Canaf Group Inc.

Canaf Group Inc.

February 21, 2008 10:33 ET

Canaf Announces Q1 Profits for Quantum

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 21, 2008) - Canaf Group Inc. (TSX VENTURE:CAF) ("Canaf") Canaf, the Canada-registered mining group, today announced first financial quarter (Q1) profits for its South African coal processing company, Quantum Screening and Crushing (Pty) Ltd. ("Quantum").

Quantum's un-audited management results for the three months from November 2007 to end of January 2008 showed a net profit of approximately US$140,000, generated from total product sales of US$2,190,881. Sales for the months of November, December and January were US$881,070, US$511,569 and US$798,242 respectively.

For the previous financial quarter (August 2007 to end October 2007), Quantum's un-audited management results showed a net profit of approximately US$114,000, generated from total product sales of US$2,107,151.

The Q1 results for financial year 2007-2008 represent an increase in sales of 4% on the previous quarter. This growth is attributed to client Mittal Steel increasing its monthly product order by 14% from the end of September. Overall sales in Q1 were, however, restricted by a spell of power shortages that occurred throughout South Africa, a crisis that affected all areas of industry and limited Quantum's production schedules. The power situation has since improved and a number of power stations that were closed for repair work are back in production. Quantum's sales during December were also affected by the failure of its client BHP Billiton, a manganese manufacturer, to take any product due to internal logistical problems.

Said David Way, chairman and CEO of Canaf: "The power cuts during the last quarter made production and trading difficult for all industry sectors in South Africa. That Quantum still recorded strong profits during that period shows just how robust the company is and emphasises how profitable the company is in more favourable trading conditions. We expect a significant increase in profits over the next quarter, especially as we are in negotiations to build on the strong relationships we have forged with two of our major clients."

Quantum is currently negotiating a five-year extension to its trading contract with BHP Billiton. Further to that, Mittal Steel, a company that purchases over half of Quantum's monthly product for its Newcastle steel plant, is testing Quantum's product at a second plant, located at Vanderbijl. Quantum is supplying the Vanderbijl plant with approximately 1,250 tonnes of product each month but could substantially increase this once the trial period is completed, a move that would require Quantum to construct an additional kiln to cater for the extra demand.

About Canaf

Canaf Group Inc. is a junior mining group based in Vancouver, Canada, and with subsidiary offices in the United Kingdom and South Africa. Canaf owns 100% of Quantum Screening and Crushing (Pty) Ltd., a coal processing company based in South Africa. In January 2008, Canaf agreed to acquire a 51% majority interest in New Stone Mining SPRL, subject to on going due diligence and regulatory approval.

New Stone Mining is registered in the Democratic Republic of the Congo, where it has four mining concessions in the Kasai Occidental and the Oriental Province. New Stone Mining has also secured a fifth concession close to the Angolan border, an area well known for its rich alluvial diamond concessions. All concessions and assets are 100% owned by New Stone Mining. New Stone Mining has developed its own system for extracting and processing diamondiferous gravel of various sizes from riverbeds using a method that minimizes waste, is kind to the environment and offers better security than other systems. New Stone Mining is currently in the process of taking the first of five alluvial diamond-mining operations into production.

About Quantum

Quantum Screening and Crushing (Pty) Ltd.'s is one of South Africa's largest producers of calcined coke, a product that is vital in the manufacturing process of steel and manganese. The company's two largest clients are Mittal Steel and BHP Billiton, world leaders in steel and manganese production respectively. Quantum has a plant in Newcastle, KwaZulu Natal, where its two kilns operate around the clock calcining the raw material anthracite. The majority of Quantum's feedstock anthracite is supplied by Springlake Colliery, which has reserves in excess of 40 years and is based in Dundee, the neighbouring town to Newcastle. Quantum has been operating profitably since 2002 and recent annual net profits have been US$0.66 million for year-end 2006 and US$0.814 million for yearend 2007 (based on South African year end of 28 February).

Forward-Looking Statements

Certain information regarding Canaf contained herein may constitute forward looking statements. Forward looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although Canaf believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward looking statements. Canaf is under no obligation to update or alter any forward looking statement. These risks include operational, political, currency and geological risks and the ability of Canaf to raise or obtain funds for its operations. Canaf's forward looking statements are expressly qualified in their entirety by this cautionary statement.

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

Contact Information

  • Canaf Group Inc. - UK Office
    Christopher Way
    Investor Relations
    +44 1273 492100
    +44 1273 492175 (FAX)
    Ascenta Capital Partners Inc.
    Bryson Goodwin
    (604) 684-4743 ext. 239 or Toll Free: 1-866-684-4209
    (604) 939-1292 (FAX)