projected economics and a high-purity iron-ore product. Despite the risks associated with the ongoing geopolitical instability in Ukraine, the deal with Anglo American signals confidence in the long-term potential of the Shymanivske iron-ore deposit.