ELDERS are a step closer to selling its Indian Sandalwood assets in the Ord River irrigation area.

The company today told the stock exchange it had entered a conditional agreement with entities associated with Santanol Pty Ltd to sell the assets.

The move is another step in the company's plans to move out of forestry operations.

The agreement would include freehold properties in the Ord River irrigation area, standing timber, plant and equipment as well as assignment of leasehold interests.

The agreement is also for the conditional sale of MIS-grower owned Indian Sandalwood standing timber.

The agreement is subject to a number of conditions including approval from MIS growers and regulatory approvals.

The company expects the deal to be complete during the first quarter of next year.

The company said in a statement it hoped to "break even or better" and use the proceeds to reduce debt. 

The company reported earlier this year its net debt had been reduced to $373 million in March.