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Bio-Extraction signs canola oil distribution deals
2009-01-12 07:41 ET - News Release
Mr. Chris Schnarr reports
BIOEXX COMPLETES MAJOR CANOLA OIL DISTRIBUTION CONTRACTS
Bio-Extraction Inc. has concluded agreements with Calgary-based Sunora Foods Ltd., and Vancouver-based Shafer CommoditiesInc. to collectively distribute 100 per cent of the canola oil produced by BioExx at its Saskatoon facility.
Under the terms of the agreements, the two distributors will purchase oil from BioExx under normal commercial terms andresell the oil to their customer networks, with a preference toward higher value specialty markets. Going forward, thedistributors, which have complementary market sector strengths across a broad spectrum of end-users, will also have theopportunity to work with BioExx to determine the optimal product mix for the market on a longer-term basis, allowing forthe development of customized and customer-specific production arrangements.
"We are excited to have the opportunity to work with two high-quality and experienced companies whose vision and missionaligns so well with ours, and who together can help BioExx penetrate multiple target markets around the globe," said ChrisCarl, chief executive officer of BioExx. "Since our first facility is relatively small compared to conventional producers,we believe this arrangement will allow us to sell selectively into markets not typically served by the much largerconventional producers, which will help us to both maximize our margins and the value offered to end customers, withoutbeing disruptive to conventional canola markets."
As is the case with all BioExx product agreements, pricing is based on market prices at the time of sale and then adjustedupward, where possible, based on the specialty features of its products. This ensures that selling prices track feedstockcosts to create a natural hedge against timing risk and therefore supports the maintenance of margins consistent withindustry crush margin trends. Canola crush margins have remained strong despite the recent decline in global commodityprices. In addition to its product sales agreements, BioExx has also signed a 10-year agreement (including renewals) forthe supply of its canola feedstock to the Saskatoon facility.
"With these oil contracts, we have chosen a path that emphasizes our niche product strengths, such as our ability toproduce non-genetically modified oil, while still providing BioExx access to some commodity-based markets to ensure thatwe can move our full production volume at all times," said Mr. Carl. "We have now completed commercial sales arrangementsand agreements for all of the products to be produced at our Saskatoon facility, including canola oil, meal and protein. Atcurrent market prices, planned sales of all products from the facility could generate approximately $300-million in revenueover the 10-year life of the agreements, including renewals. Of course, our planned migration to high value human foodproteins could add significantly to that."
BioExx expects to begin production and sales at the plant within the next 30 days.
About Sunora Foods Ltd.
Sunora Foods, based in Calgary, Alta., is internationally recognized for its canola oil and related canola products and isa major Canadian exporter of food oil. Operating through a base of more than 10 warehouse outlets, Sunora is a significantdistributor of both expeller grade and organic food oils. Its introduction of canola oil into new specialty markets haselicited the support of both health practitioners and nutritionists. Sunora has spent around 20 years developing andservicing the specialty oil needs of a global base of customers in the retail, food service and food processing industries.
About Shafer Commodities Inc.
Shafer Commodities is a subsidiary of Shafer-Haggart Ltd., which was founded in 1934 in Vancouver, B.C. With an early focuson the abundant supply of canned west coast salmon, the company expanded over the next four decades to include multipleagriculture and aquaculture based products that were distributed throughout the world. Shafer continues to service theagriculture industry through a large variety of ingredients used in many rations in addition to handling many of the grainsand oils used in the biofuel industries. Shafer has many years of experience in products for human consumption in NorthAmerican markets, including custom designing private label and food service programs for major retailer and food serviceaccounts.
We seek Safe Harbor.
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