Atlas Iron is in talks with Chinese steel maker Hebei Iron & Steel about its magnetite mine.
The Chinese steel maker is looking at Atlas’ Ridley iron ore project as a potential acquisition to secure off take.
However, the stake Hebei would be willing to take is yet to be made public.
Hebei had previously considered acquiring a stake in the Ridley project when it was controlled by Aurox Resources, but failed to reach an agreement with the miner.
Since Atlas and Aurox’s merger, Hebei has again demonstrated its interest in taking a stake in the project.
The Ridley project has a predicted output of approximately 15 million tonnes of iron ore annually over 35 years, with the merger of Aurox and Atlas expected to create an entity with the potential for 25 million tonnes of ore per year by 2014.