Atlas Iron Limited has announced it has acquired for A$2.1 million in cash a 90 per cent stake from Gondwana Resources Limited to own the Corunna Downs DSO Project in the North Pilbara in Western Australia.

The payout will be done in three tranches, in the form of a staged 12-month exploration option for 100 per cent of Gondwana's interest in the project.

"We continue to look for Direct Shipping Ore (DSO) opportunities in the Pilbara," David Flanagan, Atlas Managing Director, said in a statement.

"This project fits perfectly into our Horizon 2 expansion plans, with the potential to add DSO tonnes to the Mt Webber / McPhee Creek area."

Corunna Downs is located halfway between Atlas' Mt Webber and McPhee Creek DSO Projects in the North Pilbara region.

Gondwana retains a royalty of A$1.13 per tonne for all iron ore mined.

Atlas mines and exports from its 100 per cent-owned Pardoo and Wodgina Iron Ore projects, located 75 kilometres and 110km from Port Hedland in the Pilbara region of Western Australia.

In the 2009/10 financial year, Atlas shipped over 1.2 million tonnes of Pardoo DSO.