Cathay Forest Products Corp.

Cathay Forest Products Corp.

January 18, 2007 16:09 ET

Cathay Forest Signs Joint Venture for Commercial Timber Activities in China

TORONTO, ONTARIO--(CCNMatthews - Jan. 18, 2007) - Cathay Forest Products Corp. ("Cathay" or the "Company") (TSX VENTURE:CFZ) is pleased to announce that it has signed an agreement for the establishment of a joint venture with Rao He Song Lin Economic Trade Co Ltd. ("Rao He") for the production, manufacture, sale and export of forestry raw timber and other products.

Cathay Forest will own 60% and Rao He 40% of the joint venture. There will be an equity injection of US$1,500,000 into the joint venture by the parties in two phases. Cathay Forest will make an investment of US$600,000 into Rao He as initial phase operations fund, and US$300,000 invested in cash and Rao He will invest US$600,000. In addition, under the terms of the joint venture, Cathay Forest will issue 300,000 common shares to Yao Song-lin, principal of Rao He, subject to regulatory approval.

The Board of the joint venture will consist of a total of 5 directors including 3 appointees of Cathay Forest. Once the joint venture has been established, Yao Song-lin will be the general manager of Rao He.

After-tax profits of the joint venture company will be used and distributed in accordance with the parties' ownership interest in the joint venture, i.e., Cathay Forest 60% and Rao He 40%.

About Cathay Forest Products

Cathay Forest is a forest products company managing standing timber properties and developing fast-growth, high-yield poplar plantations in the Peoples Republic of China. Cathay Forest is building a world class forest products company through a customer base that includes the domestic Chinese pulp and paper industry and harvesting customers serving a variety of wood product industries.

Forward-Looking Statements

All statements, other than statements of historical fact, in this news release are forward-looking statements that involve various risks and uncertainties, including, without limitation, statements regarding the future plans and objectives of the Company. Actual results and future events could differ materially from those anticipated in such statements. The Company assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy of this release.

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