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September 1, 2006 - 7:00 AM EST

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AUFI 0.30 0.17

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Proposed Acquisition of Copper Projects and Disposal of Timber Interests
Australian Forest Industries Inc. (OTCBB: AUFI) announces the following:

1. AUFI has entered into a Letter of Intent, dated 25 August 2006, under which and subject to a definitive agreement and closing thereof, it will acquire;

(a) All the issued share capital of Simbajamba Mines Limited ("Simbajamba") a wholly owned subsidiary of Simba Mines Inc. ("Simba") for US$41,547,000 and

(b) All the issued share capital of Rockbury Properties Limited ("Rockbury"), a wholly owned subsidiary of Bongani International Group Limited ("BIG") for US$38,453,000.

2. The Board of AUFI has on 30 August 2006, passed a resolution of a reverse stock split of all the issued share capital of AUFI comprising 257,600,680 common shares of par value 0.001¢ per share, on the basis of 515.20136 to 1, such that the issued share capital has become (500,473) ordinary shares. The 473 shares that will be issued in excess of 500,000 result from the Board's decision that shareholders who have one share prior to the reversed stock split or who as a result of this reverse stock split will have less than one share will all retain at least one common share.

3. In settlement of the purchases set out above, AUFI proposes to issue 5,193,375 new ordinary shares to Simba and 4,806,625 new common shares to BIG. They will rank pari passu with the consolidated 500,473 common shares of AUFI and have a book value of US$8 per share.

4. Upon closing of the acquisitions AUFI will control 80% of the Cachoeiras de Binga and 70% respectively of the Benguela and Zenza copper licenses in Angola. In addition discussions are in progress with BIG for the acquisition of a controlling interest in two significant copper/cobalt concession areas in the DRC. At closing AUFI will change its name to Zebra Copper Inc ("Zebra").

5. AUFI has also entered into a Letter of Intent to sell its wholly owned subsidiary Integrated Forest Products Pty Ltd ("IFP") to an Australian unlisted company Australian Forest Industries Limited ("AFIL"), which will issue new ordinary shares ranking in pari passu, as consideration. It is intended that following the closing of this proposed transaction, the AFIL shares will be distributed in specie to the shareholders of AUFI listed on its share register at August 30, 2006.

6. To fund the work program commitments AUFI will seek to raise up to US$10 million by way of a private placement within the next 30 days. AUFI also intends to list as soon as practical on the Alternative Investment Market of the London Stock Exchange (AIM).

Forward-Looking Statements

This news release includes comments that may be deemed forward-looking within the meaning of the safe harbor provision of the U.S. Federal Securities Laws. These include, among other things, statements about expectations of future transactions or events, revenues, sales of products and performance. Forward-looking statements are subject to risk and uncertainties that may cause the company's results to differ materially from expectations. These risks include the company's ability to complete the transactions, which remains subject to a due diligence review by both parties, obtaining any regulatory approvals, having necessary financing in time to meet contractual obligations, developing appropriate strategic alliances, raising working capital, building a functional infrastructure, and other such risks as the company may identify and discuss from time to time. Accordingly, there is no certainty that the company's plans will be achieved.



Source: Market Wire (September 1, 2006 - 7:00 AM EST)

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