Fairstar Resources has obtained an option agreement for the rights to a prospective iron ore find located at the Kurnalpi Randalls project in the eastern goldfields of Western Australia.

The agreement provides Fairstar with an option to purchase 50% of the tenement where the find was made.

Fairstar will transfer one million shares in Golden West Resources and issue 21 million paid ordinary shares as consideration to the private owner.

Fairstar can execute the option within one year and purchase the interests in the tenement for $1. The company has also consented to pay imminent small royalties for revenue obtained from the tenement.

The company completed a similar agreement with another private landholder for the other 50% of the tenement in May 2009.

The iron occurrence was found at the Lindsay Dam tenement, 110km south-east of Kalgoorlie in 2008, and is the first of its kind in the region, which was earlier known for its gold potential.