Hybrid Fuels, Inc. announced that an agreement in principle has been reached between its wholly-owned subsidiary Hybrid Fuels (Canada) Inc. and the A4 Bar Cattle Company Ltd. covering a proposed joint venture between the companies.

The agreement provides for a joint venture to involve development and operation of the proposed Siksika A4 Bar Farm Operations Project. "The Siksika Project will initially consist of the construction of two facilities each utilizing Hybrid Fuels' proprietary technology together with cattle supplied by A4 Bar Cattle Company Ltd.," said Douglas Dickie, president and CEO of Hybrid Fuels Inc. "We anticipate that both the finalization of the joint venture agreement and the start of construction of the initial facilities will occur in the quarter ending September 30, 2006. Completion of the facilities is expected in the quarter ending December 31, 2006."

The barns constructed for the Siksika Project will be atmospherically controlled and will contain fly control devices. Cattle in the barns will be fed a diet of wet distillers grains (WDG) which are proven to be an excellent dietary feed stock for cattle and will be supplemented by a daily ration of fresh green grass. The Hybrid Fuels' system is designed to dispose of barn waste without any material adverse environmental impact. Cattle will remain free from hormonal implants and antibiotics. Movement of cattle to the joint venture's packing houses will be less than 25 miles to limit transportation-related stress for the cattle.

It is expected that the initial phase of the proposed Siksika Project of two facilities will produce up to 3,000 litres of ethanol daily, generate up to 1 megawatt of power, finish up to 2,400 head of cattle annually and provide up to 10 full time jobs. The hydroponics section of the barn is designed to have the grass growing equivalent of up to approximately 1,600 acres of grassland.

Provided the initial phase of the Siksika Project meets the expectations of the joint venture participants, A4 Bar Cattle Company Ltd. and Hybrid Fuels (Canada) Inc., the agreement between the parties allows for the construction of additional facilities. "We believe the proposed Siksika A4 Bar Farm Operations Project will provide an innovative, alternative approach to economic and community development on First Nation lands and will help facilitate First Nations efforts to achieve economic self-sufficiency and independence," said Allan J. Wolfleg, Chairman of A4 Bar Cattle Company Ltd. "This initiative is but one example of A4 Bar Cattle Company Ltd.'s quest for betterment of the First Nations people."

SOURCE Hybrid Fuels Inc.