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MIGAO CORPORATION PRESENTATION 1
MIGAO CORPORATION PRESENTATION 2
Forward looking statement
The contents of this presentation contain statements that may constitute “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements may include financial and other projections, as well as statements regarding future plans, objectives or economic performance, or the assumptions underlying any of the foregoing. Forward-looking information involves significant risks, assumptions, uncertainties and other factors that may cause actual future results or anticipated events to differ materially from those expressed or implied in any forward-looking statements and accordingly, should not be read as guarantees of future performance or results.
Actual results, performance or achievement could differ materially from those expressed in, or implied by, any forward-looking statements made and, accordingly, investors should not place undue reliance on any such forward-looking statements. New factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on Migao’s business.
MIGAO CORPORATION PRESENTATION 3
• Developer, producer, marketer of specialty potash fertilizers
• Founded - June 2003
• Serving China’s high-value crops
• Facilities across China
– 4 at full production = 320,000 tonnes of annual production
– Several expansion and greenfield projects planned
• Listed on TSX ‘MGO’
• Raised $140 million since 2006 IPO
Corporate Overview
MIGAO CORPORATION PRESENTATION 4
Migao’s mission is to become the leading supplier of specialty potash fertilizers to the Chinese market.
Migao Corporation
MIGAO CORPORATION PRESENTATION 4
MIGAO CORPORATION PRESENTATION 5
Production Capacity
MIGAO CORPORATION PRESENTATION 5
0
50
100
150
200
250
300
350
400
450
500
TO
NN
ES
‘00
0s
20092008200720062005
MIGAO CORPORATION PRESENTATION 6
Operations
Liaoning Migao
Sichuan Migao /
Guangdong Migao
Changchun Migao
MIGAO CORPORATION PRESENTATION 6
1
2
4
5
Shanghai Migao3
SQM JV
MIGAO CORPORATION PRESENTATION 7
Fertilizer in China
• China has 10% of the world’s arable land and 20% of the population
• Central Government’s priority on agriculture drives demand
• Growing demand for high quality food by Chinese consumers
• Largest consumer of fertilizer in the world – 25% of world’s consumption
MIGAO CORPORATION PRESENTATION 7
MIGAO CORPORATION PRESENTATION 8
Potassium Chloride (K)
• China’s ideal annual potash application 10-12 million tonnes
• 2/3 of global potash supply in Canada and Russia
• Few commercially developed potash reserves in China
- 3.5 million tonnes domestically produced
• Soil is generally potassium deficient throughout China
Potash in China
MIGAO CORPORATION PRESENTATION 8
MIGAO CORPORATION PRESENTATION 9
59%
34%
5%
2%
Potassium sulphate Hydrochloric Acid
Potassium Nitrate Ammonium Chloride
Migao Products - F2009 Revenue Mix
Potash-based specialty fertilizers
Co-products
Potassium Nitrate
Potassium Sulphate
Ammonium Chloride
Hydrochloric Acid
MIGAO CORPORATION PRESENTATION 9
MIGAO CORPORATION PRESENTATION 10
Average Price/MT (RMB)F2006 to F2010
MIGAO CORPORATION PRESENTATION 11
Average Price/MT (RMB)F2006 to F2010
MIGAO CORPORATION PRESENTATION 12
59%
34%
5%
2%
Potassium Sulphate Production Costs
MIGAO CORPORATION PRESENTATION 12
Stone Dust 0.13%
Sulphuric Acid 5.34%
Heavy Oil 4.41%
Potassium Chloride 83.04%
Packaging 0.83%
Other 4.68%
Wages 1.57%
MIGAO CORPORATION PRESENTATION 13
59%
34%
5%
2%
Potassium Nitrate Production Costs
