sale to china, page-2

re: sale to china - great announcement Territory Iron signs MOU with Chinese steel mill


(RWE Australian Business News) Territory Iron Ltd (ASX code: TFE) has
signed a memorandum of understanding with a Chinese steel mill for the
purchase of most of Territory's 2007 iron ore production from the
Frances Creek operation in the Northern Territory.


Under the terms of the MOU, the undisclosed Chinese customer has agreed
to buy between 600,000 and 800,000 tonnes of iron ore.


The Frances Creek iron ore mine is 190 kilometres south of Darwin and
is expected to commence production in early 2007, building up to an
annual output of about 1.5 million tonnes.


Territory managing director Mr Doug Stewart said the price to be paid
by the Chinese for the iron ore would be settled at a later date.


"No-one will speculate now on what iron ore prices will be like in a
year's time," Mr Stewart said.


"Everyone's waiting for the current round of contract negotiations
between the Chinese and major mining companies to be completed.


"Under this MOU we've agreed to negotiate the price to be paid by the
Chinese at a time closer to when we begin production in 2007.


"We'll then have a better understanding of contract prices and the spot
market in relation to contract prices.


"Right now, they're unknowns.


"Importantly for us, this MOU means the bulk of our first year's
production from Frances Creek will be taken care of.


"It also means that the market is there for our product.


"This is an important development for the company as we progress to
producing iron ore from this historic mine," he said.


Mr Stewart recently returned from a week-long marketing trip to China,
where he spoke to steel mill operators and buyers.


He said the market for Australian iron ore remained buoyant and the
Chinese businessmen he spoke to expected iron ore prices to go up.


Shares in Territory Iron traded steady at 39c yesterday.