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Expansion of the Crushing Capacity at Boa Vista Mill

São Paulo, August 17, 2011 - São Martinho S.A. (BM&FBovespa: SMTO3; Reuters: SMTO3 SA and Bloomberg: SMTO3 BZ) (“Company” or “São Martinho”), one of the largest producers of sugar and ethanol in Brazil, announces that the Extraordinary Shareholders’ Meeting of Nova Fronteira Bioenergia S.A., a joint venture between São Martinho S.A. and Petrobras Biocombustível S.A., approved expanding the sugarcane crushing capacity at the Boa Vista mill in Goiás to 8 million metric tons.

Crushing at the Boa Vista mill in the current harvest year (2011/12) is expected to reach 2.3 million metric tons. With the investments approved for the expansion, the mill’s crushing capacity will reach 8 million metric tons in the 2014/15 harvest year.

Nova Fronteira Bioenergia S.A. will invest R$520.7 million in the expansion, to be distributed as follows:

Capex Allocation Amount in R$
Industrial equipments R$ 430.5 million
Agricultural equipments R$ 90.2 million
Total R$ 520.7 million

Harvest Year Amount in R$

Crushing Capacity
(in millions of metric tons)

2012/2013 Harvest Year R$ 179.6 million 3.4
2013/2014 Harvest Year R$ 326.1 million 4.0
2014/2015 Harvest Year R$ 15.0 million 8.0
Total R$ 520.7 million

Upon completion of the expansion, 70% of the sugarcane crushed at the mill will be provided by the Company (own sugarcane) and the mill will have the capacity to produce 700 million liters of ethanol, in addition to 600,000 MWh of electrical cogeneration capacity.

The Boa Vista mill enjoys the PRODUZIR benefit of Goiás state government, totaling R$3.0 billion.

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João Carvalho do Val
Chief Financial and Investor Relations Officer

Felipe Vicchiato
Financial and Investor Relations Manager