MIGAO CORPORATION PRESENTATION 13
Electricity 1.04%
Ammonium Nitrate 26.03%
Natural Gas 6.65%
Potassium Chloride 61.92%
Packaging 0.75%
Other 2.30%
Wages 1.31%
MIGAO CORPORATION PRESENTATION 14
Production Process
MIGAO CORPORATION PRESENTATION 14
Co-product
Raw materials
Specialty Fertilizers
K2SO4K2SO4 KNO3 KNO3
HCIHCI NH4CL NH4CL Hydrochloric acidHydrochloric acid Ammonium chlorideAmmonium chloride
Mannheim Chemical Process Double Decomposition Process
Potassium Sulphate Potassium Nitrate
H2H2 SO4SO4 KK CICI NH4NH4 NO3NO3
Potassium ChloridePotassium Chloride Ammonium NitrateAmmonium NitrateSulphuric acidSulphuric acid
MIGAO CORPORATION PRESENTATION 15
Revenue Contribution
MIGAO CORPORATION PRESENTATION 15
40%fruits & vegetables
60%tobacco
30%fruits & vegetables
70%tobacco
50%fruits & vegetables
50%tobacco
2007 2008 2009
MIGAO CORPORATION PRESENTATION 16
Sichuan Migao
MIGAO CORPORATION PRESENTATION 16
MIGAO CORPORATION PRESENTATION 17
Sichuan Migao
MIGAO CORPORATION PRESENTATION 17
• 80,000 tonne potassium nitrate capacity
• 44,000 tonnes ammonium chloride
• 100,000 tonnes compound fertilizer capacity
• 40,000 tonne potassium nitrate JV with SQM (Chile)
• Yunnan Tobacco contract (40,000 tonnes per year)
• Patented Double Decomposition Process
• ISO 9001 and 14001 certified
• Certified by gov’t for use on tobacco crops
MIGAO CORPORATION PRESENTATION 18
Yunnan Tobacco Crop
MIGAO CORPORATION PRESENTATION 18
MIGAO CORPORATION PRESENTATION 19
Guangdong Migao
MIGAO CORPORATION PRESENTATION 19
• Production began December 2004
• 160,000 tonne potassium sulphate capacity
• 190,000 tonnes hydrochloric acid
• Fruit, vegetable and tobacco customers
• ISO 9001
MIGAO CORPORATION PRESENTATION 20
Liaoning Migao
MIGAO CORPORATION PRESENTATION 20
• Production began December 2005
• 40,000 tonne potassium sulphate capacity
• 50,000 tonnes hydrochloric acid
• 120,000 tonne sulphuric acid production plant
• Granular potassium sulphate capability
• ISO9001:2000 Certification
MIGAO CORPORATION PRESENTATION 21
Financial Highlights – 9 months 2010
December 31 2008 (9 months)• Revenue - $204.4 million• Gross Margin - 23.8%• Gross Profit - $48.7 million• EBITDA - $37.2 million• Earnings - $31.6million• EPS - $0.73• Shares - 43,675,611• Working Cap. - $146.2 million
December 31 2009 (9 months)• Revenue - $193.6 million• Gross Margin - 23.0%• Gross Profit - $44.5 million• EBITDA - $36.5 million• Earnings - $27.9 million• EPS - $0.60• Shares – 46,810,850• Working Cap. - $184.6 million
MIGAO CORPORATION PRESENTATION 22
Gross Profit Margin
0
5
10
15
20
25
30
35
40
PE
RC
EN
T
20092008200720062005
Target profit range
2010YTD
MIGAO CORPORATION PRESENTATION 23
Expansion ProjectsCompleted
• Sichuan Specialized compound fertilizer ($5 million)• Liaoning 120,000 tpy sulphuric acid ($8 million)
Current• Shanghai 40,000 tpy potassium sulphate ($10 million)• SQM 50/50 JV 40,000 tpy potassium nitrate ($10 million including
working capital)
Future• Southeast Asia ($20 million including working capital)• Tianjin 40,000 tpy potassium sulphate ($10 million)• Zunyi 40,000 tpy potassium sulphate ($10 million)
MIGAO CORPORATION PRESENTATION 24
• Established products and customers
– Uniquely positioned
– Proprietary production process
• Strong fundamentals
– 6-year revenue and earnings growth
– Well capitalized
• Compelling growth profile
• Preparing for international expansion
• Experienced management team
Investing in Growth
MIGAO CORPORATION PRESENTATION 25
Notes
MIGAO CORPORATION PRESENTATION 26
www.migaocorp.com