17/08/2006 - 11:48

Aztec signs sales contract with Chinese shareholder

17/08/2006 - 11:48

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South Perth-based iron ore company Aztec Resources Ltd has signed a sales contract with one of its shareholders, China-based CITIC Australia Commodity Trading Ltd.

Aztec signs sales contract with Chinese shareholder

South Perth-based iron ore company Aztec Resources Ltd has signed a sales contract with one of its shareholders, China-based CITIC Australia Commodity Trading Ltd.

The contract, for ore from the company's Koolan Island iron ore project, is for 1.5 millon tonnes per annum for up to 15 years, or the life of the mine. Sales will be prorated should Koolan's production fall below the expected full production rate of 4 million tonnes pa.

In an announcement to the market Aztec said the prices would be based on the annual benchmark price negotiated by Pilbara producers for equivalent iron ore products.

Aztec also confirmed that it was looking for other buyers for the remaining Koolan iron ore deposits.

 

 

The full announcement is pasted below

Aztec Resources Limited (ASX and AIM code: AZR) ("Aztec") is pleased to announce the signing of its first long term sales contract for Koolan Island iron ore with CITIC Australia Commodity Trading Pty Ltd, the operating subsidiary of CITIC Australia Trading Limited (ASX code: CAL).

CITIC Australia Trading Limited is part of the CITIC Group, one of China's largest state-owned enterprises and headquartered in Beijing.

Broad terms of the sales contract include:

- Nominal annual sale of 1.5 million tonnes at full production rate of 4 million tonnes per annum for up to 15 years or the life of the mine, whichever is less. At production rate of less than 4 million tonnes per annum sales are prorated.

- Prices are based on the annual benchmark price negotiated by the major Pilbara producers for equivalent iron ore products.

CITIC Australia Trading Limited Chairman Mr Chen Zeng said CITIC was pleased to be the first party to sign a sales agreement from one of Australia's most historic iron ore mines.

"The average grade of Koolan Island iron ore at over 64% iron is attractive to the Chinese market, and we are pleased to be the first to conclude a long term sales contract with Aztec. We also wish to acknowledge the professional approach from Aztec's management in concluding these important negotiations and enhancing the great relationship between CITIC and Aztec," Mr Zeng said.

Chairman Ian Burston said the first sales contract was a significant milestone in the rebirth of Koolan Island.

"CITIC Resources Australia has been a strategic shareholder in Aztec from the earliest stages of the Koolan Island iron ore project. This support has culminated in the signing of Aztec's first long term sales contract and represents an important step in the development of Australia's next iron ore mine," Mr Burston said.

The Company advises that additional sales contracts are currently under negotiation to cover the balance of the planned annual production of four million tonnes.

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