2016 forest management annual report forest management ......2016 forest management annual report...

39
2016 Forest Management Annual Report Forest Management Licence Area No. 2 Canadian Kraft Paper Industries Ltd. April 30, 2018 Operations Forester - Planning: _________________________ Matthew Forbes Woodlands Manager Forestry: _______________________ Paul Chapman

Upload: others

Post on 25-May-2020

8 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

2016

Forest Management Annual Report

Forest Management Licence Area No. 2

Canadian Kraft Paper Industries Ltd.

April 30, 2018

Operations Forester - Planning: _________________________

Matthew Forbes

Woodlands Manager – Forestry: _______________________

Paul Chapman

Page 2: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

i

TABLE OF CONTENTS

Page No.

1.0 INTRODUCTION .............................................................................................................................. 1

1.1 Sale of Mill Facilities .................................................................................................................................... 1 1.2 Forest Management Annual Report ............................................................................................................ 2 1.3 Saskatchewan River Forest Section FMU Boundary Amalgamation ...................................................... 4

2.0 MANUFACTURING FACILITY PRODUCTION ........................................................................ 5

3.0 FIBRE SUPPLY ................................................................................................................................. 6

3.1 Softwood Deliveries ...................................................................................................................................... 6 3.2 Hardwood and Hog Fuel Deliveries ............................................................................................................ 7 3.3 Harvesting ..................................................................................................................................................... 7 3.4 Jack Pine Budworm Salvage ........................................................................................................................ 8 3.5 Stumpage ..................................................................................................................................................... 12 3.6 Annual Allowable Cut ................................................................................................................................ 12

4.0 2015-2017 HARVEST AND RENEWAL PLAN ........................................................................... 16

4.1 Public Information Meetings and Development of the Harvest and Renewal Plan .............................. 16 4.2 Access Development and Decommissioning ............................................................................................. 16

5.0 FOREST RENEWAL ...................................................................................................................... 19

5.1 Site Preparation .......................................................................................................................................... 20 5.2 Scarification ................................................................................................................................................ 20 5.3 Tree Planting ............................................................................................................................................... 20 5.4 Stand Tending – Vegetation Management................................................................................................ 21 5.5 Silviculture Surveys .................................................................................................................................... 22

6.0 PLANNING AND REPORTING.................................................................................................... 24

7.0 FOREST INVENTORY .................................................................................................................. 25

7.1 Pre-Harvest Forest Investigations ............................................................................................................. 25

APPENDIX I – FOREST SECTION SUMMARIES FOR FML AREA NO. 2 .................................... 27

SASKATCHEWAN RIVER FOREST SECTION .................................................................................. 28

Harvest ..................................................................................................................................................................... 29 Forest Renewal and Tending ................................................................................................................................. 30

HIGHROCK FOREST SECTION ............................................................................................................ 32

Harvest ..................................................................................................................................................................... 33 Forest Renewal and Tending ................................................................................................................................. 33

NELSON RIVER FOREST SECTION .................................................................................................... 34

Harvest ..................................................................................................................................................................... 35 Forest Renewal and Tending ................................................................................................................................. 35

Page 3: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

ii

LIST OF TABLES

Page No.

TABLE 1: COMPANY MANUFACTURING FACILITIES PRODUCTION AND CONSUMPTION FOR 2016 5

TABLE 2: DELIVERY VOLUMES BY FOREST MANAGEMENT UNIT FOR 2016 (JANUARY – DECEMBER) 10

TABLE 3: REGION TIMBER PRODUCTION FOR FML AREA NO. 2 IN 2016-2017 11

TABLE 4: CUT CONTROL ADJUSTMENT FACTORS FOR SASKATCHEWAN RIVER AND HIGHROCK

FOREST SECTIONS OF FML AREA NO. 2 13

TABLE 5: SOFTWOOD (LEVEL 1) ANNUAL ALLOWABLE CUT STATUS FOR FML AREA NO. 2 TO 2016-

2017 FOR CUT CONTROL PERIOD 2015 TO 2020 14

TABLE 6: FML AREA NO. 2 ACTUAL DEPLETION FOR 2016-2017 15

TABLE 7: COMPANY ACCESS DEVELOPMENT FOR FML AREA NO. 2 FOR 2016-2017 17

TABLE 8: FOREST ROAD DEVELOPMENT PLANS SUBMITTED BY THE COMPANY IN 2016 18

TABLE 9: WATER CROSSING DEVELOPMENT FOR FML AREA NO. 2 FOR 2016-2017 18

TABLE 10: ROADS DECOMMISSIONING STATUS FOR FML AREA NO. 2 IN 2016-2017 18

TABLE 11: SUMMARY OF THE COMPANY’S FOREST MANAGEMENT ACTIVITY COSTS FOR 2016 19

TABLE 12: RENEWAL AND TENDING OPERATIONS FOR FML AREA NO. 2 IN 2016 21

TABLE 13: FREE-TO-GROW (FTG) SURVEY STANDARD DESCRIPTIONS 22

TABLE 14: FREE-TO-GROW (FTG) SURVEY SUMMARY FOR FML AREA NO. 2 FOR 2016 23

LIST OF FIGURES

Page No.

FIGURE 1: FML AREA NO. 2 3

FIGURE 2: 2015 SASKATCHEWAN RIVER FOREST SECTION FMU BOUNDARIES COMPARED TO

PREVIOUS FMU BOUNDARIES 4

FIGURE 3: JACK PINE BUDWORM SALVAGE AREA 9

Page 4: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

1

2016

Forest Management

Annual Report

1.0 INTRODUCTION 1.1 Sale of Mill Facilities

On August 22, 2016 Tolko Industries Ltd. announced it would close its mill facilities in The

Pas. From this time, the woodlands group worked on a closure plan including: processing

remaining bush inventories and delivering to the mill site, planning for remaining

silviculture responsibilities, and decommissioning company roads and stockpile sites.

