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REPEAT: Black Iron Releases Feasibility Study Showing 45.9%

REPEAT: Black Iron Releases Feasibility Study Showing 45.9% IRR, 2.2
Year Payback and U.S. $3.5 Billion NPV for Shymanivske Project 
TORONTO, ONTARIO -- (Marketwire) -- 11/15/12 -- Black Iron Inc.
("Black Iron" or the "Company") (TSX:BKI)(FRANKFURT:BIN) is pleased
to announce the results of the Bankable Feasibility Study ("BFS")
completed on its Shymanivske Iron Ore Project located in Kryviy Rih,
Ukraine (the "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") and a U.S. $3.5
billion net present value ("NPV") at an 8% discount rate. 
The BFS was completed by WorleyParsons Canada Services Ltd.
("WorleyParsons"), Watts, Griffis and McOuat Limited ("WGM"),
Consulting Geologists and Engineers of Toronto, and P&E Mining
Consultants Inc. ("P&E"). Mr. Michael Kociumbas, P.Geo., and Mr. Rick
Risto, P.Geo., both with independent firm WGM, are Qualified Persons
as defined by NI 43-101. WGM has previously visited the site,
collected independent core samples and reviewed the QA/QC data
received to date. Mr. Risto has reviewed and approved the underlying
sampling, analytical and test data used for the estimate and Mr.
Kociumbas is responsible for auditing the in-house mineral resource
estimate as supplied by Black Iron. The estimate is classified as
Measured, Indicated and Inferred mineral resources, consistent with
the CIM definitions referred to in National Instrument 43-101. The
complete BFS report will be filed on SEDAR and Black Iron's website
within 45 days of the publication of this news release. 
The Table below summarizes the key elements of the BFS: 
High-Grade 68% Concentrate (all currency is USD, pre-tax) 


 
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NPV at 8% discount rate                                      $  3.5 billion 
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IRR                                                                    45.9%
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Total Estimated Capital Costs (excluding sustaining capital) $ 1094 million 
--------------------------------------------------------------------------
--
Life of Mine FOB OPEX (Beneficiation, Mine & Transportation) $     43.97 /t 
Mine Gate OPEX (Beneficiation & Mine)                        $     29.67 /t 
----------------------------------------------------------------------------
High-Grade 68% Concentrate Sales Price Forecast - based on                  
 long term CFR benchmark price of $95/T @ 62% iron adjusted                 
 for Black Iron's higher iron content and shorter shipping                  
 distance to end users                                                      
  (Year 1, 2016)                                             $          125 
  (Year 2)                                                   $          117 
  (Year 3 onward; long-term)                                 $          115 
----------------------------------------------------------------------------
Average Annual Cash Flow                                     $  593 million 
----------------------------------------------------------------------------
Estimated Mine Life                                                16 years 
----------------------------------------------------------------------------
Final Product Iron Grade (Fine Iron Ore Concentrate)                 68% Fe 
----------------------------------------------------------------------------
Measured and Indicated Resource (at 31.6% iron)                    645.8 Mt 
----------------------------------------------------------------------------
Proven and Probable Reserves (at 31.1% iron)                       448.2 Mt 
----------------------------------------------------------------------------
Annual Production Rate (average life of mine, post ramp-up                  
 year)                                                               9.2 Mt 
----------------------------------------------------------------------------
Projected Plant Start-up and Commissioning                         Q4, 2015 
----------------------------------------------------------------------------
Projected Commencement of Revenue Generation                       Q1, 2016 
----------------------------------------------------------------------------
Projected Years to Payback (at 8% Discount Rate)                  2.2 years 
----------------------------------------------------------------------------

 
Matt Simpson, Black Iron's President and CEO, commented, "The
operation outlined by this BFS for the Shymanivske Project clearly
illustrates the potential for a high-value, low net cost iron ore
development project. The projected high NPV, net cash flows, and
relatively low unit cost for concentrate arise from Black Iron's
advantages, which include an iron ore deposit with significant
existing infrastructure (railway, power lines and port) in addition
to access to low-cost skilled labour. We continue to deliver on our
objective timetable and our results to date, coupled with this
engineering study, make a compelling case for expediting the
development of the Shymanivske Project." 
Financial Sensitivities at Various Discount Rates 


 
----------------------------------------------------------------------------
IRR (pre-tax)                                             45.9%             
----------------------------------------------------------------------------
                                                      Pre-Tax               
                                                      NPV USD        Payback
Discount Rate                                      (Millions)        (Years)
----------------------------------------------------------------------------
0%                                           $           8392            1.9
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6%                                           $           4328            2.1
----------------------------------------------------------------------------
8%                                           $           3524            2.2
----------------------------------------------------------------------------
10%                                          $           2887            2.3
----------------------------------------------------------------------------

 
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. $1136 million in average annual revenue over the
life of mine. 
On the basis of the metallurgical test work completed for this BFS,
it is estimated that the process weight recovery of 32.7% would yield
a project life of 16 years at an average strip ratio of 1.63:1,
according to the current estimated resource. The Company believes
that additional exploration and definition drilling work have the
potential to expand the existing resource and upgrade the 188.3 Mt of
Inferred mineral resource to the Measured and Indicated
classification, potentially adding up to 5 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, which would further increase the already favourable
Project NPV.  
George Mover, Black Iron's Chi
ef Operating Officer, added, "We are
pleased with the level of engineering expertise and rigour behind
this BFS. Through the process, we implemented several improvements to
the work completed last year for our Preliminary Economic Assessment.
We have found and verified solutions to optimize the process flow
sheet, to reduce the stripping ratio through mine phasing, and to
increase our weight recoveries. As a result, we are now considering
an initial operation with 26% higher annual production and 16% lower
operating costs than in our previous study. The relatively low-unit
operating cost of production, coupled with close proximity to
Turkish, European, and Middle East customers, means that this
operation has the potential to remain profitable despite fluctuations
in the iron ore price." 
Details and Assumptions 
Total initial capital expenditures are estimated at U.S. $1094
million to produce a high-grade 68% iron ore concentrate. The capital
cost estimate excludes the sustaining capital cost of U.S. $689
million. The initial assessment of the preferred port facility
indicates that sufficient capacity currently exists for the planned
production. 


