THE BOURSE WHISPERER: FairStar Resources has been granted a Mining Lease by the government of Western Australia its 100 per cent-owned Steeple Hill tenements.
The news follows the company’s successful negotiation of a Native Title Agreement covering the Steeple Hill Iron Project (SHIP), which was announced earlier this week.
The granting of the Mining Lease moves the company closer to securing a $300 million debt funding facility, on which it can commence to draw down on and move towards production.
FairStar now needs to conclude Off-Take Agreements for a substantial part of the ore to be derived from the SHIP Tenements to complete its obligations to earn the funding.
Source: Company announcement
“Shareholders can be encouraged that the Board and the company have achieved what we said we would when we made the conditional funding announcement just three weeks ago,” FairStar Resources managing director Kevin Robertson said in the company’s announcement to the Australian Securities Exchange.
“SHIP is a company transforming project that will rapidly take FairStar from an explorer to a producer of iron ore in a short time frame and we are looking to the investors to complete their due diligence and upgrade the funding status for our $300 million facility from “conditional” to “unconditional.
“We have always said that FairStar would move SHIP to production for the benefit of our loyal shareholders and I am pleased to say that today we stand on the threshold of accomplishing this very thing.”
FairStar said the $300 million facility will be used to commence construction and commission the SHIP plant in Western Australia’s Yilgarn region, fund infrastructure, provide further working capital and retire debt.
The facility will be repayable over ten years from first drawdown with iron ore.
Key features of the Innovative Debt Instrument include:
– Initial cash drawdown upon the facility becoming unconditional with further drawdowns over the following 15 months based on agreed budget and milestones;
– Debt repayable by the delivery of iron ore over a 10 year term; and
– Security is a mortgage over the SHIP mining tenements only.
FairStar plans to execute a three phase strategy at SHIP; the first phase will recover the project’s deposits of alluvial iron ore in a low cost mining operation, while the second phase will be a drill and blast operation for hard rock hematite, the third phase will be the recovery of magnetite.