The Iron Ore Company of Canada says the long-awaited Wabush 3 mining project in Labrador West will be going ahead.
The new pit comes with a $79-million investment and should increase the ore output by about five million tonnes per year.
Clayton Walker, chief executive officer and president, said it should also extend the life of the mine by 12 years.
"We're really excited about the announcement," Walker said on Thursday afternoon.
The new pit will rely on much of the existing infrastructure but construction is expected to create about 70 jobs, according to Walker.
Production by 2018
The Wabush 3 extension was put on hold last May, with IOC citing poor production and sales performance over the previous year.
The news will be welcome in Labrador West, which has been hit hard with a downturn in the iron ore industry in recent years and is in need of an economic boost.
'A good, low-cost operation, to where we can weather those ups and downs of the market.'
- Clayton Walker, IOC president
The new pit will be next to the existing Luce pit. Construction is set to begin in the spring with mining in the second half of 2018.
Iron Ore from the new pit is expected to be easier to mine, which gives the company an advantage, according to Walker.
"There's less material we have to move to get to the good stuff, and so it actually costs us less to produce those tonnes."
The price of Iron Ore is currently high, trading at about $87.50 US. It's a nice bonus, but Walker said a low operating cost gives Wabush 3 flexibility if the price falls again.
"What this does is provide us with a good, low-cost operation, to where we can weather those ups and downs of the market and keep our doors open."
Walker said performance from his workers was a big reason why Wabush 3 was sanctioned.
"We've increased our productivity, our safety is on the way up, we're seeing increased attendance, all those things helped to to give the shareholders confidence that they could invest in the mine."
Minister of Natural Resources Siobhan Coady called the development a "good-news story for the province" on Thursday.
"It will mean 12 more years of work in the mining industry in Lab West," she said.
"Incredible stimulation to the area of Labrador, and the IOC area. It's a really good opportunity, I think, for growth and development."