The news sent FairStar shares soaring 70% higher today.

State-owned CSR Ziyang has agreed to provide the vendor financing for Steeple Hill’s rolling stock and associated rail infrastructure requirements in three tranches.

The first tranche will be for three locomotives and 132 wagons with a potential carrying capacity of up to 1.8 million tonnes per annum.

The linked infrastructure and the first train set have been budgeted for a value of about $106 million.

Additional locomotives and wagons will be purchased by FairStar once the project is in production to allow increased transport tonnage requirements of up to 5Mtpa.

FairStar had attempted to secure the entire project funding through several entities to no avail, later deciding to divide its funding needs for Steeple Hill across a number of parties.

The company emphasised that it retained full control of the project and that discussions regarding funding were progressing.

“This is a historic day for FairStar as we believe we have secured a good financial structure for the company,” managing director Keven Robertson said.

“The agreement with CSR Ziyang fulfils not only our first-stage rolling stock requirements, but also the additional required rail infrastructure for the project.”

Steeple Hill’s capital requirement is about $320 million.

Last year, FairStar announced it had secured 80% of funding for Steeple Hill through a $260 million commitment from Alliance Super Holdings, which would result in a 50:50 profit-sharing joint venture.

FairStar has, however, formally terminated the proposed JV after an evaluation by the company determined the transaction was not in its best long-term interest.

The deal with CSR includes a five-year repayment term with a two-year holiday.

Steeple Hill is about 100km east of Kalgoorlie in close proximity to major rail infrastructure, with heavy-quality Trans Australian Railway passing 24km south of the project area.

The company believes the project has the potential to produce direct shipping ore with grades of more than 60% iron.

CSR Ziyang is the largest locomotive manufacturer in China, with a production capacity of 400 locomotives per year and total assets of $658 million.

Shares in FairStar were last trading 71.4% up at 1.2c