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.
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.
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.
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.