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Naturally Advanced Technologies Announces Partnership With Carolina Eastern to Manage Agronomics

Posted on July 14, 2011

Company Will Contract 15,000 Acres of Flax This Year and Establish Regional Production Facility by Q1 2012; Announcement Follows Close of C$13.1M in Bought Deal Financing

Portland, Oregon & Vancouver, British Columbia — Naturally Advanced Technologies Inc. today announced it has entered into an agreement with Carolina Eastern Precision Ag, of Pamplico, South Carolina, to provide agronomic consultation to the Company and its contractors in the region. Under the terms of the agreement, Carolina Eastern will assist NAT in the recruitment of growers and contractors, and advise on all cultivation related to flax that will be turned into its branded CRAiLAR fiber including seeding rates, fertilization, and weed control. NAT plans to contract more than 15,000 acres of flax, grown as a winter crop, in its first year. The harvest will be the first used under a purchasing agreement with Hanes Brands for CRAiLAR Flax fiber announced in March 2011. This follows an 18-month pilot program with HanesBrands and the United States Department of Agriculture’s Agricultural Research Service (USDA – ARS), which verified the opportunity for flax growth in the region.

By the first quarter of 2012, NAT anticipates it will build an integrated facility in Williamsburg County capable of producing 300,000 lbs. of CRAiLAR Flax fiber per week. S.C. is one of two flax fiber-producing regions strategically chosen by NAT for the location of facilities.

“This announcement is a culmination of a two-year process that took a significant amount of effort from South Carolina’s Department of Commerce, the USDA – ARS, Williamsburg County, and HanesBrands,” said Jason Finnis, founder and COO of NAT. “We are confident in the experience and relationships that Carolina Eastern brings to our team,” continued Finnis, “And we anticipate that their team’s knowledge of the region, from both the agronomic and economic standpoints, will allow us to quickly and smoothly ramp up production demand to bring CRAiLAR Flax to market,” he concluded.

The Carolina Eastern team will be led by Charles “Russell” Duncan, who spent 27 years as an agricultural extension agent in the Pee Dee area of S.C. with Clemson University. A native of S.C., he worked in Clarendon, Florence, Marion and Williamsburg counties during his tenure, and served as administrator for the Clarendon and Williamsburg offices. He is currently serving as chair of the International Certified Crop Adviser board, a national program of the American Society of Agronomy, which has established benchmarks for education, experience and ethics in agronomy.

“CRAiLAR Flax fiber is one of the most well-researched agronomic opportunities we’ve seen in South Carolina in my entire career,” said Duncan. “Between their partnerships with a well-established end-user in Hanes Brands, along with institutional research and the potential for local financing, we are excited about the opportunity we will be presenting in coming months and hope for a long-term opportunity to be established among farmers looking for winter crop alternatives.”

Farmer Field Day

A farmer field day, to be held on Wednesday, August 3 in Kingstree, S.C., is expected to attract more than 100 farmers in the region who are interested in growing an alternative cash crop to wheat in the winter months. The event will be hosted by NAT and Carolina Eastern, and will be supported by the USDA office in Clemson, S.C., HanesBrands and Arbor One Farm Credit.

The Company intends to leverage regional sustainable agricultural initiatives to fund a portion of the capital requirement to establish itself in the region.

CRAiLAR Flax Fiber Production in South Carolina

The Company recently completed winter growing trials in a combined study with the USDA – ARS and HanesBrands, and has identified the varietals that will produce the best fiber yields in a growing season that traditionally can only produce winter wheat. Dr. Jonn Foulk, Research Scientist, USDA -ARS, assited the team with the research. He has studied flax production in the region for nearly a decade,

“As a winter crop, we found that South Carolina offers significant upsides to growing varietals of flax that are needed to produce CRAiLAR fiber,” said Dr. Foulk. “The climate is ideal, the fertilization and weed control are minimal and the winter rainfall provides adequate irrigation. Additionally, production in the southeastern U.S. has the potential to enhance rural economic growth and to supply a natural domestic source of fiber to industries.”

In August 2010 NAT signed a ten month sublease on a facility in Kingstree, S.C., where it scaled-up flax fiber production by conducting the decortication process of CRAiLAR Flax fiber. The facility was originally established to conduct processing of flax fiber under a USDA initiative.

Companies with which NAT is currently engaged in purchasing or development agreements include Georgia-Pacific, Levi Strauss & Company, Cintas Corporation, Ashland Inc., and Hanes Brands.

Naturally Advanced Technologies Inc.

Naturally Advanced Technologies Inc. develops renewable and environmentally sustainable biomass resources from flax, hemp and other bast fibers. The Company, through its wholly owned subsidiary, CRAiLAR® Fiber Technologies Inc., has developed proprietary technologies for production of bast fibers, cellulose pulp, and their resulting by-products in collaboration with Canada’s National Research Council. CRAiLAR technology offers cost-effective and environmentally sustainable processing and production of natural, bast fibers resulting in increased performance characteristics for use in textile, industrial, energy, medical and composite material applications. The Company was founded in 1998 as a provider of environmentally friendly, socially responsible clothing. For more information, visit www.naturallyadvanced.com.