On November 10, 2016 Tolko Industries Ltd. and Canadian Kraft Paper (CKP) Industries

Ltd. – a subsidiary of American Industrial Acquisition Corporation (AIAC) – finalized the

agreement for the sale-purchase of the mill facilities in The Pas.

Before forest management activities could resume, transfer of all licences and permits,

including the Forest Management Licence (FML) Agreement for FML Area No. 2, had to

take place. CKP and various government departments worked diligently to see this process

completed. Shortly thereafter, CKP attained its environmental management system

certification to the ISO 14001:2004 standard, its sustainable forest management system

certification to the CSA Z809-08 standard, and its Chain-of-Custody certification – all

certifications held previously by Tolko Industries Ltd.

From there, CKP quickly re-mobilized its timber harvesting and hauling contractors to

provide fibre to sustain production at the mill facilities.

CKP has successfully completed its transition thanks to the efforts of all those involved.

CKP is committed to ensuring its operations are compliant with sustainable forest

management standards allowing for management of our natural resources for future

generations to come.

Page 5: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

2

1.2 Forest Management Annual Report

The 2016 Forest Management Annual Report is submitted in compliance with Section 6 of

the Forest Management Licence (FML) Agreement, originally dated May 4, 1989, now held

between Canadian Kraft Paper Industries Ltd. (hereinafter referred to as “the Company”)

and the Province of Manitoba (hereinafter referred to as “the Province”).

This report summarizes the forest management activities undertaken by the Company on

FML Area No. 2, illustrated in Figure 1, during the calendar year of 2016. Region timber

production (Table 3), Annual Allowable Cut (AAC) (Table 5), depletion area (Table 6) and

road development (Tables 7, 9 and 10) are summarized from the operating period (year) of

April 1, 2016 to March 31, 2017.

This report aligns with the second year of the 2015-2017 Harvest and Renewal Plan,

synonymous with the Operating Plan (OP). The OP was submitted to the Province of

Manitoba on March 13, 2015. During the approval process for the OP, the Province

conducted consultations with First Nation and Métis communities on proposed forest

management activities. Additionally, the Company conducted its own public meetings in

various communities.

In addition to the report tables, summaries of various forest management activities under

general headings constitute the main body of this report. Appendix I provides a list of forest

management activities undertaken by the Company in each Forest Section in 2016.

This Forest Management Annual Report, along with other Company documents including

previous Forest Management Annual Reports, the Sustainable Forest Management Plan,

Sustainable Forest Management Annual Reports, the current two-year Harvest and Renewal

(Operating) Plan, Sustainable Forest Management Annual Newsletters, and Sustainable

Forest Management Committee meeting dates and minutes can be found under the

woodlands section of: https://canadiankraftpaper.com/.

Page 6: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

3

Figure 1: FML Area No. 2

Page 7: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

4

1.3 Saskatchewan River Forest Section FMU Boundary Amalgamation

Starting the 2015-2016 operating year, all wood delivered in the Saskatchewan River Forest

Section will use the new Forest Management Unit (FMU) boundaries of 50, 58 and 59

(Figure 2). These boundaries were developed in collaboration with the Province to follow

more discernible features (lakes, rivers, etc.). The new FMU boundaries also include the

FML No. 2 portions of FMU 12 (Mountain) and FMU 47 (Interlake). FMUs 53 and 57 have

remained unchanged.

Figure 2: 2015 Saskatchewan River Forest Section FMU Boundaries Compared to

Previous FMU Boundaries

Page 8: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

5

2.0 MANUFACTURING FACILITY PRODUCTION

The Company operates an unbleached Kraft paper mill and a random length/stud sawmill

at the manufacturing facilities site in The Pas. Due to market conditions, the sawmill

curtailed lumber production in January 2009; with no improvement to market conditions

the curtailment continued through 2016. Fibre required to manufacture this production is

outlined in Table 1.

Table 1: Company Manufacturing Facilities Production and Consumption for 2016

Fibre Volume (m³) Woodyard Production Whole Log Chip Production 292,244

DEAL Processor 270,859

On-Site Mobile Chipper 21,385

Hog Production (99,643 green tonnes) (1) 161,525

DEAL Processor 50,705

On-Site Mobile Chipper 2,323

Poplar Grinder 108,497

Kraft Paper Consumption

Wood Chips (291,732 oven-dry tonnes) (2) 770,172

Hog Fuel (134,083 green tonnes) (1) 214,533

Total Mill Consumption 984,705

(1) - There is no standard formula to convert hog fuel from green tonnes to cubic metres. The conversion

factor of 1.6 used to convert green tonnes to cubic metres is an estimate only.

(2) – An average density of 2.64 m3/ODT was used to convert oven-dry tonnes to cubic metres

In 2016, the paper mill produced 160,609 metric tonnes of unbleached Kraft paper. Total

consumption by the paper mill during this time was 984,705 cubic metres (m³). The paper

mill operated 357 days with an average production of 450 tonnes of paper per day.

The DEAL processor on site operated 320 days in 2016 producing 270,859 m³ whole log

chips used at the paper mill. An on-site mobile chipper produced an additional 21,385 m³

of whole log chips.

Hog production on site in 2016 totalled 161,524 m³ from the following sources: residue

from the DEAL processor and mobile chipper; and whole log processed hog from on-site

poplar grinder.