 
----------------------------------------------------------------------------
Summary of Estimated Initial Capital Costs                    USD (millions)
----------------------------------------------------------------------------
Mining Capitalized Pre-Stripping Costs                                    61
----------------------------------------------------------------------------
Mine Fleet Lease Costs                                                    62
----------------------------------------------------------------------------
Concentrator and Site Infrastructure                                     654
----------------------------------------------------------------------------
Environmental and Tailings Management                                     20
----------------------------------------------------------------------------
Rail Spur                                                                  9
----------------------------------------------------------------------------
Port Facilities                                                          nil
----------------------------------------------------------------------------
Indirect Costs and Land Acquisition                                      189
----------------------------------------------------------------------------
Contingency (10%)                                                         99
----------------------------------------------------------------------------
TOTAL                                                                   1094
----------------------------------------------------------------------------

 
The total average operating costs over 16 years are estimated at U.S.
$43.97 per tonne of high grade 68% iron ore concentrate. 


 
----------------------------------------------------------------------------
                                                                USD/tonne of
                                                                 Concentrate
                                                                    (Average
Summary of Estimated Operating Costs                              Mine Life)
----------------------------------------------------------------------------
Mining                                                     $           13.51
----------------------------------------------------------------------------
Concentrator                                               $           14.30
----------------------------------------------------------------------------
Site Infrastructure                                        $            0.75
----------------------------------------------------------------------------
Sales and General Administration                           $            0.75
----------------------------------------------------------------------------
Environmental and Tailings Management                      $            0.37
----------------------------------------------------------------------------
Rail Transportation                                        $            7.39
----------------------------------------------------------------------------
Port Facility                                              $            6.90
----------------------------------------------------------------------------
TOTAL                                                      $           43.97
----------------------------------------------------------------------------

 
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 8.1 UAH per USD has
been used for the CAPEX (up to Jan. 2016) and 9.0 UAH per USD for the
OPEX and Sustaining Capital (2016 and beyond). Variations in the
exchange rates from year 2016 and beyond impact the financial
analysis as follows.  
Impact of Ukraine Hryvna Exposure - BFS Currency Sensitivity  


 
----------------------------------------------------------------------------
                                                      (UAH/USD)             
                                        ------------------------------------
Exchange Rate as of year 2016 onward          8:1      9:1     10:1     11:1
----------------------------------------------------------------------------
NPV @ 8% discount U.S. $ (millions)          3334     3524     3677     3800
----------------------------------------------------------------------------
Total Estimated Capital Cost                 1094     1094     1094     1094
----------------------------------------------------------------------------
Estimated Operating Cost ($/tonne)          46.73    43.97    41.75    39.96
----------------------------------------------------------------------------
Average Annual Cash Flow U.S. $                                             
 (millions)                                   568      593      613      629
----------------------------------------------------------------------------

 
Bankable Feasibility Study Report 
The BFS has been prepared in accordance with the guidelines of
National Instrument 43-101, by the independent firms of WorleyParsons
Canada Services Ltd., Watts, Griffis and McOuat Limited and P&E
Mining Consultants Inc. WorleyParsons is a leading full-service
engineering firm and has experience in the sector that includes the
design and construction supervision of many components of some of the
world's leading iron ore assets. The final BFS technical report,
which will also include the current mineral resource estimate, will
be filed on SEDAR within 45 days of the publication of this news
release. 
Pellet Plant Alternative 
Black Iron has investigated an alternative production scenario, which
would include the production of high-grade iron ore pellets. The
pellet production alternative is not included as part of the BFS. 
Analyst and Shareholder Conference Call  
Black Iron will host a conference call today at 8:00 a.m., EST
(November 15, 2012) to discuss the BFS results. To participate in the
call please dial the following: 
International: +1 416 340 8527 
Toll Free North America: 1 877 240 9772 
To register and listen to the webcast of the call, please go to Black
Iron's website at www.blackiron.com. 
Qualified Persons 
The contents of this press release have been prepared under the
supervision of and reviewed and approved by Qualified Persons, as
follows: 


 
--  Rob Spiering, P.Eng., Project Manager, WorleyParsons QP for the Process
    Plant and Infrastructure;
 
--  Michael Kociumbas, P.Geo. and Rick Risto, P.Geo., Watts, Griffis and
    McOuat Limited, QPs for mineral resources and QA/QC and data
    verification;
 
--  Eugene Puritch, P.Eng., P&E Mining Consultants Inc., QP for the mine
    engineering aspects.

 
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. For further information, please see the technical
report of the Company, which is available on SEDAR at www.sedar.com. 
Additional information about the Project can be found in the
technical report filed on SEDAR at www.sedar.com, entitled "Resource 
Estimate - Shymanivske Deposit in Ukraine," and dated January 31,
2011. 
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
www.blackiron.com or write us at info@blackiron.com 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
FS 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.
Contacts:
Black Iron Inc.
Michael McAllister
Manager, Investor Relations
+1 (416) 309-2950 
Black Iron Inc.
Matt Simpson
President & Chief Executive Officer
+1 (416) 309-2138
info@blackiron.com
www.blackiron.com
 
 
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