CFZ Cathay Forest Products Corp

Cathay Forest Products Corp. (TSX VENTURE:CFZ) today reported a net loss of
$393,925, or $0.003 per share on sales of $17 million for the three months ended
June 30, 2010 and a net loss of $1.7 million or $0.012 per share, on sales of
$24 million for the first six months of 2010.


(All financial figures in this release are expressed in Canadian dollars unless
otherwise stated)


Financial Highlights



--  Revenue increased 14% to $17.0 million versus $14.9 million 
--  Gross Profit margin increased to 8.4% versus a negative 0.6% 
--  Gross Profit increased to $1.4 million versus a negative $100,000 



These results compare with previous periods in the following table:



($cdn millions, except per share                                            
 amounts)                         Three months ended      Six months ended  
                                             June-30               June-30  
                                  2010   2009 Change    2010   2009 Change  
                                    ($)    ($)    (%)     ($)    ($)    (%)
----------------------------------------------------------------------------
Revenue                           17.0   14.9     14%   23.7   21.2     12% 
Gross Profit                       1.4   (0.1)  1469%    2.3    0.4    427% 
Gross Profit Margin                8.4%  -0.6%  1276%    9.9%   2.1%   371% 
Net Income                        (0.4)  (2.1)    79%   (1.7)  (3.2)    46% 
Basic and Diluted EPS           (0.003)(0.018)   -83% (0.013)(0.028)    54% 
Cash Flow from Operating          (2.5)   1.7   -250%   (7.7)   1.9   -502% 
Activities                                                                  



"The improved results are a combination of higher selling prices and lower
production costs in our Russian logging operations as the company has ramped up
its harvesting levels over the past few months. With impending major pulpwood
contracts, we expect to lower harvesting costs by a further 15 to 20% by the end
of the year. And in the final quarter of 2010, we anticipate commencing
harvesting in our six and five year old poplar plantations in China", stated
John Duncanson, the Company's interim Chief Executive Officer and Chief
Operating Officer.


Operational Results

Total revenue for Q2-2010 increased 14% to $17.0 million from $14.9 million in
Q2-2009 and $6.7 million in Q1-2010. This increase was attributable to higher
selling prices and volumes of logs sold from our Russian logging operations.


Selling prices in Q2-2010 improved by an average of 7% for spruce logs and 9%
for larch logs over average prices in Q1-2010. Log sale volumes from our Russian
operations to China in the quarter were 58.3 million cubic metres, an increase
of 106% over Q1-2010. Most of the selling price increase and volume increase
happened in the final two weeks of the quarter.


Outlook

The demand for softwood logs and lumber in China continues to grow. China is the
world's largest importer of softwood logs. According to Wood Resources
International LLC, during the first six months of 2010, imports were up 17% from
the same period in 2009, reaching the highest level on record. Russia and New
Zealand are the two largest suppliers, together accounting for almost 86% of the
total imports.


Softwood lumber imports into China, according to Chinese Customs, are up 48%
year-over-year. Russia and Canada are the two largest suppliers, together
accounting for 85% of imports. Chinese softwood lumber imports from Russia, year
to date, are up 34%.


The demand for hardwood (poplar) wood supply also continues to grow in China.
With another 5 million tonnes of hardwood pulp production capacity in China to
start-up over the next two years, the market for hardwood pulpwood will be
strong.


About Cathay Forest Products Corp.

Cathay Forest is a forest products company that manages approximately 1,000,000
hectares of standing timber properties and fast-growth, high-yield poplar
plantations in China and Russia. Cathay Forest has built a world-class forest
products company through a customer base that includes the domestic Chinese
forest product, pulp and paper industry and other wood products customers in
Japan.


Notice of Conference Call

Cathay Forest will hold an investor conference call to further discuss its
second quarter 2010 operating and financial results on September 1, 2010 at 9:00
AM EST. To participate, please dial 1-416-695-6616 for local callers, or
1-800-355-4959 for North American toll-free access. Alternatively, to listen to
a replay of the conference call, dial 1-416-695-5800 (Toll-Free: 1-800-
408-3053), and enter pass code 1630304. The replay of the conference call will
be available for 14 days.


Forward Looking Statements

All statements, other than statements of historical fact, in this news release
are forward-looking statements that involve various risk and uncertainties,
including, without limitation, statements regarding the future plans and
objectives of Cathay Forest. We caution readers not to place undue reliance on
these statements as a number of important factors could cause actual results and
future events to differ materially from the plans, objectives, expectations and
intentions expressed in such forward-looking statements. Except as required
under applicable securities laws, Cathay Forest assumes no obligations to update
forward-looking statements should circumstances or management's estimates or
opinions change.


The complete financial statements and Management's Discussion and Analysis are
posted on the company's website www.cathayforest.com as well as on SEDAR
www.sedar.com.

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