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(TSX-V: MPE)
Last Close: July 21 2008 - $0.25
Shares Issued: 56,482,327
CALGARY, July 22 /CNW/ - Maple Leaf Reforestation Inc. (TSX-V: MPE) ("Maple Leaf" or the "Company") today updated on the progress and forecasted revenues for both its Yellowhorn and Alfafa projects in China.
Yellowhorn Tree Project (the "Project")
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Maple Leaf has established a partnership with the Forestry Departments of Changji District of China to cultivate Yellowhorn trees on its behalf. Maple Leaf will pay a yearly fee to local farmers to cultivate Yellowhorn trees for the Company and will later buy the trees' fruit at a fixed price when it becomes available.
To date Maple Leaf has secured approximately 7,000 mu (approximately 1,150 acres) of land out of 30,000 mu (approximately 5,000 acres) of land that are currently planting Yellowhorn trees in the Changji District of China. Of this 7,000 mu of land, 2,000 mu (approximately 330 acres) has been set up as a demonstration unit for the Company. Securing partnership contracts for the remaining 23,000 mu (approximately 3,750 acres) will proceed over the next three to four months.
Out of the 2,000 mu of land, 230 mu (approximately 38 acres) will be harvested for its Yellowhorn fruit next month and should provide approximately 13.8 tons of fruit. The Company will utilize this fruit in the following manners:
- one-third to produce cooking oil (30% extraction rate); 1,449 kg,
projected to generate revenue of $116,000 RMB (approximately
$18,000 CDN), calculated using a value of $80 RMB (approximately
$12.12 CDN) per kg for cooking oil;
- one-third will be used for cultivating Yellowhorn seedling (30%
extraction rate, 700 pieces per kg, 90% germinating rate and 90%
survival rate), projected to generate revenue of $3.52 million RMB
(approximately $533,000 CDN), calculated using a value of $1.50 RMB
(approximately $0.23 CDN) per seedling; and
- one-third will be sold as Yellowhorn seed, at $15 RMB (approximately
$2.27 CDN) per kg, which the company expects to generate
approximately $72,450 RMB ($11,000 CDN) in revenue.
Total revenue forecasted from the approximately 13.8 tons harvest is $3.71 million RMB (approximately $562,000 CDN). All revenue projections are speculative and calculated using the current market prices for these products. Actual revenues may vary due to market price fluctuations.
In addition, Maple Leaf is in the process of negotiating a joint venture agreement (the "JV Agreement") with the Qitai County of China which would see the Company take over the operatorship of 1,000 mu (approximately 165 acres) of land that is cultivating Yellowhorn trees. These tress are in the second year of their growing cycle (meaning that they will be bearing fruit in the following year). The JV Agreement would also see the Company take operational control over approximately 200,000 Yellowhorn seedlings and 50,000 mu (approximately 8,250 acres) of land which has been set aside for use in connection with China's anti-desertification and wind barrier program. The total investment from Maple Leaf in the joint venture is currently forecasted at approximately $50,000 RMB or ($7,600 CDN) a year. The JV Agreement is not yet finalized, however the Company is confident that the final terms will be agreed upon in the near term.
Going forward, Maple Leaf believes that it is well positioned to achieve its target of securing 100,000 mu (approximately 16,500 acres) of land for demonstration purpose of cultivating Yellowhorn trees.
Maple Leaf also clarified the information that it provided in its January 2008 update on the Project. On January 10, 2008, the Company announced that "the Project agreement had been executed under the previously announced terms". This statement was not meant to be interpreted as meaning that the Memorandum of Understanding in relation to the Project (the "MOU") had been formally executed as a binding agreement on either party. At that time, President and CEO Mr. Raymond Lai had visited China and met with the representatives on the other side of the Project, they reviewed the contents of the MOU together and decided to proceed based on the previously announced terms. At this time the Company is not formally bound to the terms of the MOU, however it continues to proceed as planned with the hope that the MOU will become a formalized agreement in the near future with either the Jilin Saar County or other counties, depending on which county gives the most favorable terms to the Company. Meanwhile, the Company is also reviewing alternative opportunities for advancing the Project and capitalizing upon the demand for Yellowhorn fruit and the cooking oil extracted therefrom.
