CanFibre and Timber Products Jointly Announce Termination of Their Purchase Agreements.

Business Editors

TORONTO--(BUSINESS WIRE)--July 7, 2000

The CanFibre Group Ltd. (CDN:CFGL.), a subsidiary of Kafus Industries Ltd. (AMEX:KS), its affiliates and Timber Products Co. Limited Partnership headquartered in Springfield, Oregon announce that by mutual decision, they are terminating their purchase agreements with respect to MDF produced by CanFibre's current and proposed facilities.

Under the purchase agreements, Timber Products agreed, subject to conditions, to purchase all of CanFibre's MDF produced at its Riverside, Lackawanna, proposed Amsterdam and proposed Chicago facilities. CanFibre will now maintain responsibility for its own marketing and sales operations.

When asked to comment on the termination of the purchase agreements, Executive Vice President of Timber Products, Don Montgomery, stated, "CanFibre has made great strides in the production of MDF products at Riverside and we wish them continued success. We will assist in any way possible to make this transition as smooth as possible."

CanFibre has now formed its own Sales and Marketing Department, headed by CanFibre Vice President of Marketing and Sales, Gordon Clough. Gordon has more than 20 years' experience in a wide range of areas related to the MDF industry, most recently acting as Director of Marketing and Sales for one of North America's largest independent distributors of MDF.

"With Gord's team already establishing strategic distribution relationships with key industry partners, this change allows CanFibre to concentrate on the sale of its AllGreen(TM) MDF Specialty products," says CanFibre President, Chris Carl. "Timber Products has been a tremendous company to work with but termination of our formal agreements will free both companies to expand into their desired directions."

Kafus is an emerging global manufacturer of superior materials produced from sustainable resources.

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 including without limitation, the assumption that Kafus will be able to raise the necessary financing to develop its projects and that there is market acceptance for its products. 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. Kafus is subject to a number of risks and uncertainties which are set forth in its filings, with the Securities Exchange Commission.