NutraCea Forms Joint Venture in Indonesia to Establish a New Wheat Flour Mill Utilizing Its Wheat Bran Stabilization Technology
NutraCea
(OTC Bulletin Board: NTRZ), a world leader in stabilized rice bran (SRB),
nutrient research and technology, announced today that it has expanded its
international presence by entering into a formal alliance to construct a new
wheat flour mill in Indonesia
that will incorporate NutraCea's new wheat bran
stabilization technology. NutraCea recently filed a provisional patent for
this technology.
After substantial research and development and favorable results in the
initial field testing phase in the U.S., NutraCea will be constructing a full
scale, proof of concept wheat bran stabilization facility to validate the
technology and promote its widespread use to convert wheat bran into a food
ingredient. The Company believes that significant amounts of stabilized wheat
bran can be blended into the flour produced by the mill. In addition
stabilized wheat bran will be sold as a stand alone ingredient.
'The economic benefit to wheat millers of the blended product is
especially appealing at a time when grain prices are at all time highs. For
example, if a wheat miller blended 5% wheat bran into wheat flour, which is
approximately one fifth of the amount of bran produced by a mill, profits
would double based on today's pricing,' said Leo Gingras, Chief Operating
Officer of NutraCea.
The project has received all the necessary governmental and regulatory
approvals. Construction is expected to begin in mid 2008 with operations set
to start in early 2010. The estimated construction cost for the project is in
the range of $35 million depending upon variability in the size and actual
equipment costs of the plant.
Construction costs, revenues and profits will be shared 51% by NutraCea
and 49% by the Indonesian entity. NutraCea will lease its proprietary
stabilization equipment to the venture, while maintaining all of the
intellectual property rights to the technology and patents.
Revenues from the joint venture will be generated from selling 100% of the
wheat flour and wheat bran production as both a blended product and
separately. Production from the Indonesian facility when fully operational is
estimated to be 180,000 tons annually. If the plant is run at full capacity
and assuming current wheat flour prices, revenues from the facility are
anticipated to exceed $100 million annually. Margins are expected to be
significantly better than those of traditional mills due to the inclusion of
NutraCea's cost effective stabilized wheat bran technology.
Worldwide, over 500 million tons of wheat is milled annually with U.S.
millings being over 30 million tons. Wheat bran accounts for approximately 25%
of the weight of the wheat. Recent prices per ton for wheat flour range from
$600 for standard baking flour to as much as $1,000 for more valuable forms of
semolina flour. Wheat flour is used in a wide range of food products
throughout the world.
Mrs. Lim Ai Ping, President of Fortune Finance Overseas Ltd.,(FFOL), the
joint owner of the entity developing the wheat mill commented, 'This new
venture allows us to take advantage of a new and unique technology to improve
the profitability of our wheat milling operations. Indonesia imports over 4
million tons of wheat flour annually and the ability to produce more product
locally offers tremendous cost savings associated with shipping, before we
even take into account the increased yield that we anticipate achieving. We
look forward to expanding the realm of possibilities that this proprietary
technology offers.' FFOL is an affiliate to Pacific Advisors Holdings Ltd.,
which currently has a venture with NutraCea to stabilize rice bran in
Indonesia.
'We believe that this new business opportunity with wheat bran
stabilization is a natural segue to diversify the use of our proprietary
stabilization technology beyond rice bran and offers potentially larger
opportunities for the company even as we continue to execute on our rice bran
program globally,' said Brad Edson, President and CEO.
'Like our rice bran, stabilized wheat bran has an excellent flavor and
shelf life along with an impressive nutritional profile. There are many large
wheat flour mills in the U.S. alone and we are in preliminary discussions with
a number of these as well as other wheat millers throughout the world about
the potential favorable economic and commercial gain with the implementation
of our proprietary wheat bran stabilization technology. We have not yet
entered into any formal agreements outside of Indonesia, but with our facility
in Indonesia underway shortly, we will turn our focus to advance this new
business opportunity in the U.S. and throughout the world,' added Edson.
About Fortune Finance Overseas Ltd.,
Fortune Finance Overseas Ltd., is an affiliate of Pacific Advisors Holding
Company, which is one of the largest flour mills in Southeast Asia in terms of
productivity, with leading domestic market share for most of its products in
Central Java and other regions in Indonesia.
About NutraCea
NutraCea is a leader in stabilized rice bran nutrient research and dietary
supplement development. Through its wholly owned subsidiary RiceX, the company
manufactures as well as distributes products and food ingredients made from
Rice Bran through its proprietary technology and processes. The Company has
developed intellectual properties to create a range of proprietary product
formulations, delivery systems and whole food nutrition products. NutraCea's
proprietary technology enables the creation of food and nutrition products
from rice bran, normally a wasted by-product of standard rice processing. In
addition to its whole foods products, NutraCea develops families of health-
promoting 'nutraceuticals,' including natural arthritic relief and
cholesterol-lowering products. More information can be found in the company's
filings with the SEC and you can visit the NutraCea web site
http://www.NutraCea.com
