Australian exploration company FairStar Resources has secured 80% or A$260m ($249m) funding for the development of its Steeple Hill Iron Project (SHIP) in Yilgarn region in Western Australia.

The irrevocable funding commitment received from Alliance Super Holdings will account for about 80% of the total capital required to develop the mine, and will allow SHIP to commence production through a 50/50 joint venture.

As part of the business plan, all the company’s debts will be retired, allowing FairStar to become debt free.

FairStar managing director Kevin Robertson said, "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."

The Perth-based company said that the funds secured in the latest deal will be used to begin construction and commissioning a plant at SHIP; fund infrastructure; and provide additional working capital for the JV.

The company is currently in talks with four potential firms to secure the remaining 20% funding as well as an offtake agreement covering about 80%of the initial 20 million tons (JORC – indicated minerai resource) and four million tons of ultra-fines at SHIP.

SHIP, which was discovered by FairStar in July 2008, will be developed in phases. The first development stage includes low cost recovery, washing and handling of surface (alluvial) high-grade iron ore from surface down to 11m.