Perth-based Indian sandalwood grower, TFS Corporation Ltd, has signed a five year deal with UK-based handmade cosmetics company Lush, for the supply of oil produced from TFS' plantations.
Key aspects of the agreement include the commencement of supply upon the availability of the first commercial quantities of oil from TFS's plantations, which is anticipated to occur by FY11, and for Lush to purchase a minimum of 1 tonne of oil and up to a maximum of 15 per cent of TFS's oil production, in each 12-month period.
Lush has agreed to create a new sandalwood-based product range using TFS's oil, for marketing throughout their worldwide retail network of 500 stores in 44 countries.
TFS will issue one million options to Lush, exercisable at $1.80 per share at any time within three years of the first commercial oil delivery.
"This is a landmark deal for TFS, which confirms the quality and appeal of our sandalwood product," said Frank Wilson, executive chairman.
"We are particularly pleased to have concluded it with a party of such high standing as Lush, whose ethical and socially responsible standards mirror those of TFS, as reflected in our commitment to the environmentally sustainable development of our plantations."
"We are also very pleased that the price struck under the Lush agreement reflects the conditions currently prevailing on the world market," Mr Wilson added.
Since establishing in 1995, Lush Cosmetics has pioneered beauty products such as the fizzing bath ballistic, shower jellies and butter creams and solid shampoo bars.
Lush places emphasis on fresh natural ingredients like organic fruits and vegetables and operates a strict policy against animal testing.
It supports Fair Trade and Community Trade initiatives and leads the cosmetics industry in combating over-packaging by running public awareness campaigns and developing products that can be sold 'naked' to the consumer without any packaging.
"Following on from the collaboration agreement struck with Albert Vieille last year, the supply agreement with Lush demonstrates that we are progressively putting in place the necessary steps to make the transition from pure plantation manager and owner, through to a vertically integrated oil producer with blue chip customers in the global fine fragrance and cosmetics industry," said Mr Wilson.
