IronClad Mining has received approval for a mining lease proposal (MLP) from the South Australian Government for its Wilcherry Hill iron ore project.

The project is expected to produce its first shipment of direct shipping Ore (DSO) for sale to Chinese steel mills in the first quarter of 2012.

According to the stage one feasibility study, the project will provide the firm with strong margins of about A$50 (US$51) per tonne and operating surplus of A$100m (US$102m) a year at full production during the first stage.

IronClad Mining executive chairman Ian Finch said that the firm is planning to rapidly expand the project in three stages to a total production target of over 10Mtpa of iron ore.

The project is expected to produce about 1Mt in the first year and increase to 2Mt in the second year.

In the third year, the firm will commission the floating harbour to coincide with the introduction of ore from the project’s massive Hercules deposit.