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Press release from Marketwire

Migao Reports Third Quarter, Fiscal 2011 Financial Results

- Strong Gross Margin Highlights Quarter - - Production Volumes Set To Increase For Balance of Year -

Thursday, February 10, 2011

Migao Reports Third Quarter, Fiscal 2011 Financial Results07:00 EST Thursday, February 10, 2011TORONTO, ONTARIO--(Marketwire - Feb. 10, 2011) -Migao Corporation (TSX:MGO), a China-based leading specialty potash fertilizer producer, today reported financial results for the three and nine-month periods ended December 31, 2010. Migao reported revenues of $64.6 million (RMB 424.7 million) for the 3-months ended December 31, 2010 as compared to revenues of $67.0 million (RMB 433.3 million) for the three-month period ended December 31, 2009. The decrease is attributed to lower sales volumes of the Company's non-core products including potassium chloride and value added potassium chloride as well as low grade potassium sulphate. For the nine months ended December 31, 2010, revenue increased to $199.3 million (RMB 1,310.6 million) compared to $193.6 million (RMB 1,199.4 million) for the same period of fiscal 2010. For the quarter, the Company reported net income of $8.3 million or $0.16 per basic share as compared to net income of $8.7 million or $0.18 per basic share for the same quarter last year. The net income decline is attributed to an increased number of shares outstanding due to the December 10, 2009 bought deal public financing. Also impacting earnings are preproduction costs both associated with the SQM joint venture and the Shanghai facility as well as increased natural gas pricing which directly increased cost and indirectly increased cost for raw materials that are derived from natural gas. Lastly, higher effective tax rates also contributed to the decrease in net earnings compared to the same periods last year. The current quarter ending March 31, 2011 is realizing increased volumes and prices as selling prices have been adjusted upward to reflect the increased raw material costs and sales from the Company's new joint venture potassium nitrate facility in Sichuan Province will be recognized in the current quarter. The Company expects continued strong profit margin for the balance of the year.SUMMARY FINANCIAL STATEMENTS 3 months ended December 31, 20103 months ended December 31, 2009($'000)Sales64,60467,034Gross Profit16,55615,607Gross Profit (% of revenue)25.6%23.3%Net Income8,3148,706EBITDA11,96211,618Basic EPS0.160.18Diluted EPS0.160.18Weighted average number of shares (in millions of shares)Basic52.247.5Diluted52.648.0Balance Sheet Highlights($'000)December 31, 2010March 31, 2010Current ratio3.41:13.52:1Cash75,82260,221Net Cash28,99718,790Working Capital206,757189,451Total Assets385,178343,976Total Debt85,97975,470Total Equity298,994268,506Long Term Bank Debt to Equity Ratio0:10:1"We are pleased with our operations during the quarter. Improvements to pricing and demand indicated throughout the fertilizer industry over the past couple of months will positively influence the current quarter as prices for the period ended December 31, 2010 do not reflect these price increases due to prior sales commitments," said Mr. Liu Guocai, President and CEO of Migao. "We do expect increased sales volume for the fourth quarter including new production from our joint venture with SQM as well as the likelihood of delivering product at the end of March from our new Shanghai facility." Migao's gross profit margin was 25.6% of revenue for the third quarter, exceeding the targeted 22-24% range. Gross margin for the first nine months of fiscal 2011 also exceeded expectations at 25.3%. The improved gross margin is a result of favourably priced purchases of the raw material potassium chloride, combined with increased selling prices of finished goods. EBITDA for the third quarter of fiscal 2011 increased to $11.9 million or 18.5% of revenues versus $11.6 million or 17.3% of revenues for the same period last year. As at December 31, 2010, Migao had 420,000 tonnes of annual combined core product and specialty compound fertilizer production capacity. Subsequent to the end of the quarter, the Company announced the startup of production at its new 40,000 tonne per year potassium nitrate joint venture with SQM and the expected completion in March of a 40,000 tonne per year potassium sulphate facility in Shanghai. Along with the SQM and Shanghai facilities, Migao also announced plans to construct 100,000 tonnes per year of specialty compound fertilizers in Zunyi, to be built in two phases over 2011 and 2012. With the addition of the new facilities, Migao's production capacity increases nearly 40% to 580,000 tonnes per year. At the end of the period, the Company had $60.0 million (178,641 tonnes) of potassium chloride inventory with an average delivered price of $336 per tonne, of which 119,878 tonnes were on hand with the remainder being in transit. In addition, during the quarter, the Company sold 18,127 tonnes of potassium nitrate, 58,931 tonnes of potassium sulphate, 4,683 tonnes of potassium chloride, and at the end of the period, the Company had $6.9 million (33,432 tonnes) of finished goods inventory on hand, including co-products. At December 31, 2010, Migao reported cash and equivalents of $77.0 million and working capital