Canaf Investments Inc (CAF)

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CAF.V Subsidiary Information - Quantum Screening & Crushing

http://www.canafgroup.com/s/QuantumScreening.asp

Canaf Group owns 100 percent of Quantum Screening and Crushing (Proprietary) Limited, ("Quantum"), a private South African company that focuses on anthracite beneficiation.

Quantum produces calcined anthracite, a product used primarily as a substitute to coke in the manufacturing process of steel and manganese. The company's two largest clients are world leaders in steel and ferromanganese production, namely ArcelorMittal and BHP Billiton respectively. Quantum has an operation near Newcastle, KwaZulu Natal, where its two kilns operate, de-volatising the raw material anthracite, known as calcining. The majority of Quantum's feedstock anthracite is supplied by the neighbouring Springlake Colliery, which has reserves in excess of 20 years.

Calcining is a process whereby anthracite coal is fed through a rotary kiln, at temperatures between 850 and 1100 degrees centigrade; the volatiles are burnt off and the effective carbon content increased. The final product, referred to as 'calcined anthracite' is used as a coke substitute. Calcined anthracite is used as a reductant in the manufacture of steel and manganese, as well as other sintering processes. Quantum, through its wholly owned subsidiary Southern Coal (Proprietary) Limited, ("Southern Coal") has been profitably carrying on this business since 2004.

Location and Plant

Quantum is situated in Newcastle, KwaZulu Natal, South Africa. The majority of the feedstock anthracite is supplied by Springlake Colliery which has reserves in excess of 20 years, whose coal siding is strategically located adjacent to Quantum's facility.

Quantum runs two independent lines of production which each consist of pre-heating stage feeding a main rotary kiln. The raw material, anthracite is feed into an electrically heated rotary pre-heater, which raises the temperature of the product to about 800 degrees C. The pre-heated (and red hot) anthracite is then fed into the main, refractory lined, rotary kiln. It is at this stage of the process that extra raw material is added to the main kiln. The temperature of the main kiln is then controlled to remain above 1000 degrees C so that calcination of the anthracite occurs and maximum amount of volatile matter is burnt off.

The final stage of the process involves the oxidization of any excess volatiles in the after-burners/oxidizers, before emission to the atmosphere.

Screening and Crushing Plants

Since the Company acquired Quantum in 2007, significant investment has been made in crushing and screening equipment. Quantum now has the ability to offer existing and potential customers a range of size productsm which subsequently opens up other markets.

Quantum has 2 independent screening plants, which are capable to dry screen down to sizes as small as 6mm.

Profitability, Performance and Expansion Program

Quantum Screening and Crushing has been operating profitably since the Company acquired it in 2007.

Quantum Screening and Crushing has built up a fine reputation for product quality and reliability of supply, which has earned the respect and preference from two of the major steel and manganese producers in the world. Canaf believes that as long as Quantum maintains its focus on its core values, coupled with the ever-increasing demand of calcined anthracite as a replacement to coke in the reductant market, that the business will continue to expand and potentially become one of the major reductants and low volatile reductant suppliers on the continent.