BC Iron Limited (BCI) said it entered into a long-term off-take agreement for 25% of future iron ore production from its 100%-owned Nullagine Iron Ore Project in the Pilbara of Western Australia. BCI said the agreement was with Tennant Metals Pty Limited a specialist metals trading and investment house.

BCI said Tennant Metals would act as agent and/or principal for the Free on Board (FOB) sale of 25% of iron ore produced at Nullagine for a minimum five-year period from the commencement of production.

Commencement of production was anticipated for early 2010.

BCI said the price of the ore would be referenced to the long-term benchmark iron ore price, with appropriate adjustments for the premium quality nature of Nullagine iron ore.

“Sinter test work carried out independently in China during 2007 by a large steel company found that BC Iron’s fines ore can be categorised as "First Class" in terms of its sintering characteristics,” the company said.

Last month, BCI announced a 64% increase in high-quality Direct Shipping Ore (DSO) resources for the Bonnie Creek CID Project at Nullagine to 46.2Mt grading 57.0% Fe (64.7% calcined Fe) within an updated global resource totalling 80.2 Mt grading 54% Fe (61.9% CaFe) of mineralised Channel Iron Deposit (CID).

At 1212 AEDT, BC Iron shares were up 4c, or 11.1% at 40c.