BC Iron, Fortescue close on Nullagine JVJuly 20, 2009 - 5:19PM...

BC Iron, Fortescue close on Nullagine JV
July 20, 2009 - 5:19PM
Fortescue Metals Group Ltd has moved a step closer to formalising a joint venture with smaller iron ore firm BC Iron Ltd for the junior's Nullagine project in Western Australia.

Shares in Fortescue jumped 36 cents, or 9.18 per cent, to $4.28 while BC Iron's shares were up two cents at $1.04.

BC Iron announced on Monday that Fortescue had given its in-principle endorsement to the Nullagine project further to an agreement reached last month.

Under the deal, Fortescue can earn a 50 per cent interest in the project by providing BC Iron with rail haulage, port handling and ship loading facilities.

"A formal decision on the joint venture will be made following the outcome of the test pit," BC Iron said on Monday.

It said a 120,000-tonne bulk sample test pit aimed to confirm some of the underlying assumptions contained in BC Iron's feasibility study for the project, which was endorsed by its board early this month.

The junior plans to start mining at a rate of 1.5 million tonnes a year, ramping up to a three million tonnes a year rate within six months, with shipping slated to commence in mid-2010.

BC Iron also said on Monday that its representatives were travelling to China next week to commence negotiations for long-term iron ore sales contracts.