The prospective buyer is "a respected European multi-national distributor of dairy products", says HVN.
It says as a result, 34% of the spray drying plant's total production capacity and 50% of anhydrous milk fat (AMF) production capacity has now been committed.
Once operational, the new milk plant will have capacity to produce 35,000 metrict tonnes of nutritional powders and 6,000 MT of AMF.
In June, HVN had announced that it had secured two conditional supply agreements for up to 9,800 MT of nutritional milk powders for export markets.
In a statement to the Australian Stock Exchange, HVN says it continues positive discussions with a range of potential financers, including strategic equity investors, industry participants and debt providers.
Additional supply agreements are also being actively pursued with new and existing parties.
HVN chief executive officer Greg Wood says there are four key pillars that form the basis for delivery of this state-of-the-art facility - customer certainty, milk supply, financing, and product quality.
He says the latest supply agreement clearly reflects progress of this strategy.
"Our main priority at this time is securing the necessary finance to commence plant construction. The announcement assists us in this regard."
The project has been in the pipeline for several years as HVN sought resource consents and funding. Covid-19 has also delayed the project by a few years.
In February, Happy Valley announced that it had taken out a $13m loan and secured $7.4m through secured private placement of convertible notes. The money was used to buy strategic farmland to irrigate wastewater from the plant.
HVN plans to develop a single dryer facility with the site masterplanned to allow for the addition of an extra drier as well as a blending and canning plant.