Bio-Extraction Inc.

Bio-Extraction Inc.

October 16, 2008 07:34 ET

BioExx Receives Project Funding Totalling $635,500

Detailed Saskatchewan Project Update Also Provided Highlights - $335,500 non-repayable grant from Agriculture Council of Saskatchewan Inc. - $300,000 deferred-payment loan from Ag-West Bio Inc. - Saskatoon Project Update -- Building construction on target for mid-November initial occupancy -- Phase I startup and product shipments on target for January 2009 -- New key managers hired - recruiting continues -- Economics remain strong as crush margins steady -- Plant to process Non-GMO seeds

SASKATOON, SASKATCHEWAN--(Marketwire - Oct. 16, 2008) - Bio-Extraction Inc. (TSX VENTURE:BXI)("BioExx") is pleased to announce that it has secured a further $635,000 of funding from two Saskatchewan-based organizations, for use towards the further development of its specialty canola protein products.

The first is a $335,500 non-repayable grant from Agriculture Council of Saskatchewan Inc. ("ACS"), under the Agriculture and Agri-Food Canada funded Advancing Canadian Agriculture and Agri-Food Saskatchewan (ACAAFS) Program, for use towards the further development of BioExx canola Protein Super-Concentrate products which BioExx expects to bring to market in early 2010.

The second is a $300,000 deferred-payment loan from Ag-West Bio Inc. to assist with ongoing development costs for canola protein Super-Concentrates and Isolates, including human food-uses. The loan bears interest at prime plus 2%, capped at 10%. No payments of interest or principal are required on the loan until 2012, and will then extend for three years. BioExx will pay a royalty to Ag-West of 0.5% of revenue for 5 years, beginning in 2010, with a proviso that total payments to AgWest through 2015 on account of principal, interest, and royalties will not exceed $600,000.

"We are very pleased to be recognized as a part of the very close knit agricultural product development community in Saskatoon. The team at Ag-West has been particularly supportive in assisting us from the beginning," says BioExx CEO, Chris Carl. "We have invested, and will continue to invest, significantly in R&D across the very broad and capable infrastructure in Saskatchewan, and we look forward to utilizing these funds to further extend our working relationship with the world class scientists at POS Pilot Plant Systems, Feeds Innovation Institute and the Prairie Swine Centre. For us, this is an important recognition of the unique and commercially valuable work that BioExx has engaged in. We intend to return these funds, many times over, throughout the agri-business value chain."


The Advancing Canadian Agriculture and Agri-Food (ACAAF) program is a five-year, $240 million program aimed at positioning Canada's agriculture and agri-food sector at the leading edge to seize new opportunities. Funding for the ACAAF program is provided by Agriculture and Agri-Food Canada (AAFC). Regionally, the Agriculture Council of Saskatchewan receives $3.7 million annually to deliver Saskatchewan's ACAAF program. The ACAAFS program is delivered under three pillars: Pillar One is Industry-led Solutions to Emerging Issues; Pillar Two is Capturing Market Opportunities by Advancing Research Results; and Pillar Three is Sharing Information to Advance the Sector. ACAAFS supports innovative agriculture related projects that enable a sustainable, well-diversified economy for the benefit of the industry and for the people of Saskatchewan and Canada.

About Ag-West

Ag-West Bio is a membership-based organization at the forefront of Saskatchewan's bioeconomy. They work as a catalyst for partnerships and industry growth through investments, aiding strategic alliances, providing regulatory support and communications. Membership includes over 80 corporations, associations and individuals representing natural health products and functional foods, bioproducts and bioprocesses, and agricultural biotechnology sectors. Ag-West Bio's mission is to lead and support the development of an economically viable biosciences cluster in Saskatchewan in a way that will translate into significant economic benefits and spin-offs to the Saskatchewan and Canadian economy. Ag-West Bio Inc. will expedite the commercialization of value-added products by linking knowledge and investment with science and enterprise in the development of products that satisfy market needs.

Saskatoon Canola Processing Facility Update

Building Construction

Construction of the 44,000 square foot building (see website for pictures) is proceeding on schedule and on budget with initial occupancy of the building by BioExx due in November. Shortly following occupancy, BioExx will begin receiving processing equipment. The company is well-funded and looks forward to completing installation and commissioning of equipment, to commence production on schedule in January, 2009.

Phased Start-Up to Commence mid-January 2009

The facility will be started in three phases including seed processing in mid-January, oil extraction in March and protein concentration in April or May. BioExx has a unique advantage over most plant start-ups in that 100% of the products produced at each phase are readily saleable, and if current industry prices and margins are maintained, sales may result in positive cash flow being generated during preliminary phases.

