The Nullagine iron ore joint venture between BC Iron and the Fortescue Mining Group (NMG), Australia's third-largest iron ore producer, is "economically and technically robust," BC Iron said in a feasibility study.
Earlier, in June, BC Iron and Fortescue signed a joint venture agreement granting FMG a 50 per cent interest in BC's Nullagine project, in exchange for access to the major miner's port and rail facilities.
The company said production from Nullagine is expected to get underway by early 2010.
The BC Iron study found that he direct shipping ore project would produce an initial rate of 1.5 million tonnes per annum (mtpa), increasing to 3 mtpa and 5 mtpa with the upgradation of roads and infrastructure.
"Following a review of the feasibility study, BC Iron's board has made the formal decision to move forward with development of the Nullagine project, paving the way for the company's transition to production, subject to acceptance of the study by FMG and appropriate project finance being secured," BC Iron said in a statement to the Australian Securities Exchange.
"Based on these final set of requirements, first production is targeted for the second quarter of 2010," it added.