RE: RE: Fairfax / Resolute
Wood fibre is the primary component in the production of NBSK pulp. As it has neither timber
holdings nor cutting rights of its own, the Saint-Félicien Mill relies on fibre supply contracts
concluded with third parties to fulfill its annual wood fibre requirements.
On July 31, 2009, Fibrek and Abitibi concluded a three-year fibre supply agreement effective
September 1, 2009 (the “Fibre Supply Agreement”). Pursuant to the Fibre Supply Agreement,
Abitibi agreed to supply Fibrek with at least 60% of the Saint-Félicien Mill’s annual fibre
requirements at market prices (which are renegotiated annually), except in the event of a force
majeure (as such term is defined in the Fibre Supply Agreement). After its initial term, the Fibre
Supply Agreement will automatically be renewed for consecutive three-year periods on the same
terms and conditions, unless terminated by either party upon at least a six-month notice.
THAT WOULD HAVE BEEN MARCH 1, 2012... NO NEWS ON THIS YET.
The remaining required volume of wood fibre is currently contracted with other suppliers in
the region. On an annual basis, a minimum of 75% of the wood fibre is derived from black spruce fibre with the
balance being derived principally from jack pine. Management currently estimates that the wood fibre deliveries under the Fibre Supply Agreement, together with the deliveries from other suppliers, should be sufficient to fulfill all of the Saint-Félicien Mill’s fibre requirements throughout 2011. This estimate assumes that wood fibre requirements will remain stable and wood fibre deliveries to Fibrek will continue as contemplated in the Fibre Supply 12Annual Information Form Financial Year Ended December 31, 2010 Agreement and the other fibre supply agreements.
NOT SURE HOW THIS FACTORS INTO THE TAKEOVER?