The TIME

• Landmark infrastructure JV agreement in place with FMG: Provides end-to-end rail haulage and port operations ~ production to commence in early 2010
• Fast-track production strategy ~ low Capex 1.5Mtpa start-up DSO operation expanding to +3Mtpa upon commissioning of heavy haul road to Chichester 
• Longer-term production target of +5Mtpa planned based on rail extension and increased port capacity
• Off-take agreement signed with the Australian metals trading and investment house Tennant Metals for 25% of production
• Shift by steel mills to high-quality iron ore products with low impurities of the type that BC Iron will produce

• 1,500km² consolidated landholding in WA’s iron-rich Pilbara region
• High-quality, low-cost operation with life-of-mine operating costs estimated at A$40-45 per tonne
• Project development costs of A$35 - 50m ~ capital forecast to be repaid in <2 years from start of production
• Simple, easy to mine, flat-lying ore body with DSO at surface

• CID resource of 89.1Mt @ 54.1% Fe (61.9% CaFe)
• DSO resource of 50.7 Mt @ 57.0% Fe (64.8% CaFe)
• BC Iron’s ore considered “first class” with low impurities and ultra-low Phosphorus
• Sintering qualities greatly enhance marketability of BC Iron’s ore as a ‘Premium fines sinter feed’

BC Iron’s competitive edge over other iron ore juniors in the Pilbara is that our Nullagine resource comprises an outcropping, low contaminant ‘First Class’ sinter feed that is located close to accessible transport infrastructure. These attributes position BC Iron favourably to rapidly transform the project into production and cashflow

Company Overview

BC Iron Limited (ASX: BCI) is an emerging iron ore producer focused on Western Australia’s world-class Pilbara region. The Company was formed by combining the iron ore interests of Alkane Resources Ltd and Consolidated Minerals Ltd – which are now both major shareholders in BC Iron.

The Company recently signed a landmark JV agreement with Fortescue Metals Group (FMG) that puts BC Iron on track to become Australia’s newest iron ore producer in early 2010.

Nullagine Project

The Company’s core asset is the Nullagine Iron Ore Project, an extensive tenement portfolio which is located 140km north of Newman in Western Australia’s Pilbara region and proximal to Fortescue Metals’ Chichester operation.

The 100%-owned Nullagine Project currently hosts a Direct Shipping Ore (DSO) resource of 50.7Mt at 57% Fe (64.8% CaFe) within an overall Channel Iron Deposit (CID) of 89.1Mt @ 54.1%Fe. Importantly, the resource occurs at surface, resulting in low stripping ratios, and is very low in contaminants.

The Company has completed a successful Scoping Study on a start-up DSO operation at Nullagine and, on the strength of this, moved quickly into a Feasibility Study. This study, which is nearing completion, is examining the prospect of commencing commercial operations at the Bonnie Creek Channel Iron Deposit (CID) Project in 2010. 

BC Iron’s pisolite ore is a low contaminant, premium sinter blend giving the Nullagine Project the potential to deliver strong cash operating margins at all stages of the commodity price cycle.

Nullagine Joint Venture (NJV)

In June 2009, BC Iron Limited and Fortescue Metals Group (FMG) signed a landmark agreement that will see the two companies establish a joint venture to develop BC Iron’s Nullagine Iron Ore Project

The Nullagine Joint Venture (NJV) will unlock the substantial value contained in the high-quality but remote East Pilbara project and under the terms of the agreement, BC Iron and Chichester Metals Pty Ltd (a wholly owned subsidiary of FMG), will each contribute equity up to A$10 million to the project, with the remaining development costs expected to be funded through project finance.

BC Iron will manage the NJV, including responsibility for all operations, road haulage, marketing and ore sales. FMG subsidiary, The Pilbara Infrastructure (TPI), will manage all rail and port operations, taking product from the project stockpile at FMG’s Chichester operation to ships in Port Hedland.

The NJV will benefit significantly from synergies arising from the proximity to FMG’s operations, including access to existing infrastructure, systems and facilities such as the David Forrest airstrip, which will expedite the logistics of the new mine development.

The development of the Nullagine Joint Venture will be based on BC Iron’s current feasibility study, which is examining a 1.5Mtpa start-up followed by a 3 Mtpa ramp-up operation.  The study is based on the known mineralisation at the Bonnie Creek Channel Iron Deposit (CID), which includes the Outcamp, Warrigal, Coongan, and Bonnie East Prospects. 

Off-Take Agreement

Mine Development

While still subject to on-going work, BC Iron’s estimated capital expenditure requirement for the mine development is approximately A$35 – A$50 million with a forecast operating cost of approximately A$40 - A$45/tonne. The operation is scheduled for commissioning in early 2010 at an initial production rate of 1.5Mt per annum, ultimately ramping up to 5Mt per annum thereafter. By commencing at a smaller start up rate, the Company can focus on its stated objective of generating early cash flows and then expanding the project from revenue.

The proposed mining operation will be relatively simple and low-cost. In particular, the outcropping nature of the resource will result in a low waste-to-ore strip ratio. The Company is investigating innovative techniques such as the use of Vermeer surface miners and in-pit, portable crushing which will allow highly selective mining.

Management 

The Company’s Directors have a wide range of technical and corporate skills including a strong background in exploration, economic assessment, and iron ore development and mining. Importantly, the Board also has experience in exploration and assessment of CID mineralisation.