CanFibre Confirms Plans for US $110 Million MDF Facility in New York State.

TORONTO--(BUSINESS WIRE)--Sept. 30, 1997--The CanFibre Group L (Canadian Dealing Network:CFGL) CanFibre Group Ltd. is pleased to announce that it has now completed negotiations of all necessary contracts required for the financing and construction of its second Medium Density Fibreboard manufacturing facility, to be located in Lackawanna, New York.

The contracts include long-term fibre supply on a fixed cost basis with two respected waste companies in the region; a fixed price Engineering, Procurement and Construction (EPC) contract with Stone & Webster Engineering Corp. identical to Riverside; a long term sales agreement with Timber Products Company guaranteeing the sale of 100 percent of the production volume; and a land purchase agreement from the City of Lackawanna where such land is located in an Industry Development Zone offering a variety of economic benefits the most important of which is very competitive electricity rates. Environmental permitting has also commenced and is expected to be completed by mid-November, 1997.

The facility will use 100 percent post-consumer waste wood and will produce approximately 78 million square feet of MDF annually. The majority of production will be specialized resulting in a line of products which includes fire resistant, water resistant, thick MDF, and lightweight MDF. All of the MDF will be produced using Phenol Formaldehyde resins which reduce formaldehyde emissions from the product by 99.99 percent compared to MDF produced using Urea Formaldehyde resins.

CanFibre is also pleased to announce that it has received a tax- exempt bond allocation from the Erie County Industrial Development Agency (ECIDA) in the amount of US$88 million. This allocation enables CanFibre to proceed to complete financing of the MDF facility. The cost is expected to total US$110 million with the remaining US$22 million to be funded by a combination of subordinate debt and equity. CanFibre intends to complete financing by the end of 1997.

"The construction of this facility, which will be the second of five such facilities planned for North America, further underscores CanFibre's commitment to become a significant force in the production of specialized MDF," said Christopher D. Carl, President of CanFibre.

CanFibre engages in the worldwide development of manufacturing plants to produce high quality wood panel products such as medium density fibreboard (MDF) from 100 percent recycled dry waste. CanFibre MDF is North America's first "green" panel board. It is produced from materials normally dumped into landfills without the use of conventional Urea Formaldehyde resins, a growing concern for current MDF producers worldwide.

The foregoing contains forward-looking statements as defined in the Securities Act of 1933 and the Securities Exchange Act of 1934 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.

CONTACT: The CanFibre Group Ltd., 800/661-0288

416/695-3004 (FAX)

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