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Better than expected trial mining results have put the Nullagine Iron Ore Project joint venture between BC Iron and Fortescue Metals on the fast track to development.

BC Iron yesterday announced to the Australian Securities Exchange (ASX) that the final results from a trial mining test pit had exceeded expectations, with tonnes and grade 13% higher than predicted.

As a result of the improved findings Fortescue has formally endorsed the decision to obtain final approvals and commence construction at Nullagine, BC Iron said in the statement.

Fortescue can acquire a 50% stake in the Nullagine project, which is located in Western Australia’s East Pilbara, by providing BC Iron with rail haulage, port-handling and ship-loading facilities.

“This important milestone marks the beginning of a very exciting phase for the company as we get on with the job of building a substantial new iron ore project for the Pilbara region,” BC Iron managing director Mike Young said.

“We can now look forward to a raft of upcoming milestones in the lead up to production.”

In contrast to the positive trial mining results, BC Iron said that the pre-production capital expenditure will now rise to $51.5 million, up from earlier estimates of $43 million, because using Fortescue’s rail line requires a private haul road to be built.

“The increased start-up production rate will result in increased cash flows from the commencement of production,” BC Iron said.

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