TORONTO, ONTARIO--(Marketwire - Oct. 26, 2012) - Migao Corporation (TSX:MGO), a China-based leading specialty potash fertilizer producer, announced today that its business continues to be impacted by the bottleneck associated with its co-product - hydrochloric acid ('HCl'). Weaker market demand for fertilizers in China during the summer months is also expected to impact the second quarter results.
As reported over the past several quarters, HCl demand has declined as a result of the ongoing decline in China's export market. Demand for products that use HCl as a raw material such as electronics, steel, and textiles has been severely impacted by the situation. The Company continues to study alternative applications and new industrial markets that require HCl.
Demand for the Company's fertilizer products - potassium sulphate, potassium nitrate and specialty NPK has been impacted by seasonality, which historically has not been a challenge. China's agricultural input sector, in moving to more managed inventory and delivery schedules based on seasonality is an example of China's continuing adoption of more sophisticated practices.
"Contract negotiations with new and recurring major customers are being signed and will result in improved production levels of potassium sulphate, potassium nitrate and our specialty compound fertilizers compared to the first half of fiscal 2013," said Mr. Liu Guocai, CEO of Migao. "As China's farms look for better economic returns, higher quality inputs, and access to best practices, Migao will continue to be a reliable source of products, information, training, and service which I believe ensures our relatively quick return to profitable operations as current challenging conditions improve."
Declining prices for fertilizers in China as reflected in world-wide pricing trends have also resulted, as expected and previously communicated to shareholders, in decreased margins. The Company typically trades potash opportunistically when market conditions provide for profitable transactions. Migao does not expect the sale of potash to contribute significantly to total revenue during the second quarter.
The Company is expecting to announce a quarterly dividend similar to the previous quarter's $0.015 per share quarterly dividend. Details will be provided with the second quarter results which are scheduled to be released on November 14, 2012.
Migao 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 fertilizer (potassium nitrate and potassium sulphate) 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.
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