Cathay Forest Closes CAD 5.2 Million Private Placement Financing

Toronto, Ontario, Canada, 10 January 2007 –- Cathay Forest Products Corp. (TSX-V: CFZ) announces that it has closed the second tranche of the private placement financing announced on 22 November 2006. In addition to the 6,030,000 common shares issued on 20 December 2006, a further 3,970,000 common shares were issued at a price of CAD 0.52 per share, for gross total proceeds of CAD 5.2 million. Jennings Capital Inc. (the agent) was paid a cash commission and issued broker warrants entitling the agent to purchase 144,500 common shares at CAD 0.52 per share.

The net proceeds of the offering will be used to finance the acquisition of additional standing timber plantations, to further advance the Jiangsu Riverbank Program, to initiate the Heilongjiang North Eastern Project, and for working capital and general corporate purposes.

The Common Shares are subject to a hold period of four months plus one day from the date of issuance in accordance with the policies of the TSX Venture Exchange and applicable securities laws.

About Cathay Forest Products

Cathay Forest is a forest products company managing standing timber properties and developing fast-growth, high-yield poplar plantations in the Peoples Republic of China. Cathay Forest is building a world-class forest products company through a customer base that includes the domestic Chinese pulp and paper industry and harvesting customers serving a variety of wood product industries.

Web site: www.cathayforest.com