Cathay Forest Products Corp.

Cathay Forest Products Corp.

December 05, 2007 08:30 ET

Cathay Forest Signs Agreement to Develop 3,300 Hectares of Poplar in Jiangxi Province

TORONTO, ONTARIO--(Marketwire - Dec. 5, 2007) - Cathay Forest Products Corp. (TSX VENTURE:CFZ) ("Cathay Forest" or the "Company") is pleased to announce that is has entered into an agreement to develop a 3,300 hectare poplar plantation.

Cathay Forest signed the cooperative agreement with Nanchang Hengfeng Forestry Co., to develop and plant approximately 3,300 hectares within five years, however both parties anticipate completing the project well within five years. Under terms of the agreement, Nanchang Hengfeng Forestry is to secure the use of the land for forestry plantation and harvesting use and also to assist in the development of the plantation. The initial planting program is scheduled to begin in the spring of 2008.

"This agreement further emphasizes our long-term commitment to develop fast growth high yield poplar plantations in China," said Anthony Ng, Cathay Forest's President and CEO.

The poplar to be planted is a variety that has fast growth, high yield characteristics, which can reach commercial harvest quality in five years. The area to be developed is in the same PoYang Lake, Jiangxi Province region as a separate agreement previously announced on January 12, 2007, The poplar is intended to be used as feedstock for one of the largest paper companies in China, which has a pulp mill within 100 kilometres of PoYang Lake.

Cathay Forest has recently acquired fire insurance for the Company's standing timber properties located in Jiangxi Province, nearby to the Poyang Lake poplar plantations. This is the first phase of insuring Cathay's timber assets and follows a recent government program, which offsets up to 40% of the cost of insuring forestry assets. The insurance program is part of a ten-policy program recently announced by the Chinese government to support commercial forest activities in China. Besides the insurance program, other policies expected to come into effect include favourable income tax treatment and other tax credit programs. Cathay is expected to benefit from many of the policies being phased into practice.

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 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 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. We caution readers not to place undue reliance on these statements as a number of important factors could cause actual results and future events to differ materially from the plans, objectives, expectations and intentions expressed in such forward looking 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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