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Gold/Mining/Energy : Kafus Environmental (KS) -- Ignore unavailable to you. Want to Upgrade?

To: DCBEN who wrote (121)	9/30/1998 3:20:00 PM
From: Abuckatatime	Read Replies (1) \| Respond to of 229

KAFUS 1998 DEVELOPMENT ACTIVITY REPORT As of September 1998 Mission Statement -The global development of Kafus as a low-cost producer of commodity and specialty products from alternative sustainable materials.- General Global Activities Include: Production of panelboard products from waste wood and other non-virgin fiber sources; the production of paper and newsprint without the cutting of trees; replacement of fiberglass with the -growing- of car parts; replacing aluminum, vinyl and hardwood based siding with fiber cement board; processing organic wastes including chicken and pig manure into value added products. CanFibre CanFibre's Riverside MDF project continues at a strong pace with initial board production due in the first calendar quarter of 1999, despite some delays due to weather from El Nino. Construction is now approximately 70% complete and engineering is 100% complete. CanFibre recently introduced its ALLGREEN¬ MDF line of products at the Annual International Wood Products Fair in Atlanta this past August with significant positive response for its specialty MDF products, in particular ALLGREEN¬ FR MDF, CanFibre+s fire retardant MDF. CanFibre's Lackawanna, NY project recently received an additional tax exempt bond allocation of $3 MM to fund additional capital equipment for the project. This is in addition to the $87 million already committed. Although initial site work has begun, CanFibre recently increased the size of its steam injection press to meet the anticipated market+s demands for larger panelboard sizes for the East Coast market as well as export into the European marketplace. Final preparations for engineering and design have now been completed by Stone & Webster Engineering Corporation resulting in an increased capacity of the plant to over 80 million square feet on a design basis. We now anticipate final bond closing to occur early calendar fourth quarter of 1998. Kafus continues development of its first European MDF facility in the Port of Amsterdam. Applications for all environmental permits have been filed and are expected to be received by the end of 1998. CanFibre has designed this facility to have double the production capacity of its US facilities in order to service a strong European demand for environmentally friendly panel products. CanFibre's development efforts have been greeted with great enthusiasm by the Dutch government which is steadfastly supporting the first 100% recycled panelboard project in Europe. Kenaf Industries Kenaf Industries continues to finalize its development of the world+s first commercial newsprint facility based entirely on kenaf fiber. Kenaf Industries recently announced the expansion of the design capacity to 110,000 tons per year for its Texas based newsprint plant and has applied for revised permits, which are expected to be received by the end of this year. Kenaf Industries has also begun final selection of its second site in Arizona and will begin the permitting process shortly. Kafus recently formed Kafus Bio-Composites Inc. and appointed an individual with over 20 years of engineering, project development and finance experience as president. Kafus Bio-Composites+ sole function is to promote and develop the utilization of kenaf fiber and other natural fiber in molded products for the automotive, aeronautical and building products industry. This is a direct result of the successful application of kenaf fiber mat products being used in molded door inserts in several European automotive lines and the need to commercialize the development of several new products based on kenaf fiber. The dedication of this business unit will allow a focused effort to construct a number of Kenaf fiber mat production facilities in the United States and Europe by the year 2000. Kafus is in negotiations for production of kenaf mat and board projects with several Tier 1 automotive suppliers. Fortra Fiber Cement Kafus' joint venture with Temple Inland in the production of Fortra Fiber Cement, recently achieved mechanical completion of its 120 million square foot fiber cement board facility in Waxahachie, Texas. This facility will produce primarily siding product to replace hardwood, aluminum and vinyl siding products and is expected to begin commercial production and sales in October of 1998. This will mark the first commercial sales for Kafus, signifying the evolution from a development to an operating company. Camden Agro Since February 1998, Camden has operated a test facility in central Florida processing organic waste supplied by dairy, bakery and ice cream makers into animal feed supplements. Camden has now secured long-term raw material supply and finished product buy-out agreements based on the positive results of its test program. Miracle Feeds of Canada has contracted to distribute 100% of Camden+s