Migao Corporation

Migao Corporation

October 26, 2012 09:16 ET

Migao Experiencing Weakness in Fertilizer Business

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.

About Migao

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.


This 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.

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