BC Iron is one step away from receiving full support from Fortescue Metals Group for its $43 million Pilbara iron ore project, with the miner requesting one further test.
BC Iron is one step away from receiving full support from Fortescue Metals Group for its $43 million Pilbara iron ore project, with the miner requesting one further test.
Fortescue today gave in-principle support for the recently completed feasibility study over BC Iron's Nullagine iron ore project.
Both companies last month signed a deal to establish a 50:50 joint venture to develop Nullagine.
Under the agreement, FMG must give its full support in order for the project to proceed towards development.
Earlier this month, BC Iron's board gave the go-ahead for the development of Nullagine, which will have an initial production target of 1.5 million tonnes each year.
Today, BC Iron said both companies have agreed to vary the JV agreement to facilitate the completion of a 120,000 tonne bulk sample test pit.
Mining of the test pit is expected to start in September.
"A formal decision on the Joint Venture will be made following the outcome of the test pit," BC Iron said.
In addition, BC Iron said its senior executives will be travelling to China to start negotiations for long-term iron ore sales contracts.
Nullagine is due to come online in the first half of 2010.
The announcement is below:
HIGHLIGHTS
- Fortescue Metals Group (FMG) grants in-principle endorsement of Nullagine Feasibility Study
- Both parties agree to accelerate commissioning of planned test pit - scheduled start-up September 2009
- Formal decision to establish the Joint Venture to be made following the test pit
- BC Iron travelling to China next week to commence negotiations for long-term iron ore sales contracts.
Australian iron ore company BC Iron Limited (ASX: BCI; "BC Iron") is pleased to advise that it has received in-principle endorsement from Fortescue Metals Group Limited (ASX: FMG) for the Company's recently completed Feasibility Study on its Nullagine Iron Ore Project, located in the Pilbara Region of Western Australia.
The Study confirmed that the Nullagine Project is an economically and technically robust Direct Shipping Ore (DSO) project based on a Probable Ore Reserve of 36Mt at 56.9% Fe. The Nullagine Project will commence production at an initial rate of 1.5Mtpa, subsequently ramping up to 3Mtpa and then 5Mtpa as roads and infrastructure are upgraded.
The Heads of Agreement between BC Iron and FMG of 4 June 2009 contemplated a decision on the joint venture being made within 14 days of BC Iron delivering the Study to FMG. The parties have agreed to vary that arrangement to facilitate completion of a bulk sample test pit. A formal decision on the Joint Venture will be made following the outcome of the test pit.
Following a review of the completed Feasibility Study, FMG and BC Iron have made the decision to fast-track one of the key recommendations in the Study - the completion of a 120,000t bulk sample test pit. The test pit is intended to confirm some of the underlying assumptions contained in the Feasibility Study in the areas of:
- Surface miner type and performance;
- Dilution and reconciliation;
- Metallurgy;
- Value-in-use; and
- Ore price benchmark determination.
Mining of the test pit is expected to commence in September with mining completed by the end of September. Ore will be crushed, screened and stockpiled for use in test work as well as to provide samples to be used for marketing purposes. The ore will then be used for initial commissioning of the Nullagine Project upon commencement of operations in the first half of 2010.
BC Iron has obtained permission from the Palyku Native Title Claim Group for the test pit with key state mining approvals for the excess tonnage expected within the next two to four weeks.
Senior BC Iron executives will be travelling next week to China to commence negotiations for longterm iron ore sales contracts.
