massive writeup in todays west

Tiddler Fairfstar in $US260m deal

Nick Evans, The West Australian June 6, 2013, 7:18 am

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Tiddler Fairfstar in $US260m deal

The West Australian ©

Shares in iron ore tiddler Fairstar Resources surged yesterday after it announced a potentially company-making deal in which a mystery investor would spend $US260 million ($272 million) to buy a half share in profits from Fairstar's Eastern Goldfields iron ore project.

It is the second time in 18 months that Fairstar, worth $22.7 million at a market close of 1.7� last night, has announced a funding package for its $320 million Steeple Hill iron ore project, 110km east of Kalgoorlie.

In November 2011 the company announced a $300 million debt package, but after more than a year of discussions with its then partners, the funding failed to materialise.

Fairstar managing director Kevin Robertson told _WestBusiness _ yesterday there was no chance the latest deal would follow a similar route. He said the company's due diligence had assured it that its mystery backer, Alliance Resources Group, had the financial capacity to close out the agreement.

While he would not name the ultimate backers of Alliance, which is operating through a series of Australian holding companies, because of confidentiality agreements, Mr Robertson said the group had done "billions of dollars" of financing work in Australia and overseas.

"We've been down a path of heartache for too long, and now we want to move forward," he said. "We've got everything ready to go, and all we needed was this money."

The Victoria-based holding companies being used by Alliance have only two directors, Kenneth Grimmond and Jeffrey Perrey.

Their ultimate local shareholders, Superkite and Kirep, have only one director, Sydney lawyer John Stammers.

Mr Robertson said the only conditions on the deal - a requirement for Fairstar to secure $64 million to fund 20 per cent of the project, and formal execution of the joint venture documents - posed little obstacle.

72e said Fairstar was in discussions with a number of parties for its share of development costs, with a focus on Asian groups interested in offtake agreements from Steeple Hill.

Mr Robertson said Steeple Hill could be in production within 18 months of closing the agreement, and the company planned to export at an initial rate of 1.8 million tonnes a year, ramping up to 3mtpa. He said Fairstar was confident it could access port space at Esperance Port in the near term, and was not reliant on construction of a much-delayed multi-user berth.

Fairstar, which raised $600,000 at 0.61¢ a share last week, jumped 0.6¢ yesterday to a close of 1.7¢.
We've done handstands and miracles to get this far with no money.