SAKÂW ASKIY MANAGEMENT INC. Presentation New FMP 29 April 2013 16/01/2019

Change “It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than the creation of a new system. For the initiator has the enmity of all who would profit by the preservation of the old institutions and merely lukewarm defenders in those who would gain by the new ones.” Machiavelli – The Prince ( 1469 – 1527) 16/01/2019

Sakâw Askiy Management Inc. Chronology October 5, 2005 – Weyerhaeuser announces closure of PA Pulpmill Mid April 2006 – Big River and Wapawekka sawmills closed. 2007 – collapse of housing market November 26, 2009 – Government announces allocation of wood from the PA FMA to industry, first nations and communities. December 2009 – Sakâw Askiy Management Inc. is formed to take on the assignment of the FMA from Weyerhaeuser / Domtar FMA assigned to Sakâw effective November 1, 2010 16/01/2019

Forest Management in Saskatchewan The Forest Industry is sustainable and green. The Prince Albert FMA has been sustainably managed for over 50 years. The Forest Sector is highly regulated Regulatory oversight ( Saskatchewan Environment.) Complex and detailed forest management planning process 200 year even flow Ecosystem based management Community engagement Rigorous and inclusive 5 year planning process Saskatchewan Professional Foresters Govern the conduct of foresters 4

Sakâw Askiy Management Inc. Is the harvest sustainable? Total Area of FMA) 3.3 million ha Total Harvesting Landbase 2.0 million Ha (60% of total) AAC ( Swd Saw, Pulp; Hwd ) 2.9 million m3 Area logged per year ( at full Capacity) 20,000 hectares ( 1% of the harvestable land base) CONCLUSION Harvest levels very conservatively calculated 5

Common Challenges Increasingly challenging working and business climate. Market pressures evidenced by closure and curtailment of mills, Industry more cost focused than ever before Reduction in full time equivalents, Shortage of skilled trades – including forest practitioners and contractors Information management and business process complexities Results based initiative, new Tenure, Licensee and FMA manager, new legislation, regulations and policy, Forestry Build out commitments New best practices Landbase pressures Public expectations Can these changes / challenges be met by a “business as usual” focus? 16/01/2019

Economic Context 16/01/2019

Industrial Woodlands Staffing Saskatchewan – 2005 vs 2013 Woodlands Efficiency 2013 Weyerhaeuser PA 52 1:60,000 Out of business Weyerhaeuser PP 21 10 1:80,000 Mistik 24 1:50,000 1:120,000 MLOSB 5 1:200,000 8 Edgewood 3 1:150,000 Carrier 1 Sakâw Overhead Total 103 1:64,000 35 1:190,000 16/01/2019

Result Based Commitment Results-based regulation, or RBR, is a modern regulatory system that puts the focus on desired environmental and resource management outcomes rather than prescriptive regulation and processes, allowing environmental protection to proceed as a normal business process.  RBR is about encouraging innovation and efficiency, while holding proponents accountable for achieving clearly defined environmental results. 16/01/2019

Wood Supplies In Major License Areas Services all of the major forest product facilities in Saskatchewan (except Weyco Hudson Bay) . Sakâw ( PA FMA) New paradigm - multidirectional fiber flows centered on the PA FMA . Multiple, geographically dispersed, industrial clusters centered in Meadow Lake, Big River, Prince Albert, Carrot River, Hudson Bay and anchoring further co-product investments. 16/01/2019

Sakâw Governance 8 partners: 6 facility shareholders: Carrier, Meadow Lake OSB, Norsask, Meadow Lake Mechanical Pulp, L&M, and Edgewood 2 First Nation shareholders: AC Forestry, Montreal Lake Business Ventures Province provides timber allocations to all 8 parties Aboriginal interests granted 44% of total allocation (AC Forestry, MLBV, Norsask, L&M) Sakâw Shareholders Agreement has Standard business provisions. Operating Zone process Leadership on business issues by individual shareholders an integral part of design. 16/01/2019

Regulatory Governance Forest Resource Management Act Associated Regulations, codes, standards, guidelines Prince Albert FMA PA FMA FMP Memorandum of Understanding ( Side Agreement). Assignment and Assumption Agreement Unanimous Shareholders Agreement ( internal). Operating Zone Agreement ( internal) 16/01/2019

Sakâw Askiy Management Inc. Shareholders include 6 Industry and 2 First Nations Shareholder Sawlog Allocation Hardwood Allocation Allocation Percentage AC Forestry 200,000 19.7% Edgewood 75,000 3.7% Carrier 375,000 18.4% L & M MLMP 95,000 4.7% MLOSB 600,000 29.5% Montreal Lk 40,000 11.8% NorSask 175,000 8.6% Total 1,100,000 935,000 Current AAC 1,269,000 947,000 661,000 m3 of softwood pulp allocated to Paper Excellence as a third party TSL. Schedule F of PA FMA also provides for Third Party Allocations (162,000 m3 /yr.), and a Softwood Pulpwood Allocation (661,000 m3 / yr.). The Softwood Pulpwood has been allocated to Paper Excellence. 16/01/2019