of $203.1 million. Conference CallMigao will be hosting a conference call to discuss the year-end results at 10:00am, Eastern Time, Thursday February 10, 2011. The details are as follows:Dial in number: 416-340-2218 or 1-866-226-1793Taped replay (until February 24, 2011): 905-694-9451 or 1-800-408-3053 Taped replay access code: 4482045#Appointment of DirectorMigao Corporation is also pleased to announce the appointment of Mr. Wu Jianmin to the Board of Directors. Mr. Wu currently is the COO and Director of Meize New Energy Ltd., a private wind blade manufacturing company in China. He is also an Executive Director of Shenyang Yutao Investment Consultant Company Ltd. and an Independent Director of A-Power Energy Generation Systems, Ltd (NASDAQ: APWR). He was instrumental in assisting Migao with its public listing process, working with the Chinese government, and various Canadian regulatory bodies to ensure the successful listing of Migao in May 2006. Previously he was Chief Representative of Hutai Securities Co., Ltd. He was also previously an Independent Director of Fushun Special Steel (listed on the Shanghai Stock Exchange). Mr. Wu has a degree in applied computer science and a Master's degree in electrical engineering from the University of Technology in Dalian. About MigaoMigao Corporation, through its wholly owned subsidiaries, owns and operates fertilizer production plants in various strategic locations across China for the production and sale of specialty potash fertilizers including potassium nitrate, potassium sulphate, specialty compounds, and value-added potassium chloride to China's agricultural market. Migao Corporation is subject to, and complies with strict government regulations that govern safety, quality and environmental protection. Migao's Sichuan facility is ISO 14001 certified, an international environmental management standard. Please visit www.migaocorp.com for further information.CAUTION REGARDING FORWARD-LOOKING STATEMENTSThis news release may include forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario) and other provincial securities laws in Canada. These forward-looking statements include, among others, statements with respect to our objectives and goals, and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", and "continue" (or the negative or grammatical variations thereof), and words and expressions of similar meaning, are intended to identify forward-looking statements.By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results, performance or achievements may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on forward-looking statements as a number of important factors, many of which are beyond our control, could cause actual results, performance or achievements to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors that relate to our company include, but are not limited to: risks related to raw materials; execution of the business plan; expansion plans; dependence on key personnel; key relationships; dependence on key customers; dependence on key suppliers; competition; market factors and volatility of commodity prices; environmental risks and hazards; operating risks; proprietary rights; infrastructure; future capital requirements; technical substitution; exchange rate fluctuations; insurance; foreign operations; tobacco industry considerations; weather conditions and natural disasters; control by management; seasonality; dividends; conflicts of interest; global financial conditions; and the implementation of the Labour Contract Law in the People's Republic of China in 2008. In addition to the foregoing risk factors, there are also risks related to doing business in China which include, but are not limited to: state ownership; government sector intervention; foreign investment; repatriation of profit and currency conversion; tax; shareholders' rights and enforcement of judgements; developing legal system; protection of intellectual property rights; permits and business licenses; appropriation; and availability of land. Should one or more of these factors materialize, or should our estimates or underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from those described in forward-looking statements.We caution that the foregoing list of important factors that may affect our future results, performance or achievements is not exhaustive. When reviewing our forward-looking statements, readers should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found under the "Risk Factors" sections in our Annual Information Form and annual MD&A and elsewhere in our filings with Canadian securities regulatory authorities. Except as required by Canadian securities laws, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made. We cannot assure readers that actual results, performance and achievements will be consistent with these forward-looking statements, and the differences may be material. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.To be added to Migao's email distribution list for news releases or to be removed from the list, please send a request to info@migaocorp.com. FOR FURTHER INFORMATION PLEASE CONTACT: Jay HusseyMigao CorporationVice President Corporate Finance416-869-1108 ext. 104jay.hussey@migaocorp.comORRandall SmallboneMigao CorporationChief Financial Officer416-869-1108 ext. 103randall.smallbone@migaocorp.com