Cathay Forest Products Corp.
TSX VENTURE : CFZ

Cathay Forest Products Corp.

June 26, 2008 10:03 ET

Cathay Forest Receives Report From Indufor on Russian Forest Property

TORONTO, ONTARIO--(Marketwire - June 26, 2008) - Cathay Forest Products Corp., ("Cathay") (TSX VENTURE:CFZ) is pleased to announce that Indufor Oy ("Indufor"), an independent forestry consulting company engaged by Cathay has released a progress report on Cathay's Russian Joint Venture, DalEuroLes L.L.C., forestry operations.

The report finds that in an effort to begin harvesting operations, all major phases of infrastructure construction are on or ahead of schedule. Harvesting activities are expected to commence in the third quarter of 2008 with annual production projected to reach approximately 300,000 cubic metres by the end of 2009.

The report also shows significant advantages with Cathay's strategy of creating and using an in-house road construction unit as Cathay is better able to control construction costs and quality. In addition, ownership of machinery allows multiple uses across future projects. The access road construction is completed and the logging road is in progress and expected to be finished ahead of original schedule.

The Indufor report identified Japan as the most attractive wood market in Asia. 45% of all logs imported into Japan are sourced from Russia due to strict Japanese quality standards. Japan will continue to rely heavily on Russian wood exports as Japanese industry continues to shift towards using softwood plywood. Russia also continues to be leading exporter to China and wood prices in the region have been increasing significantly over the past 2 years.

Indufor also recommends that Cathay constructs a sawmill facility in Russia in order to achieve higher profitability as it will allow wood exports to bypass recently enacted and future export tariffs on un-processed roundwood.

Cathay's board of directors and management are in the process reviewing the Indufor report recommendations and specific implementation decisions will be announced in due course. An executive summary of the Indufor report will be made available on SEDAR at www.sedar.com.

Correction

In a press release issued June 23, 2008 entitled "Cathay Forest reaches agreement to acquire additional standing timber concession in Russia", the figure related to the area of land was incorrectly reported. The approval from the government of the Russian Federation for a 49-year land lease is for 700,000 hectares. The expected annual allowable cut assigned to the concession is approximately 400,000 cubic metres per year. The proposed lease is still subject to final agreement with the government of Khabarovsk.

About Cathay Forest Products

Cathay Forest is a forest products company, that with the newly acquired Russian lease will manage approximately 700,000 hectares of standing timber properties and fast-growth, high-yield poplar plantations in China and Russia. Cathay Forest is building a world-class forest products company through a customer base that includes the domestic Chinese pulp and paper industry and other wood products customers in the Japanese market.

About Indufor Oy

Indufor provides leading services in forest industry know-how and forest management, nature conservation, and environmental management in Finland and worldwide. Indufor provides clients the range of expertise needed for sustainable forest management and forest conservation. Services include up-to-date advice and technological solutions on issues ranging from how to capture the benefits of the international forest-related conventions and agreements to the smallest details of the logistics in forest production.

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. Other than in accordance with applicable securities laws, Cathay 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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