Hanfeng Evergreen Inc.

Hanfeng Evergreen Inc.

December 20, 2010 08:00 ET

Hanfeng and FBSciences to Create Joint Venture for CarbonPower® in China

-- Expanded product offering of CarbonPower® liquid fertilizers expected to accelerate market penetration and address importation issues --

-- Joint Venture to utilize portion of Jiangsu facility --

-- Most recent CarbonPower® shipment received as scheduled --

TORONTO, ONTARIO--(Marketwire - Dec. 20, 2010) - Hanfeng Evergreen Inc. ("Hanfeng" or the "Company") (TSX:HF), a leading provider of value-added fertilizers in China and South East Asia, today announced that it has entered into a memorandum of understanding ("MOU") with Tennessee-based FBSciences, Inc. ("FBSciences"), a global agri-technology company, to establish a joint venture (the "China JV") for the production of high value-added liquid fertilizer products under license from FBSciences, or products to be jointly developed by FBSciences and Hanfeng, and utilizing FBSciences' CarbonPower® core technology. The China JV will be owned 95 percent by Hanfeng and 5 percent by FBSciences. Both parties believe the China JV structure will expedite the penetration of various CarbonPower® products into the China market. The operations for the proposed China JV will be located at the Company's Jiangsu facility and will utilize the building and infrastructure associated with the NPK Prill Tower which will be shut down. A definitive agreement is expected to be completed soon. 

Once completed, the China JV will import CarbonPower® as a raw material for value-added fertilizer products, and is expected to standardize the future importation process of CarbonPower® into China. The CarbonPower® product is a superior value-added fertilizer technology that Hanfeng successfully introduced to the China market. Hanfeng is combining its research and development with foreign advanced technologies to find the best formula for China's agricultural needs, enhancing its leadership position in the fertilizer industry. FBSciences and Hanfeng have worked collaboratively during this period to identify additional commercial applications in the Chinese market for CarbonPower® other than as an additive to urea. Under the China JV, Hanfeng and FBSciences will produce foliar products, fertigation fertilizers and other value-added liquid fertilizer products that will combine CarbonPower® with other micronutrients such as zinc, boron and magnesium, which are in high demand due to significant deficiencies of these minerals in the soil in certain regions of China. 

China is also among the various countries that are experiencing severe water deficiency. Currently, the water levels in five provinces in central China have decreased by over 100 meters and are continuing to decline. As a result, the Chinese government is promoting water conservation by including in the "Twelfth Five Year Plan" the initiative of "developing water-saving agriculture practices" and encouraging the conversion of field management practices. This initiative creates an opportunity for high value-added liquid fertilizer products which require significantly less water, are energy efficient and environmentally friendly. 

The China JV will utilize the existing NPK Prill Tower infrastructure for the production and bottling of the new products, thereby significantly reducing the capital required for setting up the new joint venture project, which is now expected to be less than $0.5 million. The Company expects to incur a non cash fixed asset impairment charge of approximately $5.0 million during the second quarter of fiscal 2011 relating to the net book value of the NPK Prill tower assets. 

A portion of the products from the China JV will be sold to conventional fertilizer producers and large scale distributors while other high-end products will be sold directly to large scale farms in China, such as Beidahuang to meet its highly automated fertilization needs. Hanfeng believes this is the best way to leverage its existing distribution channels to accelerate market penetration of the new line of products. 

"In a very short time, CarbonPower® has established a very strong track record of consistent performance on a variety of crops," stated Xinduo Yu, President and CEO of Hanfeng. "It is a highly complementary product to our slow and controlled release products and has produced exceptional results in field trials when the two products are used together. Adding the high value-added liquid fertilizer products to our portfolio will open new markets, and introduce new high value-added fertilizers to the field crops of China. The preliminary foliar application field trials conducted in the Beidahuang reclamation area have achieved impressive results, and CarbonPower® products are expected to be applied in large quantities on the farms of the Beidahuang reclamation area in the upcoming year. We fully expect that the replacement of the Prill Tower production with the high value-added liquid fertilizer products will be accretive to future earnings."

Hanfeng is also pleased to announce that it has received its scheduled shipment of CarbonPower® without delay. As previously reported, the Company had experienced some importation challenges with the product and had recently taken steps to improve the process. Hanfeng expects that the steps taken to date including the establishment of the China JV will address future importation issues. 

About FBSciences, Inc.

FBSciences, Inc., is an agricultural technology company committed to helping growers around the world achieve optimal plant health and performance through innovative, scientific principles. Products from FBSciences utilize an innovative and proprietary technology that enables superior nutrient uptake and mobility by crops. FBSciences is headquartered in Collierville, Tennessee. For more information on FBSciences, visit www.FBSciences.com.

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. Forward looking statements include, without limitation, statements evaluating market and general economic conditions, and statements regarding growth strategy and future-oriented projected revenue, costs and expenditures. Actual results could differ materially from those projected and should not be relied upon as a prediction of future events. A variety of inherent risks, uncertainties and factors, many of which are beyond Hanfeng's control, affect the operations, performance and results of Hanfeng and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. Some of these risks, uncertainties and factors include the impact or unanticipated impact of: current, pending and proposed legislative or regulatory developments in the jurisdictions where Hanfeng operates, in particular in China and the Republic of Indonesia; changes in tax laws; political conditions and developments; intensifying competition from established competitors and new entrants in the fertilizer industries; technological change; currency value fluctuation and changes in foreign exchange restrictions; changes in Chinese government support or restrictions on foreign investment; general economic conditions worldwide, as well as in China and South East Asia; Hanfeng's success in developing and introducing new products and services, constructing and operating new manufacturing facilities, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels. This list is not exhaustive of the factors that may affect any of Hanfeng's 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. Hanfeng undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results or for any other reason. Readers are cautioned not to put undue reliance on forward-looking statements.

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