BC Iron flags smaller iron ore project

The global economic turmoil has prompted West Perth-based BC Iron to review a smaller start-up operation for its Nullagine iron ore project in the Pilbara which could save its some $80 million in development costs.

The company said today it is reviewing a 1.5 million tonne per annum operation where preliminary estimates peg capital costs at between $20 million and $30 million.

In its scoping study released earlier, BC Iron was investigating a 3mtpa operation which had a capital cost estimate of between $85 million and $100 million.

"In the current financial and economic climate, where project finance is difficult to arrange, we believe that a smaller-scale start-up operation represents a sensible alternative which would very quickly establish the Company on a self-funding basis to underpin both ongoing exploration and future development costs to incrementally expand production," managing director Mike Young said.

Operating costs for a 1.5mtpa mine is estimated to be around $40 per tonne, which BC Iron said will provide the company with early cash flow with minimal outlay.

BC Iron said to achieve cost savings, it has developed a process model where ore crushing and screening would be conducted in the pit using a mobile crushing plant.

"Ore would then be hauled by road to the nearby rail infrastructure operations owned by The Pilbara Infrastructure Pty Ltd (TPI) with whom the Company has a Memorandum of Understanding for rail haulage and ship loading services," BC Iron said in a statement.

TPI is a wholly owned subsidiary of Fortescue Metals Group.

Shares in BC Iron dipped one cent to 35c at 14:35 AEDT.