Press release from Marketwire
Hanfeng Expands Beidahuang Relationship
Monday, November 15, 2010
TORONTO, ONTARIO--(Marketwire - Nov. 15, 2010) - Hanfeng Evergreen Inc. ("Hanfeng") (TSX:HF), a leading provider of value-added fertilizers in China and South East Asia, today announced that it has signed a definitive agreement with Beidahuang Agriculture Company Limited ("Beidahuang") to establish a joint venture facility (the "Production JV"). The 150,000 metric tonnes per annum ("mtpa") slow and controlled release fertilizer project will consist of a 100,000 mtpa sulphur coated urea plant and a 50,000 mtpa bulk blending plant. The plant construction is expected to start in the first quarter of calendar 2011 and be completed within twelve months of commencement.
The estimated CAPEX for the 50/50 Production JV is $13.7 million ($6.95 million or RMB 45 million net to Hanfeng). Hanfeng will fund its portion with cash on hand and internally generated cash flow. The facility will be constructed within Beidahuang's Haolianghe Fertilizer Plant ("Haolianghe Urea Plant") in northern Heilongjiang province. After the construction is completed, all products from the Production JV will be sold to the 104 farms in the Beidahuang Reclamation Area. The Haolianghe Urea Plant has urea production capacity of 300,000 mtpa, which will guarantee a supply of raw material to the Production JV.
"Our relationship with Beidahuang is far more substantial than other partnerships we have entered into within China," stated Xinduo Yu, president and CEO of Hanfeng. "Administered directly by the central government of China, Beidahuang's farming and food production is part of the country's reserve program. Utilizing the most advanced farming technology, Beidahuang has a direct mandate from the central government to increase yield in support of the food reserve program. We believe Beidahuang represents a significant opportunity for Hanfeng to reach end markets rapidly."
As previously announced, Hanfeng has committed to up to 200,000 tonnes in fertilizer sales to Beidahuang during the first year of its Distribution Joint Venture (see news release dated October 4, 2010). Beidahuang's farms consume approximately 1.4 million tonnes of fertilizer annually, which represents a significant portion of the consumption in Heilongjiang province. To meet its first year commitment, Hanfeng began producing fertilizers to Beidahuang's specifications, for future delivery, in the Company's first fiscal quarter (ended September 30, 2010).
"Numerous field trial results have proved that Hanfeng's superior slow release fertilizer technologies and its environmental friendly, highly efficient, low carbon value-added fertilizers are extremely suitable for large scale applications," stated Ding Xiaofeng, CEO of Beidahuang. "Beidahuang is one of the three major reclamation systems responsible directly for the central government's mission of guaranteeing food safety. Hanfeng's recent receipt of China's National Environmental Friendly Ecological Fertilizer Certificate further supported our decision to introduce Hanfeng value-added fertilizers throughout the Beidahuang Reclamation Area. We are currently reviewing the production capacity at our Haolianghe Urea Plant with a view towards expansion, and are confident that our new Production JV with Hanfeng is the first step in a much larger project."
About Hanfeng Evergreen Inc.
Hanfeng is the largest producer of slow and controlled release fertilizers in China. It was the first company to introduce the concept of slow and controlled release fertilizers into China's agriculture market with its establishment of the first commercial scale production in China. The Company's production facilities are located in prime agricultural regions of China. Hanfeng has recently completed its first production facility outside China. Located in Surabaya, Indonesia, the facility will service the growing South East Asian market. Hanfeng is headquartered in Toronto, Ontario and its shares trade on the Toronto Stock Exchange. www.hanfengevergreen.com.
This press release contains forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Risks and uncertainties about Hanfeng's business are more fully discussed in the Company's disclosure materials, including its annual information form and MD&A, filed with the securities regulatory authorities in Canada. All amounts are stated in Canadian dollars except for noted otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
Paul Begin Hanfeng Evergreen Inc. Chief Financial Officer (416) 368-8588 firstname.lastname@example.org
Kevin O'Connor Hanfeng Evergreen Inc. Investor Relations (416) 962-3300 email@example.com