Atlas Iron has received board approval to develop the Mount Webber mine with Altura Mining.
The two have agreed to proceed to construct and develop the DSO mining operation, wit the first shipments planned for the second quarter of next year, Altura Mining said in a company statement.
The mine is located 230km from Port Hedland, and has already received environmental approval and has an initial mine life of 18 years.
Works will begin in the last quarter of this year, and target an initial shipment rate of 3Mtpa, as part of Atlas' overall north Pilbara standard product blend, with a target ore grade of 57.2% Fe.
It will double production to 6Mtpa in stage 2 of the mine's development.
The deposit will be mined by conventional open pit mining practices, rock breakage by drill and blast, and excavation by load and haul.
Ore from the mine will be trucked to Utah Point port during the first phase of development, although Atlas has slated the mine production as part of any future rail agreements.
Total capital costs for the mine are estimated to run to $146 million.
In a company statement, Atlas managing director Ken Brisden said "the decision to develop Mt Webber represents another key milestone for Atlas".
"Mt Webber is the largest of our Horizon 1 mines and provides us with high quality, long life production which will enable Atlas to reach its targeted 12Mtpa production rate by the June quarter of 2014.
"With our Pardoo, Wodinga, and Mount Dove mines in operation, Abydos due to commence in the current quarter and now Mt Webber being develop, Atlas will have delivered five mines in around five years."
The Mt Webber project spans tenements M45/1209, which is split 70/40 between Atlas and Altura, and the northern adjoining tenement M45/1197, which is 100% owned by Atlas Iron.