StakeTech Signs Major Agreement For Pulping In China.

NORVAL, Ontario--(BUSINESS WIRE)--Aug. 17, 1999--

Jeremy N. Kendall, Chairman and Chief Executive Officer of Stake Technology Ltd. (StakeTech) (NASDAQ-STKL) is pleased to announce the signing of an agreement with Pacitec Inc. (Pacitec) of Arlington, Texas for the supply of non-woody pulping systems to the Peoples Republic of China.

Under the terms of the agreement, Pacitec acquires exclusive rights to market StakeTech's proprietary pulping systems for non-woody applications in China for a license fee of US $4.0 million payable over twelve years. Maintenance of rights is conditional on achieving performance milestones that total to the sale of a minimum of 40 StakeTech Systems for a total value of approximately US $160 million. All rights to the design and manufacture of StakeTech's proprietary steam explosion pulping systems are retained by StakeTech.

Pacitec is a U.S. trade and development company with offices in Arlington, Texas and Beijing, China. Pacitec specializes in developing business opportunities in China and acts as a sales agent for such companies as Halliburton Energy Services and Kellogg Brown & Root. Pacitec is in partnership with the China National Beijing Contracting & Engineering Institute for Light Industry (BCEL), a leading institute that advises the government of China on new technology. BCEL is an experienced engineering firm with EPC capability and has completed over 20 projects in the pulp and paper industry since 1981.

In 1995, China had over 10,000 pulp and paper mills. Most of these mills are small and highly polluting and the government has ordered 4,000 mills shut down for environmental reasons. The government of China is actively sourcing the best available technology to replace and expand their existing facilities. The Ministry of Light Industry predicts that total annual fibre demand in China will grow from 34 million tons to 75 million tons by 2010 and that this will require the installation of 60 million tons of new or replacement pulp and paper capacity for a total value of approximately US $100 billion.

Jeremy Kendall noted: "China's wood resources are limited and China will increasingly have to rely on non-woody fibre for its paper requirements. Currently, China produces over 75 percent of the world's non-woody pulp. Most of these plants utilize straw and are small and highly polluting. China needs to replace these mills with clean and cost effective technology and the StakeTech Pulping process is ideally suited to this application. We believe our relationship with Pacitec will enable us to rapidly enter this market and that StakeTech Steam Explosion Pulping will be the method of choice."

StakeTech is dedicated to preserving the environment and supporting healthy lifestyles. StakeTech provides cleaner production processes for industry through its patented continuous steam explosion technology. Barnes Environmental International (B.E.I.), a division of the Company, markets and recycles industrial minerals and abrasives from facilities in Waterdown, Ontario, Lachine, Quebec and New Orleans, Louisiana. Sunrich Inc., a StakeTech subsidiary acquired on August 2, 1999, supplies specialty grains and premium organic food ingredients to major producers in the U.S. and Japan from its Minnesota and Iowa facilities.

Note: This news release may contain forward-looking information. Actual future results may differ materially. The risks, uncertainties and other factors that could influence actual results are described in StakeTech's annual report to shareholders and SEC reports.