Page 9: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

6

3.0 FIBRE SUPPLY

3.1 Softwood Deliveries

Softwood (predominantly jack pine, black spruce and white spruce) species are the tree

species used to produce the unbleached Kraft paper in the paper mill. It is delivered to the

mill in two forms:

i. Roundwood - softwood logs between 2.54-meter and 5.08-meter lengths, and

ii. Wood chips - quality softwood chips with less than 2% bark content.

Softwood volumes are detailed in Table 2 by source of delivery whether on FML Area No.

2 as indicated by Forest Management Unit (FMU), or outside of FML Area No. 2. Volumes

are also subdivided between company contractor operations – operations the Company

plans and actively manages – and third-party operations – operations not managed by the

Company where the timber/product is purchased.

Of the total 671,939 m³ of softwood fibre volume delivered, 258,312 m³ was delivered as

roundwood and 413,627 m³ was delivered as chips.

Roundwood, which constituted 38% of the fibre delivered, was supplied from three general

sources:

i. Contract logging operations.

ii. Manitoba third party operator purchase suppliers.

iii. Saskatchewan purchase suppliers.

Of the 258,312 m3 of roundwood delivered, 206,065 m3 was sourced from FML Area No.

2 with 181,985 m3 from company contractors in the Saskatchewan River, Highrock and

Nelson River Forest Sections and 24,080 m3 from third-party contractors in the

Saskatchewan River and Nelson River Forest Sections. In addition to contractor operations

on FML Area No. 2, company contractors harvested 21,182 m3 from the jack pine budworm

salvage area. More details on company salvage harvest can be found in Section 3.4.

Roundwood from contractor logging operations was delivered to roadside with separate

hauling contractors delivering the roadside fibre to the mill site.

Further, 29,367 m³ of roundwood was purchased from Saskatchewan vendors, 1,698 m3 of

roundwood was delivered from Crown Land outside FML Area No. 2 and 0 m3 of

roundwood was purchased from Manitoba private land operators. These operators make

use of a combination of conventional and mechanical harvesting systems. All roundwood

purchased from Manitoba third party operators and Saskatchewan suppliers was based

upon delivery to the mill site.

The remaining 62% of the fibre was delivered as chips from three general sources:

i Mobile in-bush, full-tree chippers on FML Area.

ii Three Manitoba sawmills.

iii Saskatchewan purchase suppliers.

Page 10: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

7

Of the 413,627 m³ of chips delivered, mobile chippers operating on the licence area

produced 88,730 m3 of in-bush chips from the Saskatchewan River and Highrock Forest

Sections.

The remaining chips were delivered to the mill site from outside FML Area No. 2 as bush

chips from company contractor operations – 29,669 m3 in FMU 57 of the Saskatchewan

River Forest Section; purchase sawmill residual chips – 5,302 m3 from Manitoba and

153,149 m3 from Saskatchewan purchase suppliers; and, as purchase field chips from

Manitoba – 136,778 m3 from Spruce Products Ltd. in FMUs 11-14.

3.2 Hardwood and Hog Fuel Deliveries

Hardwood and hog fuel is also delivered to the mill site. Hog fuel is burned in a power

boiler to supplement/reduce the use of fossil fuel in the generation of steam at the power

plant. Hardwood is typically delivered to the mill site as roundwood poplar and processed

on-site into hog fuel. Hardwood and hog fuel delivery volumes are also detailed in Table

2. Of the total of 23,280 m3 of roundwood hardwood delivered, 0 m3 was harvested by

company contractor operations, 20,909 m3 was purchased from third party operators on the

FML Area, 1,838 m³ was purchased from Saskatchewan vendors, 533 m3 was delivered

from Crown Land outside FML Area No. 2 and 0 m3 was purchased from Manitoba private

land operators.

Additional wood material, not suitable for pulping such as shavings, bark and trim ends, is

also utilized as hog fuel. Of the 41,920 m3 of hog fuel purchased, 36 m3 was delivered from

the Nelson River Forest Section, 29,002 m3 was delivered from Manitoba sawmills, 8,023

m3 was delivered from various vendors in the Mountain Forest Section, and 4,860 m3 was

delivered from Manitoba private land operators.

3.3 Harvesting

Delivery volumes by FMU for 2016 are shown in Table 2. Table 3 shows the volume

harvested by quota holders, special allocation timber sales and timber permits in FML Area

No. 2 during the 2016-2017 operating year. For details on sustainable harvest levels

reference Table 5 in Section 3.6 – Annual Allowable Cut.

The total area harvested from FML Area No. 2 during the 2016-2017 operating year was

731.5 hectares (ha).

Table 6 displays the natural (forest fires) and harvest depletion area for the FML Area No.

2 with respect to the 2016-2017 operating period.

Details on harvesting records for the 2016-2017 operating year can be found in

Appendix I.

Page 11: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

8

3.4 Jack Pine Budworm Salvage

In July of 2015, forestry and fire crews travelling by aircraft north of Devils Lake noticed

many patches of red jack pine. Follow-up surveys conducted by the Province determined

the cause to be jack pine budworm (JPBW) defoliation and estimated 2,500 ha of forest

was heavily infected. In July of 2016, the Province conducted an aerial survey of central-

northwest Manitoba to determine forest health concerns. Initial findings determined the

occupation of jack pine budworm had expanded significantly north and west of the

original infestation to Moose Lake. This prompted the Province to conduct an intensive

aerial survey of the area which calculated the total area of infected timber to be 250,000

ha – enough wood to supply the Kraft paper mill for 37.5 years!

Implications of such a serious outbreak are of major concern to the Company and the

Province. Three years of repeated budworm defoliation will likely kill mature jack pine.

