HispanicBusiness

During the quarter, overall sales realizations saw strong gains led by the average North American Random Lengths Western SPF 2x4 #2&Btr lumber price moving up US$56, or 17%, to US$391 per Mfbm. Most other dimensions and grades saw solid but slightly lower gains during the quarter. Offshore prices also showed solid gains with prices to China reaching new record-highs. Sales realizations for SYP products saw similar increases to SPF products, up US$66, or 17%, from the previous quarter, with the benchmark SYP 2X4 #2 price averaging US$452 per Mfbm and wider dimensions benefitting from more marked increases.

Sales realizations also reflected the positive impact of lower export taxes, with no export taxes on U.S. bound shipments in the current quarter. The Random Lengths Framing Lumber Composite price averaged US$413 per Mfbm for the first quarter of 2013, above the trigger price of US$355, resulting in no export tax on U.S. bound shipments. This compared to an 8% average export tax rate in the previous quarter and 15% for the first quarter of 2012.

Compared to the first quarter of 2012, the benchmark North American Random Lengths Western SPF 2x4 #2&Btr price was up US$125 per Mfbm, or 47%, with strong gains seen in most other widths and dimensions. Slightly stronger gains were seen for SYP products, with the benchmark SYP 2X4 #2 price up US$154 per Mfbm, or 52%. Compared to the first quarter of 2012, sales realizations also benefited significantly from a 15% savings in export tax on U.S. bound shipments and a higher proportion of high-value prime product, in part reflecting the addition of the Kootenay area operations at the end of the first quarter of 2012.

Total shipments in the first quarter of 2013, at just over 1.1 billion board feet, were consistent with the previous quarter but lagged production due to adverse weather impacting railcar supply, and were up 140.2 million board feet, over 14%, from the first quarter of 2012, principally reflecting production from the Kootenay area operations.

The average value of the Canadian dollar compared to the US dollar in the first quarter was down 2 cents, or 2%, from the previous quarter, further benefitting current quarter sales realizations. Compared to the first quarter of 2012, realizations benefitted from a 1 cent, or 1%, weaker Canadian dollar.

Total residual fibre revenue was up from the fourth quarter of 2012, primarily reflecting higher shipments of sawmill residual chips coupled with a modest increase in sawmill residual chip prices tied to higher NBSK pulp sales realizations and other seasonal factors. The current quarter's revenue also included seasonally higher log sales. Compared to the first quarter of 2012, total residual fibre revenue was well up, with higher shipments of sawmill residual chips and more whole log chipping offsetting lower residual prices.

Operations

Lumber production, at just under 1.2 billion board feet, was up 8% from the previous quarter, reflecting a full quarter of production from the Company's recently re-started Radium mill and improved productivity, as well as the Christmas period in the previous quarter. Lumber production was also up 18% from the first quarter of 2012. The increase compared to the same period in 2012 largely reflected the Kootenay area mills acquisition, the restart of the Radium mill in late 2012 as well as improvements in productivity.

Overall, the Company's unit lumber manufacturing costs were in line with the previous quarter, reflecting a reduction in unit conversion costs offset by increased log costs. The decrease in cash conversion costs largely reflected the higher production levels in the current quarter, while increased log costs primarily reflected higher market-price related stumpage and increased hauling costs, in part driven by higher diesel costs.