Phase I involves seed preparation and pressing; taking canola seed feedstock and pressing it to remove up to 85% of the oil. This produces a crude, expeller grade oil, and a high oil content meal (or "cake"). Both of these products are immediately saleable into BioExx markets as and when produced. Phase I is based on standard and well accepted equipment and processes, which have been widely used globally for decades. During this phase, a limited amount of cake will be further processed to produce Protein Concentrates utilizing the BioExx Intermediate Size Plant. Phase I should be operating at more than 80% capacity before Phase II commences.

Phase II is the extraction of the remaining oil from the Phase I press cake, based on the patented BioExx low-temperature oil extraction technology. The output from this phase will be a high quality Super Degummed canola oil, as well as a high quality, high-solubility protein canola meal. Current market prices and expected operating costs suggest that BioExx can earn a significant profit at the plant level based just on the sale of products derived from this phase.

Phase III is the separation of protein from the Phase II meal, to immediately produce high quality Protein Concentrates for sale into specialty feed markets, followed by a goal to introduce Super-Concentrates not later than early 2010 and then by Protein Isolates not later than early 2011. BioExx has a patent application pending for its unique method of processing oilseeds and then producing these specialty proteins, as well as the unique and high-value protein products that result.

This phased ramp-up plan maintains the target to be operating at or near full capacity around mid-year 2009, while at the same time substantially reducing the technical and start-up risks typically associated with new technology.

Recruiting of Key Personnel

BioExx has also recently successfully completed the recruiting for two important positions at its Saskatoon Plant. The role of Production and Maintenance Supervisor was filled by an individual with more than 10 years of production experience in the canola seed processing industry including a large scale plant commissioning and joins BioExx from one of the world's largest oilseed processing companies. The role of Quality Assurance Supervisor has been filled by an individual with over 5 years experience in Quality Control for one of Canada's largest food processing companies. Both individuals are bright, highly motivated individuals who join BioExx from existing roles at top tier companies in the industry. This gives BioExx reason to be optimistic about the hiring of the balance of its staff, which is slated to occur over the next twelve weeks.

Economic Stability of Profit Margins

BioExx is pleased to note that crush margins have remained healthy in the face of the steep general downturn in commodity prices. Conceptually, crush margins are a representation of the per tonne excess of output revenues (from oil and meal sales) less input costs (from seed purchases). Since these three items tend to change together, even in a declining commodity price market, margins can remain strong. The same can also hold true in strong commodity markets. BioExx believes that this provides the company with better earnings stability and insulation from the economic impact of constantly changing commodity prices by offering a long-term economic profile with less volatile margins than those of the underlying commodities. This stability is significantly enhanced when coupled with the substantial upside derived from the BioExx specialty proteins business opportunity.

BioExx to process non-GMO Seed

BioExx has worked with its contracted seed supplier, Viterra Inc. on a plan to have the Saskatoon plant utilize only seed varieties of the canola family that are not genetically modified. While no claim is made that these seeds are in any way superior to regular canola seeds, given the global perspective that BioExx has used to develop its business plan, and the desire to export its products into the highest value markets available, utilizing non-GMO seeds opens a greater number of market opportunities for the company and in some cases may also command a premium price.

About Bio-Extraction Inc.

Headquartered in Toronto, Canada, BioExx is a leading technology company focused on the extraction of oil and high-value proteins from oilseeds for the global food market. BioExx' patented technology allows for the use of significantly lower temperatures than conventional methods in extracting the active ingredients and oils from oilseeds, resulting in higher yields and higher-quality meal, oils and proteins. BioExx' low energy requirements, environmentally sound process, and high-yield production have the potential to make a valuable contribution in alleviating food crop scarcity.

BioExx is currently constructing its first commercial specialty extraction facility for processing canola to produce protein concentrates for the aquaculture and specialty animal feed markets, as well as canola oil and meal. The facility, located in Saskatoon, Saskatchewan, is expected to begin commercial operation by January 2009. To find out more about Bio-Extraction Inc. (TSX VENTURE:BXI), please visit our website at

The statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, the demand for BioExx' products, the availability of funding, and the anticipated costs of BioExx' plant construction and operation. These forward-looking statements are made as of the date hereof and BioExx does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from the BioExx' expectations and projections.

The TSX Venture Exchange has not reviewed this press release and neither approved nor disapproved the information contained in this press release.

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