Dead stands of pure jack pine are a serious fire risk. Further, jack pine budworm

infestations are generally associated with drought conditions, compounding the fire risk.

Government consultation has been ongoing with communities impacted by the jack pine

budworm infestation.

Following the results of the intensive survey, the Company has been working with the

Province on a plan to salvage these infected timber stands prioritizing areas most at risk.

The priority stands have been identified in an area from Devils Lake north to Twin Creek

as well as an area south of Kanusk Lake in FMUs 45 and 46 in the Interlake Forest

Section (Figure 3). Additionally, there are some lower-priority stands identified

southwest of Devils Lake. As this area is outside of FML Area No. 2, the Company is

operating under authority of Timber Sale (Cutting Right) #5320.

The Company initially sent two contractors in the spring of 2016 to salvage harvest the

infected timber in this area. Starting in March 2017, the Company increased its contractor

capacity. Salvage harvest is ongoing to the present date.

The Company will continue working collaboratively with the Province to salvage timber

in areas impacted by jack pine budworm infestation.

Page 12: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

9

Figure 3: Jack Pine Budworm Salvage Area

Page 13: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

10

Table 2: Delivery Volumes by Forest Management Unit for 2016 (January – December)

Softwood Volume m3 (1) Hardwood Volume m3 (1) Hog Fuel Volume m3 (1)

Forest Section FMU

Company Contractor

Operations(2) Third Party Operations(3)

Company

Contractor

Operations(2)

Third Party

Operations(3)

Company

Contractor

Operations(2)

Third Party

Operations(3)

FML Area No. 2 Roundwood Chips Roundwood Chips Roundwood Roundwood Biomass / Hog Fuel

Saskatchewan River 50 0 0 0 0 0 4,065 0 0

53 37,157 0 0 0 0 0 0 0

58 23,066 0 0 0 0 0 0 0

59 9,170 46,776 9,368 0 0 11,372 0 0

Sub-Total 69,392 46,776 9,368 0 0 15,437 0 0

0 0

Highrock 67 56,693 41,954 0 0 0 0 0 0

68 0 0 0 0 0 0 0 0

69 0 0 0 0 0 0 0 0

Sub-Total 56,693 41,954 0 0 0 0 0 0

0 0

Nelson River 83 55,900 0 4,131 0 0 486 0 0

84 0 0 5,023 0 0 0 0 0

85 0 0 134 0 0 107 0 0

87 0 0 5,424 0 0 4,878 0 36

Sub-Total 55,900 0 14,713 0 0 5,472 0 36

Total Inside FML Area No. 2 181,985 88,730 24,080 0 0 20,909 0 36

Outside FML Area No. 2

Interlake 45/46 21,182 0 1,533 0 0 0 0 0

Saskatchewan River 57 0 29,669 0 0 0 0 0 0

Mountain 11/12/13/14 0 0 0 0 533 0 12,940

Spruce Products Ltd. - FMUs 11,12,13,14 & Mill Yard 0 164 136,778 0 0 0 23,850

Kotyk Lumber Ltd. - Mill Yard 11 0 0 0 972 0 0 0 234

Spruce Wood Loggers - Mill Yard 40 0 0 0 4,330 0 0 0 0

MB Private Land 0 0 0 0 0 0 0 4,860

Province of Saskatchewan 0 0 29,367 153,149 0 1,838 0 0

Total Outside FML Area No. 2 21,182 29,669 31,065 295,229 0 2,371 0 41,884

TOTAL ALL AREAS 203,166 118,399 55,145 295,229 0 23,280 0 41,920

(1) The Company does not sort tree species prior to mill consumption

(2) Wood harvested for the Company

(3) Company mill gate deliveries

Page 14: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

11

Table 3: Region Timber Production for FML Area No. 2 in 2016-2017

Licensee or Grouping

Product (saw

logs, pulpwood,

composite,

chips)

Crown Dues Volume (m3)

Softwood Hardwood Total

FML Area No. 2

Canadian Kraft Paper

Industries Ltd.

Pulpwood 120,001 0 120,001

Chips2 86,755 0 86,755

Subtotal 206,756 0 206,756

FMU 50

Opaskwayak Cree Nation

Timber Sale Pulpwood 0 900 900

FMU 57

Canadian Kraft Paper

Industries Ltd. - Quota

Pulpwood 0 0 0

Chips2 20,904 0 20,904

Subtotal 20,904 0 20,904

FMU 59

Anderson Logging Inc.

Quota1 Pulpwood 0 0 0

Timber Sale Pulpwood 9,909 12,022 21,931

Leptick Sawmill Ltd.

Quota1 Pulpwood 2,734 0 2,734

Timber Sale Pulpwood 0 3,755 3,755

Subtotal 12,643 15,777 28,420

FMU 83

Wabowden Salvage

Damage Appraisal Pulpwood 221 125 346

FMU 83/85/87

Manitoba Hydro

Damage Appraisal Pulpwood 2,195 976 3,171

FMU 83/84

Mistik Hauling Inc.

Quota1 Pulpwood 3,112 0 3,112

Timber Sale Pulpwood 1,492 0 1,492

Subtotal 4,604 0 4,604

Total Quota / Timber Sale / Timber Permit 40,567 17,778 58,345

Grand Total 247,323 17,778 265,101

1 – Quota volumes per Manitoba Sustainable Development letters.

2 – Cut Control Adjustment Factor (CCAF) applied to chip volumes.

