The project had estimated capex of US$2.6 billion when it was approved by 69% owner FMG Iron Bridge (88%-owned by FMG and 12% by Boasteel) and Formosa Steel in April 2019.
In February, FMG revealed that cost would likely be closer to $3 billion.
Today, the company said its assessment had resulted in a further revision of the estimate to $3.3-3.5 billion.
The joint venture had spent $1.5 billion up until April 30.
FMG Iron Bridge's share of capex will be $2.5-2.7 billion, with $1.3 billion already spent.
The rise in capex reflects inflation, exchange rates and labour constraints.
"Market conditions have changed since April 2019," FMG CEO Elizabeth Gaines told reporters today.
The 12-week review validated the original plan to build a 135km concentrate slurry pipeline from the project to Port Hedland and resolved the logistics bottleneck for the delivery of modules, with construction of a module offload facility underway at Lumsden Point at Port Hedland.
An alternate transport plan using FMG's rail line was considered but resulted in higher capital and operating costs.
The review confirmed life-of-mine C1 operating costs of $33-38 per wet metric tonne, inclusive of fees to FMG for port and power services, up from $30-35/wmt.
LOM sustaining capital costs are estimated to be $5-7/wmt, which includes operational readiness and mining fleet purchases aligned with the production ramp-up profile.
The review confirmed first production by December 2022, as stated in February, but six months later than the original target.
Ramp-up to full production of 22 million tonnes per annum is expected within 12-18 months.
"We assume it takes 2.5 years for Iron Bridge to sustainably produce around 22Mtpa," RBC Capital Markets analyst Kaan Peker said.
Iron Bridge is expected to produce a 67% iron concentrate, which should attract a premium to the 65% Platts price and further lifts the average grade of FMG's production.
FMG chief financial officer Ian Wells said Iron Bridge would generate strong margins and free cashflow through the cycle.
"Iron Bridge offers a strong return on capital and a short payback," he said.
FMG shares were up 0.1% to A$22.30, a one-week high.