Migao Reports Fiscal 2010 Second Quarter Financial Results

TORONTO, ONTARIO, Nov 12 (MARKET WIRE) --
Migao Corporation (TSX: MGO), a China-based leading specialty potash
fertilizer producer, today reported quarterly sales of $67.7 million for
the three-month period ended September 30, 2009 and net income of $9.6
million for the quarter compared to revenue of $78.1 million and net
earnings of $12.9 million in the quarter ended September 30, 2008. The
Company earned $0.21 per basic share outstanding for the quarter,
compared to $0.32 per share in the quarter ended September 30, 2008.

Revenue for the first half of fiscal 2010 was $126.6 million, which is on
par with $127.8 million in revenue for the similar six-month period last
year. Net income for the six-month period ended September 20, 2009 was
$19.2 million or $0.41 per basic share as compared to $19.6 million or
$0.46 for the same six-month period last year.

Gross profit for the quarter was $14.3 million or 21.2% of revenue. For
the first half of fiscal 2010, gross margin is in line with management's
expectations for the fiscal year at 22.9% or $29 million.

Production for the quarter was at 100% of core capacity or approximately
80,000 tonnes. Maintenance performed during the previous quarter was
concluded and production ramped up to full capacity. During the quarter,
the Company announced sales orders for 75,000 tonnes of combined
potassium sulphate and potassium nitrate, indicating full production will
continue for the balance of the calendar year. The Company also
distributed, after rudimentary processing, approximately 20,000 tonnes of
non-core potassium sulphate during the quarter.

Impacting the financial performance in the quarter was slightly lower
selling prices versus the previous period ended June 30, 2009 as well as
relatively stronger Canadian dollar. The lower selling prices are a
result of reduced input costs, weighted heavily towards potassium
chloride.

Income tax expense of $1.2 million occurred during the quarter
representing approximately 12% of revenue. EBITDA for the second quarter
of fiscal 2010 was $12.2 million or 18.1% of revenue. The Company is
benefiting from grandfathered favourable tax policies, which would
otherwise result in a corporate tax rate of 25%, not including any other,
or new favourable tax treatments.

"We are pleased to see more stable conditions in the fertilizer sector in
China after a very volatile and uncertain first half of calendar 2009,"
said Mr. Liu Guocai, President and CEO of Migao. "Our strategy of
providing the highest quality products to high-value crop customers such
as tobacco, fruits and vegetables has enabled Migao to perform at
industry leading levels in terms of production levels and profit margin
during the recent difficult economic conditions. We will continue growing
this business as we also explore other opportunities to leverage our
strengths. These opportunities include addressing other high-value crops
such as cotton and horticultural flowers. These opportunities will not be
limited to China as we are also looking at markets outside of China, in
nearby Southeast Asia."

As at September 30, 2009, Migao reported cash of $36.2 million and
working capital of $136.6 million. Receivables and inventory make up the
vast majority of working capital. Accounts receivables balance improved
to $20.4 million in the quarter as compared to $61.0 million in the
previous quarter ended June 30, 2009. Accounts receivable improved as a
result of the Company discontinuing a credit program instituted last
quarter as a temporary measure during a time of uncertainty with potash
pricing. Long-term debt was nil and current bank debt was $42 million. As
a result of longstanding, successful credit relationships between Migao
and some of China's leading banks, the Company has been offered and is in
the process of establishing working capital lines of credit with a
China-based bank of approximately RMB 260 million and project financing
lines of credit of approximately RMB 136 million.

Average inventory cost of raw potash for the period was $476 per tonne, a
decrease in value of nearly $100 per tonne from the previous period's
level of $570, reflecting declining raw material purchase costs for the
Company's primary input - potassium chloride. Migao made prepayments of
$90 million for raw materials during the quarter. This substantial
increase in prepayments for raw materials was a result of the company
locking in potash pricing and supply during a period of potash pricing
volatility.

SUMMARY FINANCIAL STATEMENTS

3 months 3 months
ended ended
September September
30, 2009 30, 2008

($'000)
Sales 67,684 78,161
Gross Profit 14,349 19,104
Net Income 9,598 12,871
EBITDA 12,262 14,967
Basic EPS 0.21 0.32
Diluted EPS 0.20 0.31

Weighted average number of shares (in millions of
shares)
Basic 46.5 40.8
Diluted 46.9 41.9

Balance Sheet Highlights
($'000)
September March 31,
30, 2009 2009

Current ratio 3.10:1 5.40:1
Cash 36.2 41.7
Working Capital 136.3 146.2
Total assets 289.9 275.2
Debt to Equity Ratio 0.29:1 0.14:1

Complete financial statements are available through the SEDAR website
www.sedar.com.

Conference Call

Migao will be hosting a conference call to discuss the first quarter
results at 10:00am Thursday November 12, 2009. The details are as
follows:

Dial in number: 416-340-2218 or 1-866-226-1793

Taped replay (until November 26, 2009): 416-695-5800 or 1-800-408-3053

Taped replay access code: 4067438#

About Migao

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 specialty potash fertilizer
(potassium nitrate and potassium sulphate) to China's agricultural
market. Migao Corporation is subject to, and complies with strict
government regulations that govern safety, quality and environmental
protection. Migao's Sichuan facility is ISO 14001 certified, an
international environmental management standard. Please visit
www.migaocorp.com for further information.

Caution Regarding Forward-Looking Statements

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.

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 may differ materially from those expressed or implied in
such statements. We caution readers not to place undue reliance on these
statements as a number of important factors, many of which are beyond our
control, could cause actual results to differ materially from the
beliefs, plans, objectives, expectations, anticipations, estimates and
intentions expressed in such forward-looking statements. These factors
include, but are not limited to: risks related to raw materials;
execution of the business plan; 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 fluctuation; insurance; foreign operations; weather
conditions and natural disasters; control by management; seasonality;
dividends; conflicts of interest; 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 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 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.

Contacts:
Migao Corporation
Jay Hussey
Vice President Corporate Finance
416-869-1108 ext. 104
jay.hussey@migaocorp.com

Migao Corporation
Randall Smallbone
Chief Financial Officer
416-869-1108 ext. 103
randall.smallbone@migaocorp.com

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