Page 15: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

12

3.5 Stumpage

As per the FML Agreement, the Company is required to pay the applicable Forest Section

rates for softwood stumpage for each cubic metre of softwood delivered to the mill

complex in The Pas from FML Area No. 2, as well as for wood delivered from Manitoba

locations outside FML Area No. 2. In 2016, the Company paid $1,054,543.05 in stumpage

dues to the Province. Of this total amount, $580,399.89 was paid for wood delivered from

FML Area No. 2 and $474,143.16 was paid for wood outside FML Area No. 2. In addition

to stumpage, forest renewal charges were paid for wood where the Company does not have

renewal responsibility. The Company paid $260,828.29 in renewal charges to the Province

for quota and timber sale harvest, $426,826.40 in renewal charges to the Mountain Forest

Section Renewal Company for wood harvested in the Mountain Forest Section, and $95.17

to Louisiana Pacific Canada for hardwood harvested in the Mountain Forest Section.

Lastly, the Company paid the Province $72,903.13 in fire protection charge for wood

delivered from both within and outside the FML Area No. 2.

3.6 Annual Allowable Cut

The Annual Allowable Cut (AAC) is the volume of wood that can be harvested annually

from a Forest Management Unit (FMU) on a sustainable basis. AAC volume levels are

determined by the Province.

As indicated in the 1997-2009 Forest Management Plan (FMP), the planning target in terms

of AAC regulation is to plan and harvest within the AAC for each FMU on an annual basis.

This target may not always be feasible due to access limitations in some FMUs, timber

salvage requirements and other operating constraints (such as the practicality of harvesting

a relatively small AAC from an FMU each year). In any instance prior to exceeding the

AAC, the Company requests approval from the Province. AACs may be exceeded in any

given year providing harvest levels are sustained within the larger 5-year cut control period.

The AACs for all FMUs, are based upon Level 1 Utilization of the Province’s Forest

Inventory which includes only softwood stands.

Since the 2009-10 operating year, at the request of the Province, harvest levels reported

against the AAC included delivery volumes only, removing the requirement to report and

reconcile bush inventories.

In 2003, an agreement was reached between the Province and the Company to provide a

credit to the Company for utilizing wood below the provincial minimum utilization level

as a result of extensive wood chipping operations. Since April 1, 2008, this reduction has

been incorporated into annual scale factors that are calculated by the Province based on the

previous 2 years of data and vary by product and region of origin. These scale factors are

applicable for the term of the operating year, after which they are re-calculated utilizing

the data gathered during the recently expired operating year for application in the new

operating year. These calculations are utilized for the Saskatchewan River FMUs (50, 53,

58 and 59) as well as Highrock FMUs 67 and 68.

Page 16: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

13

On March 29, 2017 the Company and the Province signed a Memorandum of

Understanding on timber scaling practices, hereafter referred to as the MOU or Scaling

MOU. The MOU applies to all timber volumes delivered to the Company’s scale

originating from FML No. 2 or FMU 57. The purpose of the MOU is to enable efficient

and accurate scaling methods consistent with timber supply calculations allowing for closer

alignment of annual harvest volumes with AAC levels. The MOU will allow for the full

and sustainable use of timber supply proximal to the mill site, reducing transportation

distances and associated carbon footprint. The parties agree to work together to determine

a new method by which to determine undersize and defect values for Kraft Field Chip

volumes. While this new method is being developed, the parties agree to still apply annual

scale factors utilizing a 2-year weighted average of sample data. Additionally, a Cut

Control Adjustment Factor is applied to Kraft Field Chip volumes. This factor is the

difference between the provincial 8’ log length (currently used for determination of AAC)

and the provincial tree length utilization standards as displayed in Table 4. These factors

are applied retroactively to the start of the cut control period (April 1, 2015) – i.e. the 2015-

16 AAC.

Table 4: Cut Control Adjustment Factors for Saskatchewan River and Highrock

Forest Sections of FML Area No. 2

Saskatchewan River Highrock

FMU

50

FMU

53

FMU

58

FMU

59

FMU

51*

FMU

57

FMU

67

FMU

68

Provincial 8' Log Length

AAC

26,809

103,990

131,910

93,488

10,168

13,531

379,371

62,206

Provincial Tree Length

AAC

34,898

125,092

156,165

109,285

15,196

16,576

386,534

73,853

Cut Control Adjustment

Factor 76.8% 83.1% 84.5% 85.5% 66.9% 81.6% 98.1% 84.2%

*Portion of FMU 51 outside of FML Area No. 2

Table 5 displays the current status of the softwood AAC for each FMU in FML Area No.

2 with respect to the current cut control period April 1, 2015 to March 31, 2020.

As indicated in Table 5, no AAC levels were exceeded in the 2016-2017 operating year.

FMU 59 was the closest to the AAC at 83,292 m3 or 89%.

Page 17: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

14

Table 5: Softwood (Level 1) Annual Allowable Cut Status for FML Area No. 2 to 2016-2017 for Cut Control Period 2015 to 2020

Forest

Section

Forest

Management

Unit

Current 5-

Year Cut

Control

Period

Undercut

Carried

Forward

AAC (m3)

Level 1 (1)

5-year

Period AAC

2015/16

Opening

Balance

2015/16

AAC

2015/16

Harvest (3,4)

2016/17

AAC

2016/17

Harvest (3,4)

2017/18

AAC

2017/18

Harvest (3,4)

2018/19

AAC

2018/19

Harvest (3,4)

2019/20

AAC

2019/20

Harvest (3,4)

2015-2020

Total (3,4)

Remaining

current 5-year

Period AAC

Saskatchewan

River -

Mountain -

Interlake (2)

50 2015-2020 26,809 134,045 26,809 26,809 0 26,809 0 26,809 26,809 26,809 0 134,045

