Glencore entered the Black Iron project in Ukraine

Black Iron shares are skyrocketing following the signing of a memorandum of understanding with Glencore on an iron ore project in Ukraine.

The shares of the Canadian company Black Iron Inc. rose more than 35% on Wednesday following the announcement of a memorandum of understanding (MOU) with mining giant Glencore (LON: GLEN).

The companies are in talks to finance the construction of the Black Iron Shymanovskiy iron ore project in Ukraine and intend to begin formal negotiations on the financing package.

The MOU stipulates that Glencore will make an investment to help finance the construction of the project in exchange for securing an offtake prior to planned annual production for full phase one of four million tonnes, with terms and amounts yet to be agreed upon. The MOU also describes the collaboration between Black Iron and Glencore to use their relationship to balance the funds needed to build the Project.

The Shymanovskoye iron ore deposit has a good position in Ukraine between the markets of Europe, Russia, Asia and the Middle East. It is located 330 km southeast of Kiev in the central part of Ukraine, in the very heart of the Kryvbas iron ore region. A project in Kryvyi Rih, a highly developed iron ore mining region in Ukraine, uses a well-established infrastructure away from conflict zones

The PEA, released in November 2017, involved construction in two phases, starting at 4 million tonnes of dry concentrate per year and increasing to 8 million tonnes per year. With a 17% contingency expense, PEA's projected capital expenditure is $ 436 million. USA for the first stage and another 312 million USD. USA for the second stage, with a minimum mine life of 20 years from open pits that are open to resource expansion.

In accordance with the terms of the MOU, Glencore also agreed to work with Black Iron to use their relationship to obtain the required balance of funds. Black Iron may also reallocate shares to other investors if the investment terms equal or exceed those offered by Glencore. In addition, Black Iron continues to discuss debt financing issues with international financial institutions and banks in Europe.

According to Black Iron, Glencore's involvement leverages Black Iron's capabilities and draws on the commodity giant's vast international network, experience and market knowledge.

Black Iron plans to produce a 68% very low trace mineral iron granular concentrate that can be used to produce high quality iron ore blast furnace pellets or premium direct reduced pellets. It can also be used as