Tenure Models in Saskatchewan

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Legacy ( Weyerhaeuser) PRINCE ALBERT FMA WOOD FLOWS WEST CENTRAL & EAST BIG SAWLOGS Oversize to Hudson Bay Plywood as “peelers” otherwise to Pulp MIXED SAWLOGS SMALL SAWLOGS PULPWOOD PULPWOOD PURCHASED SAWLOGS PULP WOOD 132 km BIG RIVER LUMBER CHIPS PRINCE ALBERT PULP MILL CHIPS WAPAWEKKA LUMBER HOG HOG BIG RIVER Large Log Line max 22” Small Log Line min 4” max 11” Average Log 9.45” 90% treelength, tops chipped. 10% cut-to-length in bush, tops longer than 8’ with 4” top to Pulp. Oversize to Hudson Bay Plywood as “peelers” otherwise to Pulp EXTERNAL CHIPS PURCHASED PULPWOOD WAPAWEKKA Small Log Line min 4” max 11” Average Log 7.87” 50% cut-to-length in bush, tops longer than 8’ with 4” top to Pulp. 50% cut to length in yard, trim longer than 5’ with 4” top to Pulp. Moving to 100% cut-to-length in bush. Cut-to-length for 10, 12, 14 and 16’ PULP MILL Pulpwood minimum 3” top

Operating Zones = Coordinated Management 16/01/2019

Factors affecting future wood supply calculations Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Generally - as the land base increases the HVS increases even more Age distribution of forest is the primary influencing factor Lack of stands that are less than 60 years old is a limiting factor (fire suppression) Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Species, height, crown closure are the main criteria for delineating forest stands As seen on B&W 1:15,000 air-photo graphs Age and site conditions are “average” for the forest stand Softwood understory is generally not seen & therefore not mapped. In Alberta many companies invest in colour leaf-off photography to map swd understory Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors Source data (TSP) network and integrity of sample design. Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Source data (TSP) network and integrity of sample design. Strata vary from one inventory to another. Old WSGT may be split into several development types. Use of site productivity indices vs. assuming average site Inclusion of tL in yield curve data – is tL used by mills Utilization standards Net merch. vs. gros merch. Statistical variability of data Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors Company defined VOITS as required by FMP standard Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Company defined VOITS as required by FMP standard Present and future mill requirements Optimized utilization and wood flow Opportunities for expansion Certification (ISO, CSA, FSC) Understand risks associated with management strategies Carbon credits may be a future consideration Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors Government defined VOITS Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Government defined VOITS Minimize risk of unsustainable harvest Balance economic, social and environmental benefits Protect/promote other values from the forest Emerging issues Climate change Biomass Carbon credits Cumulative effects Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors Harvest systems Land base Winter cut vs. all season cut New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Harvest systems tree length vs. cut to length Winter cut vs. all season cut access Marginal stands Small wood harvest systems Environmentally sensitive areas Steep slope Riparian zones Visual quality constraints Insect & disease jP mistletoe MPB spruce budworm Road network Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors Government baseline is defined in the regeneration standard. Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Government baseline is defined in the regeneration standard. Extensive vs. intensive renewal programs Assumptions for regeneration delay Use of improved planting stock Abundance of mature and over-mature standing timber is required to take an allowable cut effect benefit. Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors Implementation vs. planned silviculture practices Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Implementation vs. planned silviculture practices jP – plant vs. scarify wS – cleaning/thinning Results of surveys FTG Surveys Establishment surveys Company survival surveys Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors Traditionally based on literature research and expert opinion Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors Traditionally based on literature research and expert opinion Very little empirical data to support assumptions Potential for use of stand level growth models (MGM) Requires a SK calibration Need to understand how to relate survey results to managed stand yield predictions Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

Factors One example is: Fire reserve factor Land base New Inventories New yield curves Management objectives Company Government Company operational constraints Renewal intensity Renewal effectiveness Managed stand yields Reduction factors One example is: Fire reserve factor Understand risks associated with assumptions about annual loss of timber due to fire Set thresholds for re-planning or use of reduction factors Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

In Summary It’s relatively easy to insert a new inventory and new yield curves into an existing approved HVS analysis to estimate what a future HVS might be. The question is: Are the management strategies and associated modeling assumptions in an approved FMP still relevant today? The answer is : They may not be in all cases and therefore pressures on wood supply could result. Presentation to Major Licence Holders December 10, 2008 Ministry of Environment & Ministry of Energy and Resources

How to contact us Visit our website at www.sakaw.ca Contact Sakâw at 306 953 2021 Contact any one of our shareholders. 16/01/2019