MPE signs JV building dealMaple Leaf signs deal to build plants, farms in Hanshou
2009-05-14 05:08 ET - News Release
Mr. Raymond Lai reports
MAPLE LEAF ENTERS AGRICULTURE INDUSTRIALIZATION COOPERATION AGREEMENT
Maple Leaf Reforestation Inc. has agreed to partner with HanshouCounty Jinmandi Agriculture Development & Plantation Center, whichis owned by Guangdong Jingsheng Investment Co. Ltd., to construct aneco-agricultural conglomerate of facilities in Hanshou county. Jinmandiwill invest up to $30-million (165 million renminbi) to build a pigfarm, a fertilizer plant, and a red potato plantation and processingplant. Construction and operation of the facilities will be theresponsibility of Jinmandi and Maple Leaf will provide marketing andfinancial management support, both during the construction andoperational phases. Jinmandi will be solely responsible for allfinancial expenditures and liable for all financial risks andliabilities relating to the construction and operation of thefacilities.
The first phase of construction of the facilities isto build the pig farm, and it is anticipated that ground will be brokenon this project in May, 2009. The farm will be 10,000 square metres insize and will have a 900-metre paved road leading to the entrance.Jinmandi will invest approximately $2.1-million (11.55 millionrenminbi) to build the farm and eight to 10 acres (50 to 60 mu) of landwill be contributed by Maple Leaf to Jinmandi for the location of thefarm. It is anticipated that the farm will house up to 10,000 pigs atany one time, and current market prices indicate that the pigs will besold for net profits of approximately $275 (1,500 renminbi) per pig.Jinmandi anticipates that the farm will be profitable by 2011.
Jinmandi and Maple Leaf will own 90 per cent and 10 per cent of thefarm, respectively, and profits will be shared between the partiesaccording to this ownership ratio. The ownership ratio for thefertilizer plant and red potato plant will be negotiated separately andannounced at a later time.
Maple Leaf will also be independently using some of the facility landsto grow 20,000 date trees and some watermelon patches. All revenue fromthese sources will be Maple Leaf's. Dates are presently a very popularconsumer product in China. Based on current market prices for dates at$1.85 (10 renminbi) a kilogram and 10 kilograms of date production pertree upon maturity in three to five years, it is anticipated thatapproximately $365,000 (two million renminbi) in revenue per year willbe derived from this product.Raymond Lai, president and chief executive officer of Maple Leaf,comments: "The co-operation agreement with Jinmandi is a positive stepforward for Maple Leaf in terms of aligning itself with major playersin the Chinese agricultural industry and it provides yet anotherrevenue stream for the company, and does so without Maple Leaf havingto expend any capital. We hope that this is just the beginning of ourrelationship with Jinmandi as the synergies between its business plansand Maple Leaf's operations are very evident."
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