animal feed production on an exclusive basis throughout North America. Camden is now completing its final development budgets and anticipates starting construction on its first Florida based commercial production facility in the last quarter of 1998, subject to financing. Additionally, Camden is nearing the conclusion of developing technical specifications for its nutrient enriched organic fertilizer blends under the trade name of Verdant Organic+. Camden+s organic fertilizer, which is produced from poultry and hog manures, has been developed with unique slow release characteristics, a feature missing from most -boutique- type organic fertilizer blends. Camden offers significant long term commercial opportunity by helping to turn one of North America+s and Europe+s worst pollutant problems into a value added solution. Kafus Environmental Offset Kafus Environmental Offset recently completed its introduction of the Kafus group of environmental companies at the 1998 Farnborough International Air Show, the largest trade show in the world, exhibited by virtually every major defense contractor and commercial aircraft manufacturer. KEO has several offset opportunities under initial consideration in South Africa, Kuwait, Oman, Egypt, Spain and the UAE. The first KEO development project between a Middle East government, and a major European defense contractor is expected to be announced before year end. Given KEO's global understanding of geopolitical issues, Kafus can directly assist in the creation of meaningful Offset programs in balance with defense planning. Kafus believes KEO represents the best possible and most immediate route to large scale international development of Kafus controlled industries. Current Funding Kafus recently announced the closing on a $12.5 million line of credit with Enron Capital & Trade Resources. This facility, designed to provide working capital for Kafus also was utilized to redeem $5.9 million of convertible preferred stock. The convertible stock, which was issued to fund early stage development, was potentially a huge dilution overhang to our shareholders and redemption eliminates this concern. With the closing of CanFibre+s Lackawanna facility, ECT will have invested in over $125 million in Kafus and its projects. Ongoing Global Development for 1999 CanFibre Negotiations continue for contracting long-term, guaranteed fiber supply for additional strategic US locations. CanFibre anticipates conclusion of development and funding for its third US MDF facility in 1999. A decision as to the location of CanFibre+s second European MDF facility will be made shortly. Current plans call for the conclusion of funding for the second European CanFibre plant in late 1999. Kenaf Kafus' second Kenaf based newsprint mill is expected to be ready for financing for the calendar second quarter of 1999. Development is currently under way for Kafus+ first European Kenaf paper facility. Spain, where newsprint is a major import and climate conditions favor kenaf growing, is currently the lead contending location. Kafus expects, staring in 1999, to begin development of multiple kenaf mat and board facilities in Europe. Kafus is in final negotiations of a three year consulting and development agreement with a leading technology supplier to the molded automotive parts industry. Fortra Fiber Cement Kafus and Temple Inland are identifying a suitable North America site for the second Fortra Fiber Cement plant with a scheduled development conclusion in 1999. Kafus owns 100% of the non-North American rights for the Fortra Fiber Cement processing technology and has initiated feasibility studies relative to the international application of Fortra Fiber Cement products. Camden Agro Additional Camden US based sites are being explored for the -cookie-cutter- development of Camden+s Florida organic waste facility. The existing pre-sale agreement with Miracle Feeds of Canada for the guaranteed purchase of Camden+s cattle feed is expandable to multiple plants in Canada and the US. Upon conclusion of Camden's organic fertilizer technical specification program, Camden will fast track a 1999 development program aligning -animal waste to fertilizer- plants with major poultry and pig production areas. The foregoing contains forward-looking statements, which are subject to contingencies and uncertainties. Such forward looking statements are not guarantees of future performance, and are based on numerous assumptions about future conditions that could prove to be inaccurate. Actual events, transactions, and results may differ materially from anticipated events, transactions or results described in such statements. Material uncertainties about the future of the company exist. There can be no assurance that funding will be obtained for the proposed facilities, or that they will be constructed or operated as contemplated, or that the market for the products of any facilities will be as assumed. Kafus is subject to a number of risks and uncertainties, which are set forth in its filing, with the Securities Exchange Commission.