Cathay Forest Products Corp.
TSX VENTURE : CFZ

Cathay Forest Products Corp.

May 01, 2009 17:35 ET

CORRECTION FROM SOURCE: Cathay Forest Announces Financial Results for 2008

TORONTO, ONTARIO--(Marketwire - May 1, 2009) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA

Cathay Forest Products Corp. announces that in its press release issued earlier today entitled "Cathay Forest announces Financial Results for 2008" the net loss per common share was incorrectly stated as $0.400 for the year ended December 31, 2008. The correct net loss amount is $0.040 per common share.

The text below replaces the announcement referred to above:

Cathay Forest Products Corp. ("Cathay Forest" or the "Company") (TSX VENTURE:CFZ) today reported financial results for the year ended December 31, 2008.

For fiscal 2008, Cathay Forest reported continued strong growth with a 29% increase in revenue to $24,816,055 for the year. This increase is mainly attributed to the expanded volume of log exported from Russia and sold into the China market. Also included in the 2008 results were the first revenues derived from the Russian operations which amounted to $643,985.

In order to reflect compromised prices for logs at year end resulting from the downturn in the global economy, the company provided $1,552,291 for potential future reductions in realizable values of the inventory. This provision has been applied against the cost of sales.

Net loss for the year was lower by $601,909 to $4,532,230 or $0.040 per common share compared to a loss of $5,134,139 or $0.062 per share in 2007.

Highlights:

- As of March 15, 2009, the Company through its majority-owned Russian Joint Venture, DalEuroLes L.L.C. ("DalEuroLes") has received a temporary railway license for its recently completed lower landing in Kharpichan, Russia. With the lower landing fully operational, logs being harvested by DalEuroLes are now being transported by the Company's own fleet of trucks to the lower landing where the logs are being handled for shipment to China and Japan via rail and sea.

- In January, 2009 the Company successfully completed its first shipment of Russian logs to Japanese customers. The sale was arranged through our Japanese distribution partner. It is anticipated that during the remainder of the year the Company will continue to ship product to Japan and by doing so allow for the development of a secondary market for our Russian products in support of our principal market located in China.

- On November 13, 2008, the Prime Minister of Russia, Mr. Vladimir Putin announced that the anticipated export tariffs on unprocessed lumber export are being delayed for a period of 6 to 9 months. With this announcement in mind the Company will continue to develop its strategy with regards to the feasibility of acquiring and putting into service a value added facility in Russia during 2009 or 2010. By virtue of its membership in Russia's Priority Investment Program Cathay Forest's majority owned joint-venture, DalEuroLes enjoys Russian export tariffs exemptions on the export of any processed wood products. Due to the uncertainty surrounding the application of tariffs, the Company continues to monitor developments with regards to this situation.

- Harvesting operations began on our first leased property in Khabarovsk in October 2008. To date we have been able to achieve operational results that are in keeping with our planned projections of meeting the annual allowable cut quota of 300,000 cubic metres per year. Starting in November 2008 in conjunction with the harvesting operations, the Company started shipping harvested logs from Russia to China. This was followed by the first shipment to Japan in January 2009. For 2010, the Company anticipates not only meeting its annual allowable cut quota on the first property but also plans to harvest a significant portion of the 400,000 allowable cut quota on the second property once the required infrastructure is in place. For 2011 and beyond, full production levels of 700,000 cubic metres per year are anticipated.

- In July 2008 the Company received final approval for forestry rights to an additional 721,198 hectares in the Khabarovsk Region of Russia with an attached Annual Allowable Cut quota of 400,000 cubic meters. It is currently anticipated that harvesting on this property will begin in mid to late 2010. These additional rights increase the Company's total forestry rights in Russia to 992,198 hectares with annual allowable cutting quotas of approximately 700,000 cubic metres per year.

- In June 2008, the Company entered into a distribution agreement with a Japanese firm that will facilitate the sale of wood products from Russia to the Japanese markets. Under the terms of the agreement the Japanese company will act as an agent in Japan for Russian wood products to be sourced by the Company. With harvesting operations underway since October 2008, the Company is in position to negotiate the sale of its harvested wood products.

- Throughout the year, the Company committed significant resources to the acquisition of forestry equipment for its Russian operations in addition to the development of infrastructure in support of its operations. The Company took delivery of the forestry equipment in late July 2008, which coincided with the completion of a significant portion of the main road into our Khabarovsk property. The equipment was first put into service in late September under contract for a third party and then subsequently began harvesting on our standing timber property at the beginning of October 2008. Transportation and loading equipment was acquired in December 2008 and placed into service in support of the harvesting operation.

- In January 2008 a total of 350,000 warrants were exercised. In April 2008, following receipt of all required regulatory approvals, the Company issued 800,000 common shares from treasury to complete the DalEuroLes transaction that was entered into in October 2007. There were no additional shares issued or options exercised after April 2008.

The Consolidated Financial Statements of Cathay Forest for the year ended December 31, 2008 as well as the related Management's Discussion and Analysis are available on SEDAR at www.sedar.com.

About Cathay Forest Products

Cathay Forest is a forest products company that manages approximately 1,000,000 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.

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. Except as required under applicable securities laws, 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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