Hilltown Resources Inc and Mineracao Siderurgia Socoimex Ltd announced a joint venture to produce iron ore at the Capanema Iron Mine in Minas Gerais State, Brazil. Hilltown will contribute USD 30 million and Socoimex USD 22 million of the total capital cost.

Socoimex will act as project operator of the 50/50 JV.

Socoimex won the bid to acquire the mine from Companhia Vale do Rio Doce and produce a minimum of 20 million tonnes of high-grade iron ore over 13 years. The agreement includes a three year licensing and development/implementation plan and a 10 year production plan.

Scheduled production is set at approximately two million tonnes per year which may be increased to four million tonnes at Vale option. Vale is the largest mining company in Brazil and the second-largest in the world.

Vale will buy 95% of the ore produced at a minimum price of approximately USD 58 per tonne with an annual inflation adjustment. Vale will receive a royalty of approximately USD 32.88 per tonne.

The acquisition of Capanema mineral and production rights by Socoimex will take place by March 1 2012.