GreenFirst Forest Products updates capital expenditure plan following spin-out

GreenFirst Forest Products (ICLTF) announced an update to its strategic capital expenditure plan to accelerate growth in the lumber sector and advance its goal of becoming Ontario’s largest and most profitable lumber producer. Since acquiring sawmills from Rayonier Advanced Materials in August 2021, GreenFirst has invested modestly in various capital projects, such as a new infeed and kiln at Chapleau and additional kiln capacity at Cochrane and Hearst. These upgrades have addressed key production bottlenecks and positioned the Company for future growth and high-return investments. Over the coming years, GreenFirst plans to establish itself as a top-quartile lumber producer in North America. The Company has opportunities to invest approximately $50 million during the current “off-cycle” in lumber pricing, which could yield up to a 20% production increase and up to a 10% reduction in production costs, which all translates to returns well above the cost of capital. The anticipated payback period for these projects is roughly 2.8 years or better. Off-cycle investments allow GreenFirst to maximize the value of each capital dollar spent and optimize installation timing, at hereby allowing for quicker ramp-up of production as the lumber market improves. Depending on the amount of capital raised in our announced financing, these projects could be completed within the next two years. Following this initial phase, GreenFirst has identified an additional $70 million in capital expenditure opportunities focused on further increasing production capacity by over 15%, enhancing recovery rates, and reducing processing costs by about 5%. These initiatives would further solidify GreenFirst’s position as a low-cost lumber producer. The combination of anticipated improvements in lumber prices, cost reductions, funds raised through the recent Rights Offering, along with the completion of the spin-out of Kap Paper and other asset monetization, enables GreenFirst to pursue a measured and strategic capital expenditure program. This approach is designed to optimize GreenFirst’s existing assets and transform GreenFirst into a first-quartile producer within the industry. Each proposed investment is undergoing a thorough evaluation to ensure alignment with our overall business strategy and to ensure substantial returns. The Company continues to work with its Board of Directors to obtain approval for these initiatives.