Extended negotiations have no impact on off-take: Fortescue

Fortescue Metals Group Ltd has confirmed the extension of negotiations with Chinese steel mill Baosteel Trading Co Ltd over a possible Pilbara iron ore joint venture does not impact on an off-take agreement signed between the two companies.

Fortescue said on Friday that the two parties had agreed to extend the completion date for the potential development of a magnetite deposit in the Pilbara region of Western Australia.

The parties began discussions about a joint venture in March after Fortescue inked an offtake agreement with Baosteel - China's largest steel mill - for output from its flagship Chichester Range project.

No regulatory approval or consent is required for the extension

The full text of a company announcement is pasted below

Fortescue Metals Group Ltd ("Fortescue") would like to comment on the incorrect reporting of its announcement last Friday as to the 90 day extension of its Memorandum of Understanding "MOU" negotiations with Baosteel Trading Co Ltd ("Baosteel").

Contrary to a media report in the weekend press, this mutual 90 day extension does not in any way impact on the off-take agreement with Baosteel for up to 20 million tonnes of iron ore from Fortescue's Chichester Range mining operations. Further the extension is in no way requiring of any regulatory approval or consent - it is simply an agreement between the parties.

As announced to the market on 26 March 2007, Fortescue signed two agreements with Baosteel with one covering the hematite iron ore off-take commitment and the other a MOU for the joint development of a potential magnetite deposit. The off-take agreement was signed as a separate contract and was in final form. The agreement iscompletely distinct from the MOU and not referenced within the MOU.

The formalisation of the MOU into a Joint Venture Agreement is progressing well however additional time is required by both parties to ensure the details of the exploration program and general development activities are able to be more precisely defined. Under mutual agreement, the time to allow for this has been extended by up to 90 days.