Kafus Reports on European Development.

VANCOUVER, British Columbia--(BUSINESS WIRE)--Oct. 29, 1996-- Kafus Capital Corp. (CANADIAN DEALING NETWORK KFSS., OTC Bulletin Board KFSSF.) Kafus Capital Corporation (Kafus) (OTC Bul. Bd: KFSSF and the Canadian Dealing Network: KFSS) is pleased to report that its newly established European subsidiary, Kafus Environmental Industries Ltd. ("KEI") has identified a site in the South of England for its development of Europe's first CanFibre urban medium density fibreboard plant.

KEI intends to develop up to four (4) CanFibre plants throughout Europe and has created a wholly-owned subsidiary CanFibre Euro Ltd. ("CanFibre Euro") as the owner/developer. CanFibre Euro is currently preparing an Offering Memorandum to raise between $1 to $2 million through its London based financial advisors. If successfully raised, these monies will supply the interim development dollars required to bring CanFibre Euro's planned first two plants to the point of project financing.

CanFibre Euro is currently negotiating the required wastewood supply agreements for the planned South England plant, as well as, a land purchase agreement for the proposed site. Two independent consultants retained on behalf of CanFibre Euro are currently identifying a suitable purchaser for both proposed plants production capacity.

Kafus recently acquired certain exclusive rights to use, market, develop and commercialize the CanFibre technology within Europe and Countries of the British Commonwealth from the CanFibre Group Ltd. ("CanFibre"). CanFibre is currently involved in the final development stages of two proposed CanFibre plants at Riverside, California and Lackawana, New York. KEI currently holds a license granted to it by Kafus Capital for the exclusive development rights to the CanFibre MDF technology package for Europe and Countries of the British Commonwealth. CanFibre Euro in turn has been licensed by KEI for exclusive European development.

CanFibre plants are designed 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 in landfills without the use of conventional Urea Formaldehyde resins, a growing environmental concern for current MDF producers worldwide.

Kafus currently owns 34 percent of the issued and outstanding common shares of CanFibre together with $8.45 million worth of convertible preference shares, that currently on conversion to common shares, would give Kafus in excess of 53 percent ownership of CanFibre.

Kafus is seeking to become a global leader in the use of alternative raw materials in the production of commodity type products.

Kafus is an SEC registrant as well as a reporting issuer in British Columbia and Ontario. -0-

The Canadian Dealing Network neither approves nor disapproves the contents of this News Release.

CONTACT: Kafus Capital Corporation

Investor Relations Department, 604/ 602-1981

604/685-2426 (FAX)

1-888-333-5377

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