Kafus to acquire controlling interest of an organic waste processing company.

VANCOUVER, British Columbia--(BUSINESS WIRE)--May 22, 1997-- Kafus Capital Corporation (Kafus) (OTC Bul. Bd.: KFSSF; Canadian Dealing Network: KFSS) -- Kafus is pleased to announce that it has executed an interim agreement to acquire 85 percent of the current and issued outstanding common shares of Camden Agro-Systems Incorporated (CASI).

CASI is an Ottawa based company specializing in the turnkey development of facilities capable of producing value added products such as animal feed commodities and organic based fertilizers from a wide range of organic byproducts including animal wastes. CASI has spent the last two years creating a waste processing industry model that can be used for multiple plant applications on a global basis.

As a result of CASI's pre-development program, CASI is in the final planning and design stages of a unique organic waste processing facility specifically designed to convert selected poultry and other organic wastes into value added animal feed supplements. CASI intends to locate its first plant near Abbotsford, British Columbia, an area known for major poultry operations.

The Abbotsford area is experiencing serious nitrate pollution to local water tables because of the spreading of chicken manure on fields, currently one of the only practical methods of disposal. Nitrate pollution of the water table is typical of the problems being encountered globally in regions of major poultry production. CASI has the ability to convert poultry manure into organic based fertilizer products.

In order to verify the feasibility of its processing technology and to validate its value added products, CASI recently successfully completed two 70 day third party due diligence demonstration trial at Kansas State University (KSU). In this demonstration, KSU researchers fed seventy beef cattle two types of feed supplement - a commercial blend, and a variety of two CASI dry, pelletized feed supplements produced from poultry wastes. Trial results successfully validated the effectiveness of the CASI feed supplements, when compared against the more expensive, commercial blend.

The second KSU trial involved growing grain sorghum in segregated plots, fertilized with two commercial fertilizer varieties and one of CASI's organic based fertilizer blends (made from poultry manure, poultry mortalities and alfalfa). Trial results indicated significantly higher grain sorghum yields were achieved from plots fertilized with the CASI organic fertilizer, than those using commercial fertilizer blends.

CASI's existing President, Mr. Bob Novitsky, P.Eng. will continue to serve as President and Chief Operating Officer of CASI. Mr. Novitsky has 10 years business experience in successfully commercializing environmental technologies. He holds a Bachelor of Chemical Engineering Degree, from the Royal Military College in Kingston, Ontario, and two Masters Degrees from the Massachusetts Institute of Technology, Cambridge Mass.

Under the terms of the interm agreement, Kafus will purchase from existing CASI shareholders 85 percent of their interest in CASI for a total purchase price of $400,000 payable by a issuance of Kafus shares at a 15 percent discount to the 5 day weighted average immediately prior to closing, which is currently set on or before June 30, 1997.

Additionally, Kafus is responsible to supply adequate working capital as required by CASI to operate and develop its existing business plan independently of direct project financing required for the proposed Abbotsford facility. Financing for this facility is to be arranged and managed by Kafus based on CASI's ability to provide long-term waste supply contracts, as well as agreements of presale for a minimum of ten years for the total production of the planned Abbotsford plant. The acquisition is also subject to satisfactory due diligence review by Kafus and approval by the shareholders of CASI and the directors of CASI and Kafus, as well as any regulatory approvals that may be required.

Kafus' planned acquisition of CASI is another step in Kafus realizing its goal of becoming a global low cost producer of commodity style products based entirely on post consumer and industrial wastes and other non-conventional production raw materials. Upon completion of financing for the planned CASI poultry waste conversion plant in Abbotsford, Kafus anticipates rapid, multiple applications of the same industrial model for North America, Europe, and The Pacific Rim.

Shares Outstanding: 16.9 million

CONTACT: Kafus Capital Corporation

Investor Relations Department, 604/602-1981

604/685-2426 (fax)

1-888-333-KFSS (5377) Toll Free

http://www.kafus.com