ferrets stock to watch: territory iron ltd

Ferret's Stock to Watch: TERRITORY IRON LIMITED
09:19, Tuesday, February 13, 2007

NEW IRON ORE PRODUCER SPRINGING FROM PREVIOUS NT MINE

Sydney - Tuesday - February 13: (RWE Aust Business News)
********************************************************

OVERVIEW
********

More than 30 years ago the Ferret paid Frances Creek a visit
when it was in its heyday as an iron ore producer.

It quit around 1974 after prices tumbled and markets dried up
and the mine filled up with water.

Today it's ready to produce again, supported by the insatiable
China demand factor which is the main reason for its resurgence and of
course the high prices.

An an offshore buyer is prepared put down $30 million to ensure
Frances Creek is back in action.

Yesterday Territory Iron Ltd (ASX:TFE) announced to the ASX that
it has has agreed to place 60 million shares with Crawley Resources Ltd
at 50c each to raise $30 million.

Following completion of the placement, Crawley will have a 30.8
per cent shareholding in Territory.

The placement is expected to fully fund the estimated remaining
costs to bring Territory's Frances Creek iron ore project into
production, as well as allow exploration of the company's tenements in
the Northern Territory to be accelerated.

The company expects to be in production by the end of May, with
shipping scheduled in August.

Territory Iron aims to produce 1.5 million tonnes a year at full
production.

Crawley is a company jointly owned by Hong Kong-based Noble
Group Ltd and its associates, and Michael Kiernan.

Noble holds 70 per cent equity in Crawley, with the remaining 30
per cent owned by Mr Kiernan.

Noble is a market leader in managing the global supply chain of
agricultural, industrial and energy products.

It operates in over 42 countries, serving more than 3,000
customers.

In the directors' annual report for the December half year,
Territory Iron says it proceeding with the design and development of the
Frances Creek mine and related facilities whilst continuing its
exploration program to identify additional reserves and resources.

Agreements have been signed with the railway operators to
provide rail services for the transport of Territory iron product.

Sales agreements for the ore are in progress.

Mining and other operating contracts are under final negotiation
with short-listed contractors.

Work has begun at the port of Darwin with construction of the pad
for stockpiles now complete and design for conveyor systems nearing
completion.

Some construction and foundation work for the conveyor system
has commenced at the port.

SHARE PRICE MOVEMENTS
*********************

Shares of Territory Iron finished 7c higher at 46c yesterday.
Rolling high for the year is 49c and low 20c. The company has 92.7
million shares on issue with a market cap of $42.6 million.

The directors' report also disclosed that the company completed
exploration during the year with a total of 291 RC and diamond holes for
12,136 metres drilled at its Frances Creek and Mt Bundey projects.

The majority of the drilling was carried out at Frances Creek
where total indicated plus inferred resource was increased to 9.4
million tonnes at 60.9 per cent fe.

This was report up from 8.6 million from that reported in the
annual report.

The net loss for the half year to December was $848,630 (2005:
$2,673,163)

The lower loss reflected that exploration costs associated with
the Frances Creek project has not been expensed.

Net assets at December 31 were $17,156,005 (2005: $6,467,401)
including $9.4 million (2005: $5.4 million) in cash.

An the annual meeting chairman David Macoboy told shareholders
it had been about 18 months since Territory Iron was listed on the
Australian Stock Exchange.

One year ago, following the first six months of drilling, the
board anticipated that exploration efforts would confirm that sufficient
tonnes of marketable iron ore product would be discovered to justify
re-opening the Frances Creek mine in the Northern Territory.

By February this year it was determined that a profitable
project could be developed.

Since the decision to proceed to mining, the company has
continued with a successful drilling program to further add to the
resources and reserves at Frances Creek, and in April successfully raised
$12.6 million to that end.

The Frances Creek project enjoys huge advantages by way of
infrastructure - both at a regional level where rail and bulk handling
facilities are in place and locally where previous mining has provided
haul roads and water dams.

In addition, the nearby town of Pine Creek is highly suited to
housing workers at reasonable costs.

"We are encouraged by signs that the iron ore markets continue to
show strength," chairman David Macoboy told shareholders.

BACKGROUND
**********

Territory Iron joined the Australian Stock Exchange in March
2005.

The company has at least four project in focus but will not
necessarily restrict its activities to these projects as it evaluates
other opportunities as and when they arise.

These include:

* Frances Creek - prospectivity good to excellent. Prospective
areas: conversion of the deposits with 3.4 million tonnes of Inferred
Resource into Reserves, down dip and strike extensions within the 13
mined areas at Frances Creek mine site and at the 37 other deposits
known to occur within the project area, unexplored parts of the +30km
strike, particularly the largely ignored northern area and areas of
lower relief, areas ignored for higher P or lower Fe which now may be
marketable.

* Mt Bundey - prospectivity good to moderate. Iron skarn
mineralisation associated with granites. Frances Creek-style
mineralisation (ironstones) associated with sedimentary rocks.

* Rum Jungle - prospectivity high at Yarram, moderate at
Batchelor): Lodes A to D at Yarram, Goethite and limonite rich areas
which have not been previously recorded at Batchelor.

* Warrego - prospectivity High. High-grade magnetite
concentrates.

Initially a total of 50 million shares were issued at 20c to
raise $10 million in order to explore a portfolio of iron prospective
projects in the Northern Territory.

The company controls or has interests in tenements which have
potential to produce significant amounts of iron ore for the export
market. Iron ore was produced and exported up until 1974 from the old
Frances Creek mining centre within the Frances Creek Project area, when
flooding and consequent damage to infrastructure forced closure.

A number of changes in the past 30 years have made the revival
of this iron ore field potentially rewarding.

These include: new mining and processing equipment the
development of rail links within close proximity of Frances Creek, new
port facilities in Darwin, modern exploration techniques, including
airborne geophysics, and much improved market conditions.

Specifically therefore, the company's objectives are to: engage a
highly skilled team to explore and develop iron ore; focus initially on
the better areas which may lead to production in the near term; and
simultaneously explore the most prospective areas for production growth.

Success in the delineation of reserves may cause proposed
exploration plans to be amended with part or all of the funds raised
under the prospectus re-allocated to mining operations.

Territory Iron will seek to grow by further exploration and
acquisition of other projects should opportunities arise that fit the
company's growth strategy.

The world demand for iron ore is buoyant and iron ore prices
have recently increased, driven by a growing Chinese economy.

Demand in the Asian market is forecast to remain strong in the
near term.

Territory Iron, through its assets and a strong sales link into
China through one of its founding shareholders, OM Holdings Ltd, is
well positioned to take advantage of this market should a future mining
operation be established.

ENDS

Copyright © 2007 RWE Australian Business News. All rights reserved.