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TFS Corporation Ltd ABN 97 092 200 854

254 Adelaide Terrace Perth WA 6000 PO Box 3068 East St Georges Terrace Perth WA 6832 Tel 618 9221 9466 Fax 618 9221 9477 Email tfs@tfsltd.com.au Web www.tfsltd.com.au

TFS UPGRADES FY07 SALES EXPECTATIONS AND SIGNS CONDITIONAL CONTRACTTO SIGNIFICANTLY INCREASE LAND BANK

TFS Corporation (TFS), the Western Australian-based Indian sandalwood grower, is pleased toannounce an increase in anticipated sales in FY07 and the companys signing of a conditional contractthat, if completed, will materially extend the companys land bank for the purposes of Indian sandalwoodcultivation.

FY07 Sales Update

Based on the companys improved sales and marketing distribution network, and the recently completedupgrade of its Kununurra operations and related infrastructure, TFS advises that it now anticipates sales

of approximately 375 hectares of Indian sandalwood in FY07. This would represent an increase of nearly15% over the 326.5 hectares of sales concluded in FY06 and compares to previous guidance for FY07of 325 hectares. As with prior periods, the majority of the sales will occur in the second half of the year.

TFS Chairman Frank Wilson said: We are confident that we can meet this increased sales target for FY07 given the oversubscribed response to our TFS 2006 Indian sandalwood project, our improvedmarket penetration on the east coast of Australia and the increased capability of our Kununurraoperation. We are also encouraged by the recent sample testing of our plantations, as first announcedon 9 October 2006, which supports the predicted heartwood yield of our sandalwood trees.

Land Purchase

All of the companys existing land bank and plantation operations lie in the Kununurra region of Stage 1of the Ord River Irrigation Area (ORIA), in Western Australia. This region offers ideal growing conditionsfor Indian sandalwood, with its tropical climate, abundant water, fertile clay-based soils, absence of natural predators and suitable distance away from cyclone-bearing locations.

TFS currently has 840 hectares under plantation in the ORIA. It also has a further 775 hectares of landavailable, which it is anticipated will be sufficient for planned new plantings through to the end of calendar 2008.

The company is actively seeking both land leases and land purchases in Kununurra. It has also lodgedan expression of interest in acquiring land in Stage 2 of the ORIA, which is currently at the developmentproposal stage but not expected to be approved in the immediate future.

TFS has today entered into a conditional contract for the purchase of Kingston Rest, an operating hayand cattle farm some 66 kilometres south of Kununurra. The property comprises 2,400 hectares of freehold land, 1,200 hectares of pastoral leasehold land and a 3,200 hectare dam with a current capacityof 65 gigalitres. At least 1,900 hectares of the land has been identified as being suitable for the growth of Indian sandalwood.

Total consideration of $18.05 million includes $0.9 million in respect of plant and equipment and, subjectto satisfaction of the attached conditions, will be paid over the following timeframe:

Deposit payment of $1.5 million, of which $25,000 is payable now and $1.475 million upon thecontract becoming unconditional

$2 million on 28 February 2007 $3 million on 31 May 2007 Balance of $11.55 million payable on 1 July 2007

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The contract is conditional upon TFS undertaking a full due diligence to its satisfaction on the property,plant and farming operations and being satisfied that the property is suitable for the development of Indian sandalwood plantations. It is also subject to obtaining a number of necessary approvals within 60days, the most significant of which are Environmental Protection Authority (EPA) approval of landclearing for sandalwood cultivation and the granting of a water licence by the local water authority.

Whilst it is the companys intention to investigate all options with regards to the land unsuitable for Indiansandalwood, early indications are that income from existing farming operations is sufficient to cover holding costs associated with the purchase.

It is the companys intention to fully debt-fund the purchase of the Kingston Rest property, facilitated byTFSs lowly-geared balance sheet and planned cash flow initiatives. The company will be entering into apartial securitisation of its loan book, which is expected to raise $10 million by March 2007, and hasrecently reached agreement with external financiers for the financing of its FY07 sales, which isexpected to release $10 million of additional cash flow by 31 July 2007.

This purchase represents an attractive opportunity to materially extend our land bank, said Mr Wilson.

The property boasts important attributes, with a significant discrete area of land and ample availability of water. We are also acquiring it at a price which compares favourably with both our own past landpurchases and, more particularly, current land values in the region.

For further information, please contact:

Quentin MegsonChief Financial Officer TFS CorporationTel.: +61 8 9221 9466

About TFS Corporation Ltd

TFS Corporation Ltd (ASX: TFC) is an owner and manager of Indian sandalwood plantations in the eastKimberley region of Western Australia. As part of its vision to be a vertically integrated producer of finished sandalwood products, TFS owns a significant proportion of the plantations in its own right. Themajority of the plantations are managed on behalf of investors in Managed Investments Schemesregulated by ASIC and the ATO.

TFS was founded in 1997 to capitalise upon the success of government trials into the plantation growthof Indian sandalwood in the Ord River Irrigation Area (ORIA) of north-east Western Australia.

TFSs first planting was in 1999 and it now manages the largest area of Indian sandalwood plantation inthe world, with 840 hectares planted on behalf of nearly 600 growers. TFS and its directors own around50% of the total plantations.

The company listed on the Australian Stock Exchange in December 2004 and has a current marketcapitalisation of approximately $73 million.

TFS is committed to adopting and maintaining the highest environmental and ethicalstandards in all aspects of its business. All plantations are grown on land that has previouslybeen used for agricultural or horticultural production.

TFSs plantations will arrest the decline of this very valuable species. The deep-rooted nature of thetrees will also help to lower the water table in the ORIA and assist in counteracting local salinityproblems.

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About Indian Sandalwood

Indian sandalwood has a history as a tradeable commodity spanning thousands of years, but is nowendangered due to the illegal harvest of wild trees throughout the world. As a result, Indian sandalwoodis the worlds most expensive tropical hardwood and continues to increase in price each year. Itsheartwood currently trades for $A105,000 per tonne on average, having risen at a compounding rate of 18% per annum over the past 15 years.

Indian sandalwood is an important ingredient in cosmetics and toiletries (perfumes and fragrances),incense sticks, high quality carvings and for medicinal purposes (aromatherapy and Chinese medicine).Indian sandalwood has a well entrenched market throughout the world. This is particularly so in Indiaand China, which are two of the fastest growing economies in the world.

For more information, please visit www.tfsltd.com.au

http://www.tfsltd.com.au/http://www.tfsltd.com.au/