PERTH (miningweekly.com) – Diversified junior Fairstar Resources on Wednesday announced that it had secured A$260-million in funding to develop its Steeple Hill project, in Western Australia.

The funding agreement accounted for some 80% of the capital requirement to develop the iron-ore mine.

ASX-listed Fairstar told shareholders that the deal with Alliance Super Holdings was nondilutive, and would advance Steeple Hill to production through a 50:50 profit-sharing joint venture (JV).

As part of the business plan, all Fairstar’s debt would be retired, allowing the company to become debt free.

The junior said that the funds would be used to start construction and commissioning at Steeple Hill, and to fund infrastructure and provide further working capital for the JV.

“The future prospects for Fairstar have never looked better and this agreement means the company can retire debt and will emerge debt free, while the 50:50 profit-sharing JV will have significant funding at its disposal well above that required to transition Steeple Hill into production,” said MD Kevin Robertson.

Meanwhile, Robertson confirmed that the junior was in advanced negotiations with four other parties to fund the remaining 20% capital requirement and to secure offtake agreements for up to 80% of the 20-million-ton Joint Ore Reserves Committee-compliant resource, and the four-million tons of ultra-fines at the Steeple Hill project.

He said the funding would enable Fairstar to continue delineating the full mineral potential of Steeple Hill, adding that the full extent of the orebody remained unknown, although the in-ground indicated resource estimate was worth A$2.5-billion at current prices.

The company would also start a resource drilling programme at the adjacent North Ship tenement as soon as possible.

“A full programme of works for North Ship has been approved and in-house estimates believe it is possible that the total amount of ore at North Ship could be multiples of Steeple Hill,” Robertson said.

“Our overriding priority has been to ensure we secured the best possible deal with the best possible outcome for shareholders.

“We are confident the Alliance Super Holdings transaction will put Fairstar on the map as an emerging powerhouse in Western Australian resources,” Robertson added.

The Steeple Hill project would be developed in stages, with the first development phase involving the low-cost recovery, washing and handling of surface high-grade iron-ore, down to 11 m.

Once the company had capitalised on the strong iron-ore price and production had started at Steeple Hill, it would move to a drill and blast operation to unlock deeper ore.