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UPDATE 3-Fortescue COO, executives step down amid Iron Bridge review

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* Local media report cost blowouts at Iron Bridge

* Fortescue says to do with team culture, communicationbreakdown

* Miner to provide more detail with half-year reportThursday(Adds closing shareprice)

MELBOURNE Feb 16 (Reuters) - Australia's Fortescue MetalsGroup Ltd said on Tuesday Chief Operating Officer GregLilleyman and two other executives have resigned as part of areview of its Iron Bridge Magnetite project in WesternAustralia.

The $2.6 billion high-grade ore project, which is key toFortescue's growth strategy, was on track to start exports inthe first half of 2022, it said last month, after the Australiannewspaper reported the project faced a cost blowout of as muchas 25%.

Higher ore grades would mean Fortescue could blend thematerial with that of its lower grade products to get betterprices and potentially win market share from peers BHP Group, Rio Tinto Ltd and Vale SA..

The project is expected to deliver 22 million tonnes whenfully ramped up.

The world's fourth-biggest iron ore miner said Lilleymanalong with Don Hyma, director of projects, and Manie McDonald,director of Iron Bridge, have left the business.

"At Fortescue, our commitment to our values and culture isour highest priority. What we've learned through our review ofthe Iron Bridge project to date, is that we have lost sight ofthat critical focus," Chief Executive Officer Elizabeth Gainessaid.

"Core to our values is ... doing what we say we are going todo," she told media after the announcement, adding there hadbeen some evidence of a breakdown in communication.

"This is about the culture of the team."

Magnetite iron ore projects are notoriously difficult todevelop, with China's CITIC Pacific Sino Iron project in WesternAustralia arriving years late and billions of dollars overbudget.

"The history of these kind of projects in Australia ispretty poor," said Shaw and Partners mining analyst PeterO'Connor.

"The project will still likely go ahead," he said, addingthat Lilleyman was a very experienced operator.

Fortescue shares fell as much 6.3% before closing down 3%.

The miner said the review of the project was continuing andit would provide a further update along with its half-yearresults on Thursday.

Gaines and chief financial officer Ian Wells will also forgotheir incentive payments this financial year, the company said.(Reporting by Shashwat Awasthi in Bengaluru and Melanie Burtonin Melbourne; Editing by Krishna Chandra Eluri and RichardPullin)