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Asia Bio-Chem Announces Significant Developments

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  Published in House and Home on Tuesday, December 14th 2010 at 7:30 GMT by Market Wire
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TSX: ABC

- Reopens Changtu Facility, Implements Intermodal Loading Dock at the Daqing Facility, and Increases Operating Line of Credit with China Construction Bank -

TORONTO, Dec. 14 /CNW/ - Asia Bio-Chem Group Corp. (TSX: ABC) ("Asia Bio-Chem" or the "Company") is pleased to announce that it has successfully completed the upgrade and relocation of its Changtu facility.  This project is the first phase ("Phase 1") of the development of the Changtu Corn Bio Chemical Industrial Park, which has been established in cooperation with the Changtu county government. 

"This is an extremely important milestone for our Company as it positions us at the top of our industry in terms of production processes and product quality." said Zhiping Wang, President and CEO. "This project will help our current and future customers comply with their customer's requirements to provide stable, quality product together with full environmental compliance."

Phase 1 included an upgrade of Asia Bio-Chem's Changtu plant in the areas of evaporation, dewatering, and packaging. These upgrades will improve efficiencies by reducing steam, electricity, and water usage. Also, by undertaking these upgrades the Company has now satisfied the latest requirements of the international food and beverage industry, thereby allowing the Company to qualify for larger contracts.  Phase 1 also involved the relocation of the Changtu facility to a new 190,000 square meter parcel of land, which was granted to the Company by the county government. The County has made significant investments into the new location, which is 7.5 kilometres from the previous Changtu plant. The old plant will remain the property of the company and serve as a storage facility to allow the Company to manage more of its own grain supply for the new facility. The total cost of Phase 1 was approximately RMB 80 million ($12 million).

Further, the Company has completed the implementation of an intermodal container system at the Daqing Facility.  The use of intermodal containers provides the Company with a number of advantages:

1. Previously, Asia Bio-Chem could only load product when a train was at its facility; therefore, the Company was restricted in its production by the amount of storage space and the timing of rail cars. Now, the Company can continuously load product into the containers, thereby allowing a higher rate of production at the plant.
2. Once the product is in the containers, the Company does not need to offload the product at the sea port, saving time and labour. The new containers are loaded directly from the rail cars to the ships, which reduces the time the product sits at the seaport and provides more efficient scheduling between the rail car and ship arrivals and departures.
3. Overall, this new system will reduce the period of time it takes to ship the Company's products to its customers, which should improve the Company's receivables turnover.

The Company is also pleased to announce that it has secured an additional RMB 55 million (C$8.4 million) in operating credit facility from China Construction Bank.  The loan represents an increase of the existing RMB 145 million operating loan in our Daqing Plant, which has been renewed with a maturity date of December 13, 2011. The loan will be renewable on an annual basis and will be secured against the assets of the Company's Daqing Plant. This facility will bear a floating rate of interest based on 110% of the Peoples Central Bank Rate, or approximately 6.12%. 

About Asia Bio-Chem Group Corp.
Asia Bio-Chem Group, through its wholly-owned subsidiaries in the People's Republic of China ("PRC"), is in the business of processing corn. From its plants in Liaoning and Heilongjiang Province, the Company has a total processing capacity of 900,000 tonnes of corn per year, which are processed into cornstarch, corn germ, gluten, and fiber for sale into the domestic Chinese market.  

This news release contains certain statements that may be deemed "forward looking statements". Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects,", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. The Company undertakes no obligation to update these forward looking statements, except as required by law, in the event that management's beliefs, estimates or opinions, or other factors, should change.