The Bloom Lake operation is currently designed to produce eight-million tons a year, of iron-ore concentrate but Consolidated Thompson has commissioned an assessment of a project to increase output to 16-million tons, and expects to have the details to present to its board for approval by May.

The company started up production in December and had spent some $463-million on development of the Bloom Lake operation by the end of last year, as well as $84,6-million on rail infrastructure and $27,4-million on port development.

It plans start loading ore onto the first vessel for shipment to customers during the second quarter, Quesnel said.

He expects initial operating costs from Bloom Lake to be in the low $30/t, but said that they should improve as operations settle into a steady state.

Demand for iron-ore, which is used in the production of steel, has rebounded over the last year, driven by demand from Asia, and in particular from China, the biggest steelmaker and iron-ore buyer.

“We happen to think, as we look to the weeks and months and years ahead, that our timing could not be much better: to be a new producer in the summer or spring of 2010, when we look at both demand and pricing the market today,” executive chairperson Brian Tobin said.

The company is still waiting for external consultants to complete the study on the expansion to 16-million tons, but the project “is something that we are very keen on as we move along,” he told analysts and investors on a conference call.

Last year, Chinese steel producer Wuhan Iron & Steel (Wisco) invested $240-million in Consolidated Thompson, in exchange for a 19,9% stake in the company and a 25% holding the Bloom Lake asset.

Wisco also has offtake rights on up to 60% of the iron-ore produced over the life of the Bloom Lake operation, at market prices.

That deal was followed up early this year with a one-million ton a year offtake deal and $50-million credit agreement signed by Consolidated Thompson with a subsidiary of Korea's SK Group.

The Canadian firm also closed a private placement for $144,1-million in September, and closed a $ 100-million debt facility of senior secured bonds with Marret Asset Management Inc in January this year.

Shares in the company rose 1,45% on Thursday, to C$9,08 apiece by 16:10 in Toronto.

Last year, Consolidated Thompson agreed to buy the shares in Canadian iron-ore joint venture Wabush Mines held by US Steel Canada and ArcelorMittal Dofasco.

The deals would have given it a 73,2% stake in Wabush, which owns the Scully iron-ore mine near Wabush, Newfoundland and Labrador; pellet plant and port facilities at Point Noire, Quebec; and integrated rail facilities.

But the third joint-venture partner, US-based Cliffs Natural Resources, exercised a right of first refusal on the US Steel and ArcelorMittal holdings and acquired their shares, beating out Consolidated Thompson.