PERTH (miningweekly.com) - The South Australian government has thrown its support behind ASX-listed IronClad Mining, in its bid to amend the existing Lucky Bay port approval.

IronClad had been seeking a number of amendments to the existing approvals since the downturn of iron-ore prices last year, allowing the company to introduce a bulk ore, buffer stockpile within 1.5 km of the planned loading facility, within an area leased by the company, reducing the transshipment distance from 10 nautical miles to 7 nautical mines.

The existing approval requires that all ore from IronClad’s Wilcherry Hill mine site to the Lucky Bay port be transported in containers. However, IronClad noted that owing to the bulk density of the iron-ore and loading logistics, the containers needed to be custom designed, built and delivered at a cost of over $7 000 per container.

“We took the liberty of presenting government, in advance, with a full set of technical and environmental-impact data relating to the buffer zone proposal, so we believe that the approval time is likely to be shorter than the normal three months,” said IronClad MD Robert Mencel.

“With that approval in place, we can lock-in significant operating- and capital-cost reductions,” he added.

“The government has agreed to sponsor the proposed changes to the existing development approval so IronClad can construct a buffer storage facility,” said Transport and Infrastructure Minister Tom Koutsantonis on Monday.

“The decision to shepherd the amendments through the development assessment process demonstrates the government’s ability to facilitate infrastructure construction in this state,” he said.

Mencel noted that with iron-ore prices rebounding recently, the South Australian government's approvals gave IronClad further strong impetus to start production as soon as possible.

Stage 1 production at the Wilcherry Hill operation would see around one-million tons a year of direct shipping ore (DSO) magnetite being produced, increasing to two-million tons a year by the second year of operation.

The first two years of production from the project have been contracted for sale to international steel mills, while 50% of year three's and four’s forecasted production had been contracted through sale of an offtake agreement with Hong Kong-based New Page Investments.

Stage 2 of the Wilcherry Hill project would increase production to between four-million and five-million tons a year of iron-ore, by combining Wilcherry Hill magnetite concentrate with the DSO product.

Stage 3 of the project would include the exploration and development of the Hercules project, which had an inferred and indicated Joint Ore Reserves Committee-compliant resource of 198-million tons, and was expected to increase output to between 10-million and 12-million tons a year by 2015.