Greenfirst Forest Products (GFP) Status Update summary

Strategic rationale, vision, and market outlook

• Plans to invest CAD 50 million in capital expenditures to generate CAD 18 million in incremental EBITDA, targeting a 20% output increase and 10-15% cost reduction within 18 months.

• Aims to become Ontario's largest wood producer and a top quartile North American lumber company through continuous improvement, strategic capital investment, and M&A activity.

• Market fundamentals indicate a favorable cycle ahead, with a 2.5 million housing deficit in the U.S. and expected interest rate declines supporting higher lumber demand and prices.

• Projects are timed off-cycle to maximize benefits when the market rebounds, leveraging a strong log supply and a culture of continuous improvement.

• The company is now a pure-play sawmill operator after divesting non-core assets and spinning out Kap Paper, focusing on Ontario operations.

Capital expenditure and investment plan

• Phase I CapEx of CAD 50 million targets upgrades at four mills, including new saw lines, kilns, and planer mills, with site-specific investments ranging from CAD 6 million to CAD 25 million.

• Expected to add 75 million FBM in production, with incremental EBITDA per site ranging from CAD 3 million to CAD 8 million.

• Capital program aims for a further 15% improvement in cost per Mfbm and 20% mill output growth.

• Projects selected for quick payback, minimal civil work, and use of refurbished equipment where possible to keep costs low.

• Cost per incremental production is CAD 658 per thousand FBM, significantly lower than industry peers.

Financial position and funding

• Current liquidity stands at CAD 44 million, with a CAD 20 million rights offering already committed and potential to raise up to CAD 97 million.

• Book value per share is CAD 8.16, reflecting the new shares from the rights offering.

• Additional funding options include monetizing duty receivables, asset sales, and equipment financing if the rights offering is not fully subscribed.

• Strong financial position with CAD 20 million cash and CAD 316 million in assets as of September 2024.