53 2015-2020 103,990 519,950 103,990 103,990 17,225 103,990 17,054 103,990 103,990 103,990 34,279 485,671

58 2015-2020 131,910 659,550 131,910 131,910 13,304 131,910 19,156 131,910 131,910 131,910 32,460 627,090

59 2015-2020 93,488 467,440 93,488 93,488 55,612 93,488 83,292 93,488 93,488 93,488 138,904 328,536

subtotal 0 356,197 1,780,985 356,197 356,197 86,141 356,197 119,502 356,197 0 356,197 0 356,197 0 205,643 1,575,342

Highrock 67 2015-2020 379,371 1,896,855 379,371 379,371 85,195 379,371 59,314 379,371 379,371 379,371 144,509 1,752,346

68 2015-2020 62,206 311,030 62,206 62,206 0 62,206 0 62,206 62,206 62,206 0 311,030

69 2015-2020 168,132 840,660 168,132 168,132 0 168,132 0 168,132 168,132 168,132 0 840,660

subtotal 0 609,709 3,048,545 609,709 609,709 85,195 609,709 59,314 609,709 0 609,709 0 609,709 0 144,509 2,904,036

Nelson River 83 2015-2020 195,550 977,750 195,550 195,550 47,977 195,550 34,233 195,550 195,550 195,550 82,210 895,540

84 2015-2020 180,330 901,650 180,330 180,330 3,018 180,330 1,492 180,330 180,330 180,330 4,510 897,140

85 2015-2020 129,610 648,050 129,610 129,610 4,674 129,610 517 129,610 129,610 129,610 5,191 642,859

87 2015-2020 130,900 654,500 130,900 130,900 2,232 130,900 1,452 130,900 130,900 130,900 3,684 650,816

89 2015-2020 38,920 194,600 38,920 38,920 0 38,920 0 38,920 38,920 38,920 0 194,600

subtotal 0 675,310 3,376,550 675,310 675,310 57,901 675,310 37,694 675,310 0 675,310 0 675,310 0 95,595 3,280,955

Total FMU Area No. 2 0 1,641,216 8,206,080 1,641,216 1,641,216 229,237 1,641,216 216,510 1,641,216 0 1,641,216 0 1,641,216 0 445,747 7,760,333

(1) FMU AACs are a combination of new Provincial standard (FMUs 50, 53, 58, 59, 67 and 68) and previous Provincial standard (FMUs 69, 83, 84, 85, 87, and 89) (2) FMUs in Saskatchewan River/Mountain/Interlake Forest Section were amalgamated effective the 2015-16 Operating Year. The details on how the original FMUs were regrouped can be found in Section 1.1 – Saskatchewan River Forest Section FMU Boundary Amalgamation of the Annual Report (3) Volume reported against AAC excludes deliveries of unmerchantable volumes to reflect exceeding provincial utilization standard. (4) Unmerchantable volume (Forestry Branch Circular C-8) is not applied to quotas, timber sales or deducted from the AAC. Volume is recorded by year delivered, not by cut date.

Page 18: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

15

Table 6: FML Area No. 2 Actual Depletion for 2016-2017

Stratum Stratum Description Actual

Harvest

Area (Ha)(1)

Natural

Depletion

Area (Ha)(2)

SWD/SFWD Pure Commercial Softwood 294.5 798.6

JP/PJP Pure Jack Pine 32.0 419.4

UBS Upland Black Spruce 41.3 93.2

LBS Lowland Black Spruce 26.8 68.4

STL/TLS Spruce-Tamarack 0.1 208.9

OTHSW Other Softwood 0.0 0.0

Softwood Subtotal: 394.7 1,588.5

MSPF/MWD Mixedwood -Softwood Leading 167.1 23.0

NSPF/NWD Mixedwood - Hardwood Leading 72.6 28.9

Mixedwood Subtotal: 239.7 51.9

TA/PTA Pure Trembling Aspen 68.3 1.4

HDWD/MAP Pure Commercial Hardwood 2.9 0.3

OTHHW Other Hardwood 0.0 0.0

Hardwood Subtotal: 71.2 1.7

PP Potentially Productive Forest 6.3 0.0

NF/NP Non-Forest / Non-Productive 19.6 541.5

GRAND TOTAL 731.5 2,183.6

(1) – Area harvested by the Company on FML Area No. 2 + FMU 57

(2) – Forest fires occurring on FML Area No. 2

Page 19: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

16

4.0 2015-2017 HARVEST AND RENEWAL PLAN

The 2015-2017 Harvest and Renewal Plan, covering the period of June 1, 2015 to May

31, 2017 was submitted on March 13, 2015.

4.1 Public Information Meetings and Development of the Harvest and Renewal Plan

Meetings for the 2015-2017 Harvest and Renewal Plan were held between January 26th,

2015 and February 20th, 2015 in the communities of Cranberry Portage, Cormorant,

Cross Lake, Flin Flon, Grand Rapids, Easterville, Moose Lake, Sherridon, Snow Lake,

OCN/The Pas, Thompson and Wabowden. More information on public and Indigenous

engagement can be found in the Company’s Sustainable Forest Management Plan and

Annual Report.

4.2 Access Development and Decommissioning

Access development is a key component in the management of the forest resource

throughout FML Area No. 2. Contributing factors such as the management of the AACs

on an FMU basis and the long-term balancing of delivery costs make it necessary to gain

access into various areas to conduct harvesting and forest renewal activities.

