* Mary River costs C$740 mln using trucking option
* Production would start at 1 mln tonnes/yr in 2013
* Output of 3 mln tonnes in 2014 - 20 year life
* Truck option means op costs of C$28.93 to C$62.71/tonne (Adds detail.)
CALGARY, Alberta, Jan 13 (Reuters) - Baffinland Iron Mines BIM.TO, whose control of a rich iron deposit in Canada's Arctic has sparked a takeover battle, said on Thursday developing the project could cost C$740 million ($747 million), with production starting in two years.
The junior Canadian miner, the target of a bidding war between ArcelorMittal (ISPA.AS) and Nunavut Iron Ore, released a feasibility study on the development of the mine site, known as Mary River, using trucks to haul ore to a port 100 kilometers (62 miles) away.
Baffinland said it will also update a 2008 feasibility study on using a rail line to carry ore from the mine to port, likely a costlier option. It did not say when it would complete the revisions.
Baffinland also said it was reviewing Nunavut's most recent offer, which added exchange rights to the cash portion of its bid. The board has so far recommended that shareholders tender to the offer from Arcelor, the world's top steelmaker.
The two companies have been courting the Canadian miner since September. Baffinland's share's closed at C$1.52 on Thursday, well above both Arcelor's offer of C$1.40 a share for 100 percent of the company, and Nunavut's C$1.45 bid for 60 percent.
The current ArcelorMittal bid, which is set to expire on Jan. 21, values Baffinland at about C$550 million. The bid by Nunavut, set up by a U.S. private equity group, values the target at C$570 million and is set to expire on Jan. 25.
PRODUCTION AS EARLY AS 2013
Baffinland's release put some hard numbers behind what it could cost to build and operate the project, and how soon it might open.
Using trucks, the mine could begin producing 1 million tonnes of lump and fine iron ore by 2013, with output rising to 3 million tonnes a year later - a level the site can sustain for 20 years, Baffinland said in a release.
Production could potentially rise to 4 million tonnes a year, the company said.
Operating costs for the project are pegged at C$28.93 per tonne of ore produced.
A second scenario, under which a contractor operates the mine, pegs the capital cost at C$604.7 million, but operating costs would more than double to C$62.71 per tonne.
Baffinland said it will also update a 2008 feasibility study that uses building a rail line to carry the ore from the mine to port. It did not say when it would complete the revisions.
($1=$0.99 Canadian) (Reporting by Scott Haggett; Editing by Frank McGurty)