NEWS RELEASE
Cautionaryannouncement – Incident at ArcelorMittal’s Newcastle facility
15 August 2011, Vancouver, BritishColumbia-Canaf Group Inc. (TSXV: CAF) ("Canaf" orthe “Company”) announces that ArcelorMittal South Africa has confirmed that astructural failure occurred in the gas cleaning plant at its Newcastle facilityon Friday 5 August 2011.
The damage has renderedtheir blast furnace inoperable and repairs are expected to be completed inapproximately three months.
As a consequence of theincident, Canaf’s wholly owned subsidiary, Quantum Screening and Crushing (Pty)Ltd., (“Quantum”), has been advised by ArcelorMittal that no supply of calcinedanthracite for their Newcastle facility will be required until further notice. ArcelorMittal’s plant at Vanderbijlparkis expected to continue ordering calcined anthracite as usual.
In response to the news,Quantum’s management team made a precautionary decision to stop production andcease the majority of supplies from the Company’s feedstock supplier, ShandukaCoal, as a case of force majeure.Christopher Way, President and CEO stated today, “The news from Mittalis very disappointing, especially at a time when we have been experiencingrecord orders from our largest customer, however, I am confident that Quantumwill continue to be profitable during the coming two to three months; revenuewill be reduced but we can expect to see increased margins as we sell ourstocks.”
Quantum has built upsufficient stocks of calcine and cash over the past quarters and will manage tocontinue to supply other customers without operating the kilns for a shortperiod of time. Christopher Wayalso stated, “We will maintain close contact with Mittal’s Newcastle facilityso that we are ready to start up production approximately 4 to 6 weeks prior totheir re-commissioning, in order to re-build stocks. In the meantime, Quantum will be actively looking for othercustomers, as part of our ongoing expansion plan.”
This incident will notaffect the financials of the last quarter for the period 01 May 2011 to 31 July2011, which are expected to be released towards the end of September 2011. Reduced revenues areexpected for the months from September through to December 2011. Shareholderswill be kept informed of any further impact once more information has beenreceived from ArcelorMittal.
About Canaf
Canaf Group Inc. is a junior mining groupbased in Vancouver, Canada, and with subsidiary offices in the United Kingdom.Canaf owns 100% of Quantum Screening and Crushing (Pty) Ltd., a carbonproducing company based in South Africa.
About Quantum
Quantum Screening and Crushing (Pty) Ltd’s isone of South Africa’s largest producers of calcined anthracite, a product usedas a replacement to coke in the manufacturing process of steel and manganese. Thecompany’s two largest clients are Mittal Steel and Samancor, world leaders insteel and manganese production respectively. Quantum has an operation in Newcastle,KwaZulu Natal, where its two kilns operate around the clock devolatising theraw material, anthracite. The majority of Quantum’s feedstock anthracite issupplied by Springlake Colliery, which has reserves in excess of 25 years andis located in the nearby town of Dundee.
Forward-LookingStatements
Certain information regarding Canafcontained herein may constitute forward looking statements. Forward looking statements may includeestimates, plans, expectations, opinions, forecasts, projections, guidance orother statements that are not statements of fact. Although Canaf believes thatthe expectations reflected in such forward looking statements are reasonable,it can give no assurance that such expectations will prove to have beencorrect. These statements are subject to certain risks and uncertainties andmay be based on assumptions that could cause actual results to differmaterially from those anticipated or implied in the forward lookingstatements. . Canaf undertakes noobligation to update publicly or revise any forward looking information,whether as a result of new information, future events or otherwise, except asrequired by law.These risks include operational, marketing, political, currencyand geological risks and the ability of Canaf to raise or obtain funds for itsoperations. Canaf's forward-looking statements are expressly qualified in theirentirety by this cautionary statement.