To meet the timber requirements of the Company’s mill facilities, access development

including clearing of right-of-ways, road construction, and construction of watercourse

crossings, is required. Tables 7 and 9 outline the planned (per the 2015-2017 OP) and

actual access development activities for the 2016-2017 operating year. Table 8 lists Forest

Road Development Plans (FRDPs) submitted by the Company in 2016. Table 10 lists

access roads decommissioned during the 2016-2017 operating year as part of the terms of

the FML Agreement. Road categories are defined in Appendix II of the Company’s two-

year Harvest and Renewal (Operating) Plan.

In addition to access development detailed in Tables 7 and 9, the Company undertook the

following road maintenance and road management projects in 2016:

• Upgraded 3.5 km of the Hugo Bay / Stony Point road in FMU 57 including roadside

brushing and grading

• Maintained culverts and improved drainage on the Halfway road in FMU 59

• Utilized a 7 km portion of an old transmission line ROW as a temporary winter

road in the Namew-Halfway area in FMU 59

• Completed road inventory update including GPS locations, crossing size,

ecosystem classification, etc.

Page 20: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

17

Table 7: Company Access Development for FML Area No. 2 for 2016-2017

Access Development in km

Planned Actual

Forest

Section Road Name Category

Right-

Of-Way Roadway

Right-

Of-Way Roadway

Saskatchewan

River Bignell Road 2 0.0 11.6 0 0

Bracken Creek Road 3 35.8 0.0 0 0

Mahigan Road 2 10.2 0.0 0 0

Paul Harbour Road 2 14.6 8.2 0 0

Highrock Batty Road 2 0.0 2.6 0 0

Crow Lake Road 2 11.1 6.3 0 0

Dickstone Road 2 7.7 15.6 0 0

Martell Lake West Road 4 3.3 3.3 0 0

Martell Lake Winter

Road 4 10.4 10.4 0 0

Ruddock Road 2 0.0 5.1 0 0

Nelson River Black Duck Creek

Winter Road 4 20.5 20.5 0 0

Three Point Lake Road 4 8.5 8.5 0 0

Total Road Program 122.1 92.1 0 0

Page 21: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

18

Table 8: Forest Road Development Plans Submitted by the Company in 2016

Forest Section Road Name Date Submitted Date Approved

Saskatchewan River Bignell Road April 6, 2016 Pending

Table 9: Water Crossing Development for FML Area No. 2 for 2016-2017

Forest Section Road Name Planned Crossing Installed Crossing

Saskatchewan River

Bracken Creek Road Km 31.1 – Ice Bridge (S-4)

No

Highrock Dickstone Road Km 46.0 – Bridge (H-40)

No

Where applicable, watercourse crossings are reviewed by DFO under the Fisheries Act and Transport

Canada under the Navigation Protection Act.

Table 10: Roads Decommissioning Status for FML Area No. 2 in 2016-2017

Forest Section Road Name Category Length (km) Type

Nelson River North Joey 2 5.4 Long-Term

Page 22: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

19

5.0 FOREST RENEWAL

Under the terms of the 1989 FML Agreement, the Company is responsible for reforestation

of all harvest areas within FML Area No. 2 where the harvest volume is subsequently

delivered to the mill site.

Where harvested timber is retained by third party operators, the responsibility for

reforestation remains with the Province. The Company pays the Province forest renewal

charges and other applicable dues for wood delivered to the mill site from these sources as

detailed in Section 3.5.

The Company’s corporate accounting policy is to accrue silviculture liability to the free-

to-grow stage on all blocks harvested since 1989. This will ensure that funds are available

not only for basic silviculture work such as site preparation and planting, but also for

potential costs such as vegetation management, replanting and future survey work. The

Company’s free-to-grow obligation is accruing on a block-by-block basis to reflect all

expected future treatments.

Table 12 summarizes forest renewal and tending operations undertaken by the Company

in 2016.

In 2016, a total of $1,771,873 was spent in the completion of the Company's forest

management activities as illustrated in Table 11.

Table 11: Summary of the Company’s Forest Management Activity Costs for 2016

Activity Cost ($)

Aircraft/Helicopter 119,210

Eradication 0

Photos – Cutover Imagery 43,621

Scarification 110,617

Seed & Cone Collection 12,828

Stand Tending – Herbicide 395,537

Surveys – Free-to-Grow 67,996

Tree Planting – Planting 613,059

Tree Planting – Seedlings 396,081

Tree Planting – Snow Cache 12,924

1,771,873

Page 23: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

20

5.1 Site Preparation

Site preparation is a treatment to mechanically enhance the effectiveness of tree planting

by creating improved conditions for rooting and growing seedlings, decreasing undesirable

competition, regulating spacing and improving access for planters. Site specific

prescriptions include separating and aligning logging slash, decreasing the depth of organic

material over mineral soil, temporarily reducing woody or herbaceous competition for

light, moisture and nutrients, and enhancing infill of natural regeneration to augment the

planted seedlings. Since moving to a full-tree to roadside harvesting system, site

preparation is no longer required on a regular basis to promote desirable microsite creation

for tree plant activities.

In 2016, 0 hectares of harvest area was site prepared.

Details on site preparation activities are listed in Appendix I.

5.2 Scarification

Scarification is the treatment used to enhance natural regeneration (typically jack pine) by

creating the conditions necessary for seed germination and growth and to improve spacing

by distributing existing seed more evenly. Scarification treatment consists of pulling shark

finned barrels and spiked anchor chains across cutovers to expose mineral soil and scatter

the cones and seed.

In 2016, scarification treatments were applied to 528.6 ha as a reforestation treatment for

natural jack pine regeneration. Sites that were part of the jack pine stratum were scarified.

Details on scarification activities are listed in Appendix I.

