Brockman Resources Ltd., an Australian iron ore producer, announced Wednesday it has signed a memorandum of understanding (MOU) with Sinosteel, China's largest iron ore trader.

Sinosteel will purchase 10 million tons of iron ore per year in the first five years, which is up to 50 percent of future ore extraction from the Marillana project, in Western Australia.

The contracted quality amounts to one-quarter of Sinosteel's current iron ore imports. The Marillana project is still under the definitive feasibility study (DFS) of which 60 percent is completed, and should be finished during the third quarter of this year.

In addition to this agreement, the two sides will carry out discussions on wider strategic investment.