BEIJING, March 12 /PRNewswire-Asia-FirstCall/ -- Yongye International, Inc. (Nasdaq: YONG), ("Yongye or "the Company")a leading developer, manufacturer, and distributor of Shengmingsu brand plant and animal nutrient products in the People's Republic of China (PRC), today announced its operating entity in China,
The preliminary agreement with Wuchuan Shuntong Humic Acid Trading Company Limited ("Shuntong") provides for the acquisition of Shuntong's development rights to a currently undeveloped lignite coal resource project located in Wuchuan County, a suburb located outside the city of Hohhot, Inner Mongolia, where the company's major operations reside in the PRC. According to a third party valuation report, the project area is estimated to contain over 40 million square meters of surface level lignite coal which can supply the company's long term needs. According to the agreement, Nongfeng will pay Shuntong RMB240 million ($35.1 million) to acquire the development rights for this project. In addition to this, Nongfeng plans to build a new factory with 20,000 tons of plant nutrient product and 10,000 tons animal nutrient product annual capacity in a nearby economic development zone located near the coal resources project. According to government regulations, the acquisition will not be completed until Nongfeng makes full payment to Shuntong and receives in return the full, unencumbered title to the development rights.
"Acquiring this lignite coal resource is of great strategic importance to us and is in line with our overall plan. In our operations, humic Acid, which is extracted from lignite coal, is the most significant cost component and it is important to secure this lignite coal resource at a cost effective price. Once this acquisition is complete, Yongye's fast growing Shengmingsu business won't be subject to market price fluctuation of this key raw material," said Mr. Zishen Wu, Chief Executive Officer. "Once our new factory becomes fully operational, we expect higher gross margin due to the benefit of this vertical integration."
Yongye also plans to build a new manufacturing facility in an economic development zone which is in close proximity to the Lignite Coal Project. This new factory is expected to be capable of extracting humic acid from lignite coal and producing 20,000 tons per year of the Company's liquid plant product and 10,000 tons per year of its powder animal product.
Mr. Wu added, "Our current manufacturing facility operates at almost full capacity to meet peak season demand and inventory requirements. Our new factory will therefore help us continue to grow our business to meet the strong demand for our product in the domestic agricultural market in China. In addition, we believe that our new factory, once complete, will lead to significant cost savings by more tightly integrating the production of humic acid with our fulvic acid extraction process. We expect higher gross margins and increased profitability due to the benefits from this vertical integration."
About Yongye International, Inc.
Yongye International, Inc., headquartered in Beijing, is engaged in the development, manufacturing, distribution and sales of Shengmingsu brand plant and animal nutrient products. The Company's patented and patent pending formulas and proprietary extraction processes allow it to create products that increase crop yields and improve the health of livestock. Its sole operating subsidiary, Inner Mongolia Yongye Nongfeng Biotechnology Co., Ltd., is headquartered in Beijing with major operations located in Inner Mongolia, People's Republic of China. For more information, please visit the Company's website at http://www.yongyeintl.com .
Safe Harbor Statement
This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For further information, please contact: Yongye International, Inc. Mr. Larry Gilmore-VP of Corporate Strategy Phone: +86-10-8232-8866 x 8880 Email: [email protected] Web: http://www.yongyeintl.com CCG Investor Relations, Inc. Mr. Crocker Coulson, President Phone: +1-646-213-1915 (New York) Email: [email protected] Athan Dounis, Account Manager Phone: +1-646-213-1916 Email: [email protected] Web: http://www.ccgirasia.com
SOURCE Yongye International, Inc.
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