BC Iron awards contracts for Nullagine

BC Iron has today awarded two key contracts for the development of its $43 million Nullgaine iron ore joint venture with Fortescue Metals Group.

The junior today said it had awarded the stage one, 60-man accommodation camp to WA company Complete Portables. The contract includes the design and construction of the camp for the project, located in the Pilbara.

BC Iron also awarded a five-year ore haulage transport contract to WA transport and logistics company Mitchell West.

The value of the contracts have not been disclosed but BC Iron said the pricing falls within feasibility study parameters.

The partners are on track to start first production from the project by the end of this year, targeting an initial production of 3 million tonnes each year of iron ore.

The announcement is below:

Australian iron ore company BC Iron Limited (ASX: BCI); ("BC Iron") is pleased to advise that it has awarded the first key construction and services contracts for the Nullagine Iron Ore JV (BC Iron 50% / FMG 50%) in Western Australia's East Pilbara as development activities gather momentum.

The award of the first key contracts - the value of which falls within Feasibility Study estimates - marks another milestone for BC Iron as it moves rapidly towards bringing the Nullagine Project into production later this year, becoming the Pilbara's next iron ore exporter.

The contracts included the construction contract for the Stage I, 60-man camp at site, which has been awarded to the Western Australian company, Complete Portables.

Work will begin immediately on the planning and construction of the first stage of the accommodation village, which will be used for final in-fill drilling and to complete the remaining heritage surveys. Pending receipt of Government and regulatory approvals, the accommodation village will subsequently be expanded to house some 150 employees when production begins at Nullagine later this year.

It is expected that the planning, construction and delivery of Stage I of the camp will take approximately two months to complete with Complete Portables to handle the design, manufacture, transport and set-up of all components of the accommodation.

BC Iron has awarded the ore haulage contract for the Nullagine Project to Western Australian transport and logistics company, Mitchell West. The agreement covers the transport of Nullagine iron ore to the Fortescue Metals Group (FMG) rail infrastructure near Christmas Creek, a journey of some 55km once the final approvals for the heavy haul road are received and the road is built.

Ore will be transported using 360-tonne powered road trains, which are significantly larger than conventional road trains, thus increasing overall efficiency and reducing costs.

These specialised road trains are in high demand at present and as such, BC Iron has moved quickly to finalise this contract and will ensure that other long-lead-time items are managed similarly within the Project timeframe.

Following the decision by FMG to fast track development of the Christmas Creek rail line and loading spur, BC Iron decided to move directly to a targeted start-up production rate of 3Mtpa based on the construction of the purpose-built haul road.

Commenting on the announcement, Mr Young said: "We are very pleased to be able to award these key contracts for the Nullagine JV to West Australian companies, helping to ensure that the benefits from our investment in this project flow directly to local enterprises and communities.

Both companies have extensive experience in their fields of expertise and we are looking forward to working with them both as we progress development of the Nullagine Project.

"Securing these key long-lead-time contracts is an important part of our strategy to ensure that we meet all key project construction and production milestones.

"As part of our strategic planning in the lead up to production, we recognised the importance of securing these long-lead-time contracts in a timely fashion, especially as project development in the WA mining sector gathers momentum and access to mining services becomes increasingly difficult.

"We are also pleased to have signed key agreements with pastoralists in the Nullagine area, clearing the way for land access to facilitate the construction of the heavy haul road to Christmas Creek. Signing these agreements was a key requirement for project development.

"The signing of the pastoralist agreements was a crucial, time critical component of our project development activities and having these in place now means that we can prepare for construction of the heavy haulage road. I would like to take this opportunity to thank all the parties involved for their support in reaching this agreement," said Mr Young.