Centaurus provides Brazil map for Atlas

THE BOURSE WHISPERER: Leading Pilbara iron ore producer Atlas Iron has added an international outlook to its portfolio by agreeing to take a strategic 19.9% stake in Brazil-focused Centaurus Metals.

The deal is part of what the companies have referred to as, “a wide-ranging strategic alliance that includes technical, development and product marketing support”.

Under the Agreement, Atlas will subscribe $18.7 million to Centaurus through a share placement comprising 212 million shares at 8.8 cents per share.

The deal will boost Centaurus’ coffers to over $25 million and will allow it to accelerate development of its domestic and export iron ore projects in south-eastern Brazil.

“Entering into a strategic alliance with a well-respected and proven iron ore producer such as Atlas is a very positive step as we move to become an iron ore producer over the next two years,” Centaurus Metlas managing director Darren Gordon said in a joint ASX announcement with Atlas.

“The decision by Atlas to take up a strategic shareholding in Centaurus reflects the fact that it sees a lot of parallels between our business today and its business several years ago.

“Centaurus has an excellent suite of projects that have the potential to generate very significant cash flows for a modest capital investment, and Atlas has clearly recognised this potential.

“Having Atlas as a major shareholder positions Centaurus for its transition to an iron ore producer, from both our Export and Domestic projects in Brazil, and with Atlas’ support we hope to replicate the sort of growth and success that Atlas has been able to achieve.”

Atlas Iron managing director David Flanagan said his company was pleased to have secured an investment in Centaurus.

The future development of the Centaurus Brazilian iron ore assets delivers Atlas exposure to the emerging iron ore business in Brazil, which is one of the world’s major iron ore provinces.

“The investment provides us with great exposure to a very well managed business that is poised to make the progression from iron ore explorer and developer to a producer,” Flanagan said in the announcement.

“As part of our strategic alliance, we will provide technical advice and assistance to help Centaurus realise the full potential of its asset base and unlock substantial cash flows over the next few years.”

Centaurus intends to use the funds raised from the Placement for the following purposes:
 
– The completion of a Feasibility Study and approval processes at the Jambreiro iron ore project;

– Accelerated exploration and development of the export-focused Serra Do Lontra project;

– Securing port capacity to assist in the development of the planned future export business;

– Ongoing exploration and review of new project opportunities to support the company’s planned iron ore export business from Brazil; and

– General working capital.