1. VFCFC – Nov 14, 2013 Board meeting

2. VFCFC – Nov 14, 2013 Board meeting
Agenda
2012 Annual Report:
Planning/ Cutting Permit Development/Mtn Pine Beetle Strategy
Harvesting
Road building/Road maintenance
Reforestation
Revenue /Log Destinations
Cut control
2012 Summary
2013 Operating Plan
Approvals
Other – meeting Licence commitments

3. VFCFC 2012 Annual Report Planning Cutting Permits
CP 3 approved Jan 2012 (~86,000 m3);
CP 4 submitted Oct 2012 (~53,000 m3);
CP 5 is ready to be submitted (~17,000 m3);

4. VFCFC 2012 Annual Report Harvesting
Current year - logged 107,533 m3 to the end of October, 2012
Logging completed by Upper Similkameen Indian Band and Dennis Cook Holdings Ltd.
Post Harvesting Activities and Reforestation
105.6 hectares were prepared for 2013 planting
45,030 trees were planted on 39.4 hectares
Mtn Pine Beetle Strategy:
Continue harvesting on stands that are affected by Mtn Pine Beetle;
Conducted aerial overview flight in August to observe infestation distribution and intensity;
Focus harvesting plans on stands with the highest intensity attack levels;

5. VFCFC 2012 Annual Report Road Construction/ Road Maintenance
Existing road upgrade: km
Temporary road construction: 11.1 km
Permanent road construction: km

6. Forecast Revenue ($/m3)
VFCFC – Revenue
Block
Forecast
Volume (m3)
Forecast Revenue ($/m3)
Actual Volume (m3)
Actual Revenue ($/m3)
Total Actual Revenue
CHI008
19,000
$177,294
18,883
$10.56
$199,368
CHI043
22,258
$150,687
21,807
$9.86
$215,084
CHI044
14,500
$110,125
17,106
$6.54
$111,945
CHI041
43,322
$424,829
49,737
$6.80
$338,203
Total
98,980
$862,935
107,533
$8.04
$864,600

7. VFCFC – Log Destinations - 2012
Volume (m3)
Ave Price ($/m3)
SPF sawlogs to Weyerhaeuser
75,016
Q1,2 - $47
Q2 ,3 - $50
Oversize SPF to Gorman Bros
1,609
Q1,2 - $70
Q2 ,3 - $75
Pulp to Ledcor chipper
22,569
$27.38
Pulp to Firemaster
1,747
$28.38
Post and Rail to PWP and PPR
3,219
$32
Fir to Vaagan and Tolko
3,372
$50 to Vaagen
$55 to Tolko
Total – All Destinations
107,533

8. Cash Flow - 2012 Month Forecast ($) Actual ($) Jan $0 Feb $93,480
$110,086
Mar
$297,996
$281,344
Apr
$40,747
$40,843
May
Jun
$100,000
$64,807
Jul
$250,000
$137,457
Aug
$260,000
$85,921
Sep
$59,109
Oct
$85,032
Nov
Dec
Total 2012
$1,138,000
$864,600
Cash flow was estimated against a total volume of 104,277 m3. Actual total volume delivered in 2012 is 107,533 m3. However, our pro-forma had estimated 15% pulp (6,498 m3) and we delivered 32% pulp (15,768 m3) from CHI041. With SL net revenue at about $9/m3 after stumpage and pulp net revenue at about $0/m3 after stumpage this is a revenue shift of approximately $85,000. Grade 4 credits should make the pulp volume difference available for future harvest.

9. Cut Control (m3) 2010 2011 2012 est 2013 est 2014 est 5 yr total AAC
20,000
70,000
250,000
Total Harvest
13,085
107,533
96,215
93,600
310,433
Harvest charged to AAC
9,875 a
87,511
86,000
78,000
252,579
A 2011 cut control letter is still being appealed. MOF missing a requested credit.

10. 2012 Summary
Harvest strategy and forest stewardship plans are being safely executed.
13,085 m3 were logged in 2011 and 107,533 m3 were logged in 2012 for a total of 120,617 m3 harvested to date of the Licence.
all timber management and legal obligations are being met.
The Licence has been included in Weyerhaeuser’s Environmental Management System and is certified to the Sustainable Forestry Initiative (SFI) standard.
Economics are being affected by deteriorating condition of beetle attacked timber.

11. 2013 Operating Plan
Continue to log beetle uplift volumes in Mtn Pine Beetle stands (consistent with Mtn Pine Beetle strategy)
Jan to April
Log approximately 79,215 m3
June to August
Log approximately 17,000 m3 in a block that has a forecasted high pulp %. This affects its economic viability.
Recommend we include it in the 2013 plan. It is the right forest management decision to log it.
Weyerhaeuser and VFCFC renegotiate a block specific fee structure for this block.
Forecast revenue of $609,503
See 2013 Operating Plan for more detail

12. Approvals
Weyerhaeuser requests from the VFCFC Board to approve the 2013 Operating Plan, specifically to:
harvest Blocks CHI 040, 044 and 045 (approximately 97,000 m3).
sell:
Pulp at market price to local outlets first (Ledcor and Firemaster)
Post and rail to Princeton Post and Rail and Princeton Wood Preservatives unless otherwise agreed to by all parties – production split 50/50
Oversize (>18” logs) and all Douglas Fir to best market.
Carry out all other forest management obligations as defined in the Timber Management Agreement (ie planting, site preparation, road construction, road maintenance, surveys, cutting permit layout, etc)

13. VFCFC - Other Forest Licence Committments
(i) The Agreement Holder must conduct at least one formal public meeting each calendar year in a format satisfactory to the District Manager for the purposes of informing the general public of the activities the Agreement Holder proposes to undertake with respect to the Agreement.
(ii) Notwithstanding (i) above, the Agreement Holder, in conducting a formal public meeting(s), and in informing the general public of the activities the Agreement Holder proposes to undertake, will:
Actively promote ongoing public awareness
Report on activities related to past and future harvesting, including forest management performance, and
Provide an accounting of participation in community projects/investments and general economic activity attributable to the operation of this Agreement.

14. VFCFC - Other Management Plan commitment examples
The Community Forest will:
invest in archaeological and cultural site assessment in the initial years of the Agreement to fill in information gaps identified by the Upper Similkameen Indian Band.
explore options, including research and field trials, for enhancing the ……
will also engage in a planning process with ski association….
1.3 …use a performance measures table to evaluate performance
develop a formal communications plan during the first year of operation….

15. VFCFC - Other For the Board to consider:
Develop a plan to meet commitments
Funding for land based projects
Weyerhaeuser can assist

16. Questions?