Western Plains Resources Ltd has announced Monday that it is set to sell nine million tonnes of iron ore over the next five years from its South Australian Peculiar Knob project, with a definite agreement to be inked within months.

The company did not furnish any specifics on the identity of its customers but earlier statements pointed to shipments going directly to Asia, as Western Plains said that their non-binding memorandum of understanding would include provisions that will extend the agreements beyond five years.

Western Plains said that shipment would commence by the second half of calendar 2011 as it added that the company is looking to fully commit to the project by the second part of 2010, by which time the deal should have transitioned into binding sales contracts.

The company said that the entire production of the Peculiar Knob site would be the subject of similar MOU agreements with its other clients, at least for the first five years of its existence as it stressed that sales from such deals would be based at market clearing prices on a quality adjusted basis, utilising a combination of cost and freight (CNF) and free-on-board (FOB) pricing schemes.

Last month, the federal government has issued confirmation that Western Plain's Peculiar Knob site is located within its Woomera Prohibited Area (WPA), which is also the case with the company's several South Australia explorations sites.

Western Plains said that the Peculiar Knob project site promises the highest grade of undeveloped direct shipping ore reserves in Australia and would have the capacity to produce up to three million tonnes of iron ore each year.

The announcement shored up Western Plain's shares which traded at 57 cents, going up by 4.5 cents or 8.6 percent, as of 1443 AEST.

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