BC Iron Limited is to sell its 75% interest in the Nullagine Joint Venture (NJV) to a subsidiary of Fortescue Metals Group Limited (Fortescue).

The two companies entered a binding terms agreement.

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NJV is an unincorporated joint venture between BC Iron and Fortescue with an ownership ratio of 75:25.

Nullagine mine temporarily suspended its operations in December 2015 after operating for more than five years consistently due to low iron ore prices.

"Nullagine has been a successful operation and BC Iron shareholders have extracted significant value from it over a number of years."

Since suspension of operations, BC Iron was considering various strategic options for Nullagine, including selling of its stake.

Discussions were also held with various potential thirds-parties, with the final sale agreed with Fortescue.

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The sale also includes 75% interest in the iron ore rights over the NJV tenements and 100% title in the NJV tenements.

In addition, the deal comprises existing fixed assets, equipment, low-grade stockpiles and all associated mining information.

As consideration for this sale, Fortescue will pay BC Iron a royalty on 75% of the future iron ore mined from Nullagine.

BC Iron chairman, Tony Kiernan said: “Nullagine has been a successful operation and BC Iron shareholders have extracted significant value from it over a number of years.

"BC Iron has now concluded that the sale to Fortescue offers the best potential from a future BC Iron value and risk perspective. We acknowledge the role played by Fortescue who have been on a journey with BC Iron from day one at the Nullagine project."

The sale is subject to regulatory approvals, various third-party consents and execution of formal documentation.