Tiger Ethanol International says that Xinjiang Yajia Distillate Company Limited, a Chinese entity of which the company owns 90%, has entered into an agreement with Xinjiang Yili Agricultural Division Supply and Sales Company for supplies of corn to be used in the company's planned ethanol manufacturing plant in Hami District.

The company says this agreement reduces the potential for uncertainty in the company's bio-mass supply chain. In addition, the company will benefit from having "grandfathered" operating license within China's evolving ethanol market. The terms of the agreement provide that during the first period of five years that Xinjiang Yili Company will supply all the corn kernels necessary for its initial production level of 20 to 30 thousand tons of ethanol "at a formula price that results in a discount to the commodity market price".

The company's future plan is to increase production to 100,000 tons of ethanol per year and Xinjiang Yili Company's commitment to deliver the bio-mass supply needs for this higher production level will help Tiger to reach that goal.

This agreement is particularly important as it guarantees biomass supply to Tiger's venture which enjoys grandfathered status because the Chinese Central government recently passed an edict limiting the use of corn for ethanol production by stopping the granting of additional licenses for such purpose. Tiger is in an advantaged position because its permits and licenses all pre-date the adoption of this new restrictive national policy and are therefore 'grandfathered' by the terms of the new government regulations.

Tiger says its intentions have always been to produce ethanol from corn while at the same time provide itself with the ability to adapt its manufacturing process to other biomass forms in order to take advantage of opportunities and respond to regulatory changes. These other possible biomass forms include, but are not limited to, sorghum, casava and sugar cane.

For the same reasons the company is closely watching technological development in the area of cellulose based biomass for ethanol production. Further, the company's intention after completing construction of its first manufacturing facility is to raise the production capacity of such facility to 100,000 tons per year. Thereafter the company intends to proceed with the development of other manufacturing plants in other districts of China incorporating biomass choices reflecting the most efficient technologies that are also the least intrusive on China's food supply markets.

Tiger Ethanol International is a development stage company which owns 90% of Xinjiang Yajia Distillate Company Limited, a Chinese entity which plans to construct a facility to produce ethanol in China. The remaining 10% of Xinjiang Yajia Distillate Company Limited is owned by Xinjiang Wangye Brewing Company and Guangdong Kecheng Trading Company. The company intends to produce ethanol from agricultural products.

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