Centaurus Metals has signed a deal to secure important tax concessions in the development of its Jambreiro iron ore project in Brazil.

The company said it had signed a memorandum of understanding State of Minas Gerais in southeast Brazil as well as a group of key State Departments.

In exchange for a range of tax concessions, Centaurus has agreed to hire local staff, contractors and services in preference over non-locals wherever possible.

The State will also try to help Centaurus secure working capital and equipment finance from the State Development Bank BDMG should the company choose to pursue this form of finance as part of its overall financing package.

Centaurus managing director Darren Gordon said Centaurus would invest $136 million in Jambreiro initially generating 1000 jobs during construction and 500 direct and indirect jobs during steady operation.

"We are very pleased that the State Government has recognised these opportunities and the substantial economic contribution that the development of Jambreiro will make by entering into the project facilitation arrangements for the key elements of the development and provide valuable fiscal and taxation concessions to the project," he said.

Centaurus hopes to have Jambreiro operating by the end of the year with hopes of a 2mtpa project delivering high-grade hematite to the domestic Brazilian market.