Company Will Contract 15,000 Acres of Flax This Year and Establish
Regional Production Facility by Q1 2012

Announcement Follows Close of C$13.1M in Bought Deal Financing

PORTLAND, OR and VANCOUVER, BC, July 14, 2011 /PRNewswire/ – Naturally Advanced Technologies Inc. (“NAT” or the “Company”) (OTCBB: NADVF) (TSXV: NAT) today announced it
has entered into an agreement with Carolina Eastern Precision Ag, of Pamplico, S.C., to provide agronomic consultation to the Company
and its contractors in the region. Under the terms of the agreement,
Carolina Eastern will assist NAT in the recruitment of growers and
contractors, and advise on all cultivation related to flax that will be
turned into its branded CRAiLAR fiber including seeding rates,
fertilization, and weed control. NAT plans to contract more than 15,000
acres of flax, grown as a winter crop, in its first year. The harvest
will be the first used under a purchasing agreement with HanesBrands (NYSE: HBI) for CRAiLAR Flax fiber announced in March 2011. This
follows an 18-month pilot program with HanesBrands and the United States Department of Agriculture‘s Agricultural Research Service (USDA – ARS), which verified the opportunity for flax growth in the
region.

By the first quarter of 2012, NAT anticipates it will build an
integrated facility in Williamsburg County capable of producing 300,000
lbs. of CRAiLAR Flax fiber per week. S.C. is one of two flax
fiber-producing regions strategically chosen by NAT for the location of
facilities.

“This announcement is a culmination of a two-year process that took a
significant amount of effort from South Carolina’s Department of
Commerce, the USDA – ARS, Williamsburg County, and HanesBrands,” said
Jason Finnis, founder and COO of NAT. “We are confident in the
experience and relationships that Carolina Eastern brings to our team,”
continued Finnis, “And we anticipate that their team’s knowledge of the
region, from both the agronomic and economic standpoints, will allow us
to quickly and smoothly ramp up production demand to bring CRAiLAR Flax
to market,” he concluded.

The Carolina Eastern team will be led by Charles “Russell” Duncan, who
spent 27 years as an agricultural extension agent in the Pee Dee area
of S.C. with Clemson University. A native of S.C., he worked in
Clarendon, Florence, Marion and Williamsburg counties during his
tenure, and served as administrator for the Clarendon and Williamsburg
offices. He is currently serving as chair of the International
Certified Crop Adviser board, a national program of the American
Society of Agronomy, which has established benchmarks for education,
experience and ethics in agronomy.

“CRAiLAR Flax fiber is one of the most well-researched agronomic
opportunities we’ve seen in South Carolina in my entire career,” said
Duncan. “Between their partnerships with a well-established end-user in
HanesBrands, along with institutional research and the potential for
local financing, we are excited about the opportunity we will be
presenting in coming months and hope for a long-term opportunity to be
established among farmers looking for winter crop alternatives.”

Farmer Field Day
A farmer field day, to be held on Wednesday, August 3 in Kingstree,
S.C., is expected to attract more than 100 farmers in the region who
are interested in growing an alternative cash crop to wheat in the
winter months. The event will be hosted by NAT and Carolina Eastern,
and will be supported by the USDA office in Clemson, S.C., HanesBrands
and Arbor One Farm Credit.

The Company intends to leverage regional sustainable agricultural
initiatives to fund a portion of the capital requirement to establish
itself in the region.

CRAiLAR Flax Fiber Production in South Carolina
The Company recently completed winter growing trials in a combined study
with the USDA – ARS and HanesBrands, and has identified the varietals
that will produce the best fiber yields in a growing season that
traditionally can only produce winter wheat. Dr. Jonn Foulk, Research
Scientist, USDA -ARS, assited the team with the research. He has
studied flax production in the region for nearly a decade.

“As a winter crop, we found that South Carolina offers significant
upsides to growing varietals of flax that are needed to produce CRAiLAR
fiber,” said Dr. Foulk. “The climate is ideal, the fertilization and
weed control are minimal and the winter rainfall provides adequate
irrigation. Additionally, production in the southeastern U.S. has the
potential to enhance rural economic growth and to supply a natural
domestic source of fiber to industries.”

In August 2010 NAT signed a ten month sublease on a facility in
Kingstree, S.C., where it scaled-up flax fiber production by conducting
the decortication process of CRAiLAR Flax fiber. The facility was
originally established to conduct processing of flax fiber under a USDA
initiative.

Companies with which NAT is currently engaged in purchasing or
development agreements include Georgia-Pacific, Levi Strauss & Company, Cintas Corporation, Ashland Inc., and HanesBrands.

Naturally Advanced Technologies Inc.
Naturally Advanced Technologies Inc. develops renewable and
environmentally sustainable biomass resources from flax, hemp and other
bast fibers. The Company, through its wholly owned subsidiary, CRAiLAR
Fiber Technologies Inc., has developed proprietary technologies for
production of bast fibers, cellulose pulp, and their resulting
by-products in collaboration with Canada’s National Research Council.
CRAiLAR technology offers cost-effective and environmentally
sustainable processing and production of natural, bast fibers resulting
in increased performance characteristics for use in textile,
industrial, energy, medical and composite material applications. The
Company was founded in 1998 as a provider of environmentally friendly,
socially responsible clothing. For more information, visit www.naturallyadvanced.com.

Neither the TSX Venture Exchange Inc. nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this
release.

Forward-Looking Statement Disclaimer

This news release includes certain statements that may be deemed
“forward-looking statements”. All statements in this news release,
other than statements of historical facts, are forward-looking
statements. Forward-looking statements or information are subject to a
variety of risks and uncertainties which could cause actual events or
results to differ from those reflected in the forward-looking
statements or information and including, without limitation, risks and
uncertainties relating to: any market interruptions that may delay the
trading of the Company’s shares, technological and operational
challenges, needs for additional capital, changes in consumer
preferences, market acceptance and technological changes, dependence on
manufacturing and material supplies providers, international
operations, competition, regulatory restrictions and the loss of key
employees. In addition, the Company’s business and operations are
subject to the risks set forth in the Company’s most recent Form 10-K,
Form 10-Q and other SEC filings which are available through EDGAR at www.sec.gov. These are among the primary risks we foresee at the present time. The
Company assumes no obligation to update the forward-looking statements.

SOURCE Naturally Advanced Technologies Inc.