Vega Biofuels Provides Shareholder Update

NORCROSS, Ga., Aug. 19, 2011 /PRNewswire/ -- VEGA BIOFUELS, INC. (Pink Sheets: VGPR) provides the following Update to Shareholders.

Dear Fellow Shareholders:

I would like to first thank you for your continued support.  It is a very exciting time for the Company and I wanted to provide you with an update and status of our current business.  

As I've stated before, prior to making the decision to build a bio-coal manufacturing plant, we put together an extensive plan that would maximize our opportunities in the industry so that we could fully implement our Business Plan and increase shareholder value.  We are now in the process of implementing that plan.

When completed, the plant will produce green energy bio-coal for use in existing coal fired power plants around the world.  We will manufacture the bio-coal from timber waste using a process called "torrefaction".  The torrefied biomass will then be compressed into briquettes to be sold to the end user.

The following will give you an idea of what we have done so far and what remains to be done in order to begin shipping product.

Since what we are doing utilizes new technology, we felt that it was critical to surround ourselves with individuals that are experts in the biomass industry and that have previous experience with the torrefaction technology.  After reviewing the credentials and history of several potential consultants and engineering firms, we entered into an Agreement with Louisiana based engineering services firm, Hunt, Guillot & Associates.   HGA is a multi-disciplined project management and engineering services company and will provide many different services to Vega.  We felt that HGA was a perfect fit for the Company because they had prior experience with building a torrefaction plant.  In addition to engineering and design services, HGA will help the Company locate permanent personnel for the new plant.

A very critical piece to the overall puzzle is securing the necessary raw biomass to feed the daily requirements for the plant.  In our case, the raw biomass to be used is timber waste.  We knew that we wanted to locate the plant in an area of the country that was in close proximity to high quantities of timber waste.  After researching various locations around the country, we decided that the best place to build the plant was somewhere in Georgia's Bioenergy Corridor.  Tifton, Georgia was our first choice until we learned that there was a new Inland Port being built in Cordele, Georgia that would be an extension of the Port of Savannah, one of the Country's largest international shipping ports.  

Through contacts that we had in the Crisp County area, we were introduced to individuals from the Crisp County Industrial Development Council.  During meetings with the Executive Director of the Council, we were offered various incentives to locate the plant in Crisp County.  Subsequent to these meetings, we made the decision to locate the plant in Cordele and began searching for a potential site.  Through the IDC, we found a couple of existing facilities that would suit our needs.  

The site we've selected is in a perfect location adjacent to the new Inland Port.  We have met with a representative from Cordele Intermodal Services, a partner in the new Inland Port and were told that because the plant will be located next to the Inland Port, there would not be a charge for picking up our loaded containers to be sent to the Port of Savannah.  

We have negotiated the terms of a Lease Purchase Agreement with the owner of the building and will provide details and post pictures on our website within the next few days.  It's a wonderful facility located in the perfect area, right in the middle of the timber rich Georgia Bioenergy Corridor.  According to a recent Forbes Magazine article entitled "America's Best Places For Alternative Energy," the abundance of biomass in Georgia's Bioenergy Corridor ranks third in the nation as a potential source of renewable energy. The article referenced the amount of privately owned forests in Georgia, more than any other state in the country, as a reason for the state's ranking.

We felt that it was critical to find someone that had expertise in Georgia's timber business and entered into an Agreement with The Timber Group, LLC to provide the plant with the necessary timber waste to keep the plant running at full capacity.  The principals of The Timber Group are experts in the timber business, specifically Georgia's timber business.

Funding is a critical part of a project of this magnitude.  We've secured interim funding from a group of current shareholders that will cover the Company's expenses during the design phase of the project.  We are in discussions with other funding sources concerning permanent financing and will keep you updated as we have new information.

We have come a long way, but still have a long way to go.  This is a very exciting project with many moving parts.  We will have additional information about the project as we move forward.

I also want to address a couple of shareholder issues that we are aware of and are working to resolve.  

I'm not sure if you aware that Penson, a large securities clearing firm made a decision a couple of months ago that they would no longer clear stock that was priced below $.10/share (ten cents).  As you can imagine, when they made that decision a lot of the brokerage firms that cleared through Penson had to find another clearing firm.  One of the options was Alpine Securities and as you can imagine, they have been inundated with new business.  

Since the decision by Penson, we have heard from a few shareholders that are having problems trading our stock.  There is not a problem with "our" stock, it is trading every day.  The problem lies with the brokerage firm that holds the shareholder's account.  If your brokerage firm clears stock through Alpine Securities, you may be experiencing problems with trading Vega's stock.  Subsequent to all of the new business, Alpine has made the decision to hold the proceeds of a sale of our stock for up to 30 days before forwarding it to the seller's brokerage firm.  Vega is not the only company that is having this problem.  Companies that are not DTC eligible are the ones that are having this problem.  In January of this year, DTC placed a chill on deposits and DWAC's of Vega's stock.  Until now, this has not been an issue.  It simply meant that rather than transferring our stock electronically, you would need to deposit an actual certificate with your brokerage firm.  This is something that most Pinksheet companies experience and most shareholders are never concerned with since they purchase their shares in the open market and never have a reason to have an actual certificate.

We have been in contact with DTC in an effort to have them change our status back to the way it had been since 1986 and allow our stock to be transferred electronically.  We have also been in contact with Alpine Securities on behalf of our shareholders and are trying to resolve the issue in a way that protects our shareholders until we can resolve the issue with DTC.

If you have a brokerage account with a firm that does not clear through Alpine, you are not experiencing this problem.  If you are experiencing problems of any kind, please let us know and we will do whatever we can to help you.

We will keep you informed and make a public announcement once we resolve the issue.

Thank you for your interest in Vega Biofuels and for your continued support.

Sincerely,

Michael K. Molen
Chairman/CEO
Vega Biofuels, Inc.

CONTACT: Vega Biofuels, Inc.: 800-481-0186

SOURCE Vega Biofuels, Inc.