Migao Corporation

Migao Corporation

March 15, 2011 07:30 ET

Migao Secures Long Term Potash Supply

TORONTO, ONTARIO--(Marketwire - March 15, 2011) - Migao Corporation (TSX:MGO), a leading producer of specialty potash fertilizers for the Chinese market, is pleased to announce an agreement with Potash Export Company for the supply of up to 500,000 tonnes of potash per year for ten years.

As part of the terms of the agreement, Migao will prepay USD $100 million, with further payments to be negotiated and advanced prior to the initial potash delivery in January 2013. Migao will receive preferential pricing on up to 500,000 tonnes of potash per year for 10 years. Preferential pricing will be determined based on a discount from certain and specific potash prices established between major potash suppliers and customers.

"This agreement secures our current and future potash needs at a meaningful discount to market prices," said Mr. Liu Guocai, Migao's CEO. "We believe this is the first such supply agreement in China with Potash Export Company and reinforces the strength of long-term relationships we have forged with our key suppliers."

Potash Export Company is a private entity established by Russian-based potash producers to market and distribute potash internationally. The potash supplied to Migao by Potash Export Company is meant for import into China exclusively.

"This commitment along with our planned and Board approved expansion plans are fully funded through existing cash and cash flow," continued Mr. Liu Guocai. "We feel this is the best use of our resources as a way to provide a compelling return as well as secure long term raw material needs."

By March 31, 2011, Migao's production capacity will be 380,000 tonnes per year of combined potassium nitrate and potassium sulphate, which requires approximately 300,000 tonnes of potash as raw material. Including new and planned specialty NPK facilities and other scheduled construction projects, Migao's capacity will be 570,000 tonnes by the end of calendar 2011.

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 potassium nitrate, potassium sulphate and specialty compound fertilizers to China's agricultural market. Migao Corporation is subject to, and complies with strict government regulations that govern safety, quality and environmental protection. 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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