Hanwei updates wind power business

Thursday, October 30, 2008

VANCOUVER, Oct. 30 /CNW/ - Hanwei Energy Services Corp. ("Hanwei" or the "Company") today provided an update on its wind power business. The Company estimates that turbine production for 2008 will total approximately 40 turbines, based on its component delivery schedule. As previously reported, the Company has delivered 12 1.5MW turbines (four in Q1 2008, eight in Q2 2008), three sets of wind turbine blades and 30 towers (together in Q4 of 2007) under its initial contract with Daqing Deta Electric Co. Ltd. ("Deta"). Hanwei has completed an additional 8 turbines and 17 blades (5 and 2/3 sets) related to its initial contract for installation at Ruihao's wind farm and expects to deliver them in the fourth quarter of 2008.

Nine of the twelve turbines and towers and the three sets of turbine blades delivered to date have been installed at Heilongjiang Ruihao Energy Technology Co., Ltd.'s ("Ruihao") wind farm in Heilongjiang province, China and connected to Ruihao's substation and the local electrical grid for calibration and field-testing.

The Company has commenced production of turbines under the new 200MW contract with Ruihao, which was a component of its previously announced acquisition of Deta. Hanwei has integrated the Deta management team into its operations and is supplying equipment to Ruihao while awaiting final regulatory approval for the acquisition of Deta. Hanwei expects to complete and deliver an additional 20 turbines during the fourth quarter of 2008, for a total of 40 for all of 2008. Hanwei also expects to complete and deliver an additional 23 blades during the fourth quarter of 2008 for a total of approximately 40 blades (13 and 1/3 sets) for all of 2008.

To support the new 200MW order, Hanwei has invested approximately $31 million in prepaid inventory to mitigate some of the delays caused by high demand for component parts throughout the wind power industry. Hanwei has been successful to date in accessing working capital through debt facilities established with China based banks and lenders to support the ongoing capital requirements of the wind power operations. To improve supply chain management, Hanwei has created a dedicated purchasing and logistics group, which has successfully established supplier relationships with key China-based component and systems manufacturers. The group will manage all inventory procurement and coordinate key component deliveries.

Since establishing its wind power business in 2007, Hanwei has continuously improved its management, engineering, and production capabilities. Through a number of key hires recruited from some of China's largest wind power and engineering firms, Hanwei has assembled an experienced management team that has successfully ramped up production capacity, improved supply chain management and established numerous quality and production controls.