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This presentation contains certain forward-looking information that reflects the Company’s current views and/or expectations with respect to: expectations relating to the markets the Company operates in; the impact of currency exchange rates and other market factors on the results of the Company’s mills; and expectations relating to capital expenditure spending. Persons reading this presentation are cautioned that statements comprising forward-looking information are only predictions, and that the Company's actual future results or performance are subject to certain risks and uncertainties including, without limitation: those relating to potential disruptions to production and delivery, including as a result of equipment failures, labour issues, the complex integration of processes and equipment and other factors; fluctuations in the market price for products sold; trade restrictions or import duties imposed by foreign governments; labour relations; failure to meet regulatory requirements; changes in the market; potential downturns in economic conditions; fluctuations in the price and supply of required materials; foreign exchange fluctuations; availability of financing (as necessary); and other risk factors detailed in our Annual Information Form dated March 28, 2018 available on SEDAR at www.sedar.com and other filings with the Canadian securities regulatory authorities. In particular, financial forecasts and expectations are not indicators of future financial performance and there is no assurance that the Company’s assumptions' in support of such forecasts or expectations are correct, accurate or complete. These risks, as well as others, could cause actual results and events to vary significantly. The Company does not undertake any obligation to update any forward-looking information, except as required by applicable securities law. Unless otherwise noted, all references in this presentation to “$” are to Canadian dollars. The selected financial information presented herein is qualified in its entirety by, and should be read in conjunction with, the Company’s unaudited condensed consolidated financial statements for the quarter ended June 30, 2018 and the related notes thereto and Management’s Discussion & Analysis, which are available on SEDAR. Where we disclose production costs, such costs are calculated based on a variety of factors and inputs which may result in such costs not being comparable to similar types of costs disclosed by other issuers. This presentation contains reference to “Operating EBITDA”, “adjusted net loss” and “adjusted net loss per share”, which are non- GAAP financial measures. For disclosure of the manner in which these measures are calculated and a reconciliation to net loss, please refer to the MD&A for the quarter ended June 30, 2018, available on SEDAR. The financial information contained herein has been prepared in accordance with International Financial Reporting Standards. 2
Quarterly EBITDA from Continuing Operations • Operating EBITDA from continuing operations was $2.7 15 Millions $ million for the second quarter of 2018 compared to operating EBITDA loss from continuing operations of $1.4 10 million in the first quarter of 2018. 5 • The Dissolving Pulp Segment generated operating EBITDA of $4.2 million. The Bio-Products Segment generated - operating EBITDA loss of $0.5 million and corporate costs (5) were $1.0 million. (10) • Adjusted net loss from continuing operations was $8.4 million, or a basic and diluted adjusted net loss from continuing operations per share of $0.56. EBITDA 3
Quarterly EBITDA 15 Millions $ 10 • Operating EBITDA for the Dissolving Pulp Segment for the second quarter of 2018 was $4.2 million, compared to 5 operating EBITDA of $0.2 million in the first quarter of 2018. - (5) • Sales totaled $50.1 million for the quarter compared to (10) $39.7 million for the first quarter of 2018. EBITDA Sales by Quarter 50 Millions $ 40 30 20 10 - Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Sales 4
Quarterly Shipments ADMT 50 Thousands • The Company sold 39,882 air dried metric tonnes (“ADMT”) of dissolving pulp in the second quarter of 40 2018. 30 • The FSC mill held 2,743 ADMT of dissolving pulp inventory at June 30, 2018 compared to 4,359 ADMT 20 as at March 31, 2018. 10 - Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Shipments 5
• In the second quarter of 2018, the FSC mill's production costs, including amortization of some of the planned shutdown costs and the positive impact of the cogeneration facility, were 5% lower compared to the first quarter of 2018 due primarily to productivity gains which more than offset higher variable costs. • Demand for dissolving pulp continues to be strong, supported by annual increases in the worldwide demand for fibre and viscose staple fibre capacity growth. • Dissolving pulp prices are currently $1,214 (US$935) per tonne which is 11% higher year over year. • Management believes full year 2018 average pricing to be comparable to full year 2017 average pricing, supported in part by swing mill capacity shifting to paper pulp production as a result of increasing paper pulp pricing. US$ Paper Pulp Pricing Compared to DP $1,100 We have evaluated swinging $1,000 some production to NBHK and the economics still indicate to $900 remain 100% on Dissolving Pulp $800 $700 $600 $500 $400 DP NBHK NBSK 6 Source: RISI source for NBHK, NBSK spot price US Eastern . CCF source for Hardwood DP spot price CIF China
The xylitol demonstration plant project is estimated to require 18 months to engineer and build • and an additional 18 months to commission and operate in demonstration mode. Front End Engineering Design work is scheduled for completion in the fourth quarter of 2018. The budget for the project is estimated at up to $33.0 million. This includes equipment • procurement and installation, operating utilities and raw materials during the demonstration, engineering of a commercial plant, overheads and cash flow. New subsidiary, Fortress Xylitol Inc. (“FXI”) has been established in Québec to install and • operate a xylitol demonstration plant at the FSC mill. Governments of Canada and Québec have committed up to $17.4 million in investments, grants • and loans to a new bioproducts subsidiary, to support the construction of a $33.0 million xylitol demonstration plant planned for the FSC mill. The company plans to invest $5.0 million in FXI to support the project with an additional $2.0 • million loan for contingencies if needed. The company expects that the balance of funding for the planned project will be provided by strategic partners, federal and provincial governments. 7
Quarterly Cash Balance 70 Millions $ • The Company had $32.0 million in cash at June 30, 60 2018 of which $7.9 million was restricted compared to $37.7 million at March 31, 2018 of which $8.0 million 50 was restricted. 40 30 • During the second quarter of 2018, the Company 20 spent approximately $6.1 million on capital expenditures (including maintenance and projects) for 10 continued operations. The Company also received $2.9 million in government grants in the quarter. 0 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Cash and cash equivalents Restricted cash 8
Consolidated SG&A from Continuing Consolidated SG&A from Continuing Operations by Segment Operations by Nature 6 6 Millions $ Millions $ 4 4 2 2 - - Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q2-17 Q3-17 Q4-17 Q1 -18 Q2 -18 Pulp Bio-Products Corporate General & administrative Commission, sales & marketing 9
Repayments of principal for debt outstanding as at June 30, 2018 are required as follows: Q2 2018 $ millions Year Convertible Other Debt Total Debt 2018 - 2,741 2,741 2019 62,100 14,225 76,325 2020 - 14,225 14,225 2021 - 14,225 14,225 2022 - 14,225 14,225 Thereafter - 79,096 79,096 Total 62,100 138,737 200,837 10
This concludes the presentation for our second quarter results from operations We will now open up the lines for a Q&A 11
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