THE BOURSE WHISPERER: FairStar Resources (ASX: FAS) has secured an irrevocable commitment for $260 million – equating to 80 per cent of funding for the company’s Steeple Hill Iron Project (SHIP), located in the Yilgarn region of Western Australia.
FairStar has struck the funding deal with Alliance Super Holdings, which the company said will transition SHIP to production via a 50/50 profit sharing Joint Venture.
FairStar indicated that as part of its business plan and budget, all the company’s debts will now be retired leaving it debt free.
The company has also secured a line of credit totalling $640 million above and beyond the $260 million invested in SHIP by Alliance, which it said was well in excess of the $320 million capital and funding requirements for the project.
FairStar has confirmed Alliance has the funds in place with the only outstanding requirements to meet being FairStar to secure its 20 per cent and the formal execution of the JV agreement.
The funds have already been earmarked to fund construction and commissioning of a plant at SHIP, as well as for associated infrastructure and working capital.
FairStar said it was already in negotiations with four parties to secure the remaining 20 per cent funding and an offtake agreement covering up to 80 per cent of the initial JORC code-compliant 20 million tonne Indicated Resource plus four million tonnes of ultra-fines.
“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 joint venture will have significant funding at its disposal well and above that required to transition SHIP into production,” FairStar Resources managing director Kevin Robertson said in the company’s announcement to the Australian Securities Exchange.
“This is a significant milestone for FairStar and the company wants to thank all its loyal shareholders for their continued support through some challenging times.”
The company expects the funding to enable it to continue its work of delineating the full mineral potential at SHIP.
JORC Resource drilling is also anticipated to commence at the company’s North SHIP tenement as soon as possible.
“A full program 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 SHIP,” Robertson said.
“The vast unlocked potential of our SHIP and North SHIP deposits means we are literally looking at the tip of the iceberg in terms of future value for the company.
“We are confident the Alliance Super Holdings transaction will put FairStar on the map as an emerging powerhouse in Western Australian resources.”