Black Iron, a Canadian iron ore explorer, has inked definitive agreements with Ukrainian mining and steel producer Metinvest to form a $536m development joint venture, wherein Metinvest will make the proposed investment in Black Iron's subsidiary Black Iron (Cyprus).

Through this agreement, Metinvest has secured an option to acquire stakes in Black Iron’s development projects including the Shymanivske project and the Zelenivske project both located in Kryvyi Rih, Ukraine.

As per the terms, Metinvest will initially acquire 49% in Black Iron (Cyprus) (BKI Cyprus) through private placement of shares in BKI Cyprus by investing $20m. BKI Cyprus owns in two Ukrainian companies – Shymanivske Steel and Zelenivske Steel.

Metinvest’s investment is expected to increase to upto $536m during the course of the construction of the Projects. Both, Metinvest and Black Iron will have an option to fund the development of the projects that is estimated to reach $1,09bn as per bankable feasibility study.

In addition, the Ukrainian firm will also have an option to take up additional shares in BKI Cyprus to increase its ownership to 51% after the company reaches full run rate production of 9.2 million tons per annum concentrate for three consecutive months.

Black Iron president and CEO Matt Simpson said: "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."

Black Iron, meanwhile, is intending to use the proceeds from the venture to finance the development of its Shymanivske Project and for general working capital purposes.