A positive scoping study has prompted BC Iron to commit to undertake a feasibility study for the Nullagine Iron Ore Project in the Pilbara region of Western Australia .

The company aims to begin iron ore production at the 3-5 million tonne per annum Direct Shipping Ore (DSO) operation 140km north of Newman by the end of the decade.

The Perth-based company believes Nullagine has the potential to underpin a high-value, long-life iron ore business.

The scoping study focused on the inferred resource of 28 million tonnes at 57.4% iron at the Outcamp Well and Coongan Well Deposits, which form part of the larger Bonnie Creek Channel Iron Deposit (CID).

It examined a number of alternative options for mining, processing and marketing, with the base case operating and capital costs assuming simple open pit mining, crushing and screening to a single fines product. Ore would be hauled by road to Fortescue Metal Group’s planned Christmas Creek operation. BC Iron has a Memorandum of Understanding with Fortescue to negotiate rail and port access.

DSO production would begin in 2010 at an initial rate of 3 million tonnes per annum, ramping up to a long-term level of 5 million. The study estimated capital costs of Aus$85 million and operating costs at Aus$42/tonne. The current resource would underpin a mine life of about 6 years.

BC Iron’s managing director Mike Young says: “This is a great outcome which demonstrates the robustness of the Bonnie Creek Project as a company-making development opportunity. The forecast cash operating cost of Aus$42/tonne includes an estimate for ore transportation costs on board ship and highlights the substantial cash operating margin that the operation would generate.

“Also, the scoping study does not take into consideration the larger mineralized CID that surrounds the DSO resource, where lower grades occur on the margin or are interbedded with the DSO zones.

“There is potential for customers to accept lower grade materials than that currently classified as a DSO resource, and this would result in a higher DSO resource tonnage.”

Previous exploration has established the potential for a 40-50 million tonne DSO project within two years, which would underpin a mine life of seven years at the expanded 5 million tonnes per annum.

BC Iron has started drilling to upgrade the resources at Outcamp Well and Coongan Well as well as test the Warrigal Well, Bonnie Creek East and Dandy Well prospects, where a further 15-25 million tonnes of DSO is being targeted.

Environmental desktop studies completed as part of the scoping study so far indicate that no significant issues have been identified which might have an adverse impact on the company’s proposed timeline for developing the project.

www.bciron.com.au