Alfalfa Project
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Maple Leaf has now taken control of Funong Alfalfa Feedstock Supply Ltd. ("Funong") and will be shipping out 1,000 tons of Alfalfa cakes to three of Funong's existing customers, namely Shanxi Yangling Keyuan Clone Biology Co., Ltd., Sichuan New Hope Group and Hebei Kaite Feedstuff Group Co., Ltd. (collectively, the "Existing Customers") in August and September 2008. Despite having taken control of Funong's operations, Maple Leaf will be withholding $700,000 RMB (approx. $106,000 CDN) of the purchase price until it is able to confirm that the Existing Customers will still honor the contracts that they have entered given the sale of Funong. Combined, the Existing Customers have ordered 3,000 tons of Alfalfa cakes however Funong is currently only capable of supplying a third of this. Alfalfa cake is currently in short supply in China. The price of Alfalfa cake has escalated from $1,200 RMB (approximately $180 CDN) to between $1,800 and $2,000 (approximately $272 to $303 CDN) a ton. The Company believes that these sales will generate revenue of $2 million RMB (approximately $303,000 CDN) and gross profit of approximately $1 million RMB ($152,000 CDN). The balance of the 2,000 tons is expected to be shipped out before the end of 2008.
The Company is planning to increase its capital investment in Funong and to re-invest the profit from Funong's operations to acquire more automated equipment, thus increasing the production capacity in the coming year.
About Maple Leaf Reforestation Inc.
Maple Leaf is a Canadian company operating a large-scale forest nursery whose primary focus is growing value-added tree seedlings and alfalfa feedstock alongside landscaping and nursery products in China. In addition, the multi-faceted Xinjiang Yellowhorn tree project will provide for the manufacture of biodiesel fuel. Reforestation has been identified as a critical strategy to help manage China's troubling environmental issues, namely pollution and desertification. Maple Leaf currently has over 6 million varieties of seedlings under cultivation at its nursery facility that includes a 110,000-square foot greenhouse located in Liang Cheng, Inner Mongolia, China.
Maple Leaf is a wholly-owned foreign enterprise ("WOFE"), which allows Maple Leaf to control 100% of the direction and operations of the company in China while permitting the cash generated from operations in China to flow back to Canada.
Should you wish to receive Company news via email, please email
catarina@chfir.com and specify "Maple Leaf Reforestation Inc." in
the subject line or contact the Company directly.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Certain statements in this news release including (i) statements that may contain words such as "anticipate", "could", "expect", "seek", "may" "intend", "will", "believe", "should", "project", "forecast", "plan" and similar expressions, including the negatives thereof, (ii) statements that are based on current expectations and estimates about the markets in which Maple Leaf operates and (iii) statements of belief, intentions and expectations about developments, results and events that will or may occur in the future, constitute "forward-looking statements" and are based on certain assumptions and analysis made by Maple Leaf. Forward-looking statements in this news release include, but are not limited to, statements with respect to future capital expenditures, including the amount, nature and timing thereof; other development trends within the China's seedling industry; business strategy; expansion and growth of Maple Leaf's business and operations and other such matters. Such forward-looking statements are subject to important risks and uncertainties, which are difficult to predict and that may affect Maple Leaf's operations, including, but are not limited to: the impact of general economic conditions; industry conditions; government and regulatory developments; seedling product supply and demand; competition; and Maple Leaf's ability to attract and retain qualified personnel. Maple Leaf's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do transpire or occur, what benefits Maple Leaf will derive there from. Subject to applicable law, Maple Leaf disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
All forward-looking statements contained in this document are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in other disclosure documents of Maple Leaf which have been filed with Canadian provincial securities commissions and are available on www.sedar.com.
%SEDAR: 00022303E