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Australian iron-ore producer Atlas Iron Ltd has formed a strategic alliance with Brazilian-focused Centaurus Metals Ltd.

Following an agreement between the ASX-listed companies, Atlas plans to acquire a 19.9% stake in Centaurus for A$18.7 million (US$20.7 million).

The deal would take place in two tranches, with Atlas initially purchasing 110 million shares at A$0.088 each out of Centaurus’ existing 15% capacity.

Subject to Centaurus shareholder approval, Atlas would then subscribe to a further 102 million shares to complete the second tranche.

Atlas would also receive a further 16 million options under the first tranche, and another 14 million under the second tranche.

David Flanagan, Atlas managing director, said: “We see the Centaurus business model of seeking low capital iron-ore projects, which are close to infrastructure, as similar to that which has served Atlas so well in the Pilbara. Brazil is one of the world’s leading producers of high grade iron ore and this opportunity gives Atlas exposure to back a good management team who are building an excellent Brazilian iron ore achieve.”

In June, Atlas and announced a takeover of fellow Pilbara miner, FerrAus, for $0.65 per FerrAus share