5.3 Tree Planting

In 2016, 2,048,125 seedlings were planted on 1,625.7 ha within FML Area No. 2. These

seedlings were purchased from Pineland Forest Nursery at Hadashville, Manitoba.

The trees planted in 2016 were grown in containers and shipped as either boxed, frozen,

over winter stock or boxed current stock. In both cases the seedlings are extracted from the

container prior to shipping. Tree species planted were black spruce, white spruce and jack

pine.

Details on planting activities are listed in Appendix I.

Page 24: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

21

5.4 Stand Tending – Vegetation Management

In 2016, the Company performed 1,900.2 ha of vegetation management on FML Area No.

2. Vegetation management was done exclusively using aerial application of glyphosate

herbicide. Herbicide is used in late summer (August) to suppress/kill hardwood (aspen,

poplar, birch) trees, allowing the smaller softwood (spruce, pine) trees to grow more

vigorously. This is also known as “releasing” the softwood trees.

Treatment blocks were identified from field surveys or aerial photo interpretation and then

an aerial survey was done to map the portions of each block which required release, and to

identify any sensitive areas such as waterways in or adjacent to the block that would need

to be buffered.

Details on vegetation management activities are listed in Appendix I.

Table 12: Renewal and Tending Operations for FML Area No. 2 in 2016

Operation Area (Ha)

Uneven-aged Management

Selection Cut – Harvest 0

Subtotal Uneven-aged Management 0

Even-aged Management

Natural Regeneration 0

Assisted Regeneration

Planting 1,625.7

Scarification for Natural 528.6

Sanitation/Treatment for Dwarf Mistletoe 0

Subtotal Assisted 2,154.3

Subtotal Even-aged Management 2,154.3

Total Regeneration 2,154.3

Site Preparation

Mechanical 0

Chemical 0

Chemical/Mechanical 0

Total Site Preparation 0

Tending

Spacing 0

Mechanical Spacing 0

Chemical - Ground 0

Chemical –Aerial 1,900.2

Total Tending 1,900.2

Page 25: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

22

5.5 Silviculture Surveys

As of 2013, regeneration surveys are no longer conducted on harvested blocks in the

Province of Manitoba. Previously, a regeneration survey was conducted at 7 years following

depletion and a free-to-grow survey at 14 years after depletion. Now, the Province has

consolidated silviculture surveys into one survey depending on stand covertype: A 10-year

free-to-grow survey for softwood and softwood-dominated mixedwood blocks; and, a 5-7

year hardwood renewal survey for hardwood and hardwood-dominated mixedwood blocks.

Table 13 describes the standards of the Free-to-Grow survey.

The Company participated in the Manitoba Silviculture Technical Committee and on related

subcommittees working on revisions to survey procedures through 2016.

Table 14 summarizes free-to-grow survey efforts conducted by the Company in 2016 by

survey standard achieved.

Table 13: Free-to-Grow (FTG) Survey Standard Descriptions

Standard Standard Label Standard Description*

FTG-S Free-to-Grow Softwood Softwoods are subject to little or no hardwood

competition – will develop into a softwood (S)

stand with no additional stand tending

FTG-M Free-to-Grow Mixedwood Softwoods are subject to some hardwood

competition – will develop into a softwood-

leading mixedwood (M) stand with no additional

stand tending

NFTG-S Not Free-to-Grow Softwood Many softwoods present but are subject to

moderate hardwood competition – require stand

tending to develop into a softwood (S) stand

NFTG-M Not Free-to-Grow Mixedwood Many softwoods present but are subject to heavy

hardwood competition – require stand tending to

develop into a softwood-leading mixedwood (M)

or softwood (S) stand

N Mixedwood – N Primarily hardwood with some softwoods present

– will develop into a hardwood-leading

mixedwood (N) stand

H Hardwood Primarily hardwood with no-few softwoods

present – will develop into a hardwood (H) stand

REGEN Regeneration Enough softwoods present to potentially develop

into a softwood (S) stand but are too short at the

time of survey to draw a practical conclusion

NSR Not Sufficiently Regenerated Not enough softwoods or hardwoods present to

develop into a fully-stocked stand. Additional

management such as fill plant or seeding is

required * - Descriptions developed, in part, from the MANITOBA FREE TO GROW SURVEY MANUAL 2014

Page 26: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

23

Table 14: Free-To-Grow (FTG) Survey Summary for FML Area No. 2 for 2016

Free-To-Grow (ha) Not Free-To-Grow (ha)

Harvest

Year FTG-S FTG-M

NFTG

-S/M N H Regen NSR Total (ha)

1992 25.8 25.8

1993 339.6 22.7 49.9 412.2

1994 734.8 33.8 62.8 831.4

1995 306.5 50.5 3.4 93.7 454.1

1996 826.1 21.8 19.5 57.2 924.6

1997 675.6 25.4 79.9 780.9

1998 923.1 29.7 20.9 973.7

1999 0.0

2000 342.3 38.4 380.7

2001 0.0

2002 433.1 4.9 178.3 616.3

2003 158.3 59.0 225.3 442.6

2004 214.3 2.9 217.2

2005 917.0 16.0 17.3 950.3

2006 254.4 138.6 35.0 29.8 457.8

Total 6,150.9 150.1 304.5 0.0 0.0 114.2 747.9 7467.6

Page 27: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

24

6.0 PLANNING AND REPORTING

Forest management activities to be undertaken on the Company's FML Area are first

described as proposals to the Province through a series of plans, as well as through the site-

specific provincial work permit process. Once such activities are completed, reports such

as this 2016 Forest Management Annual Report are prepared to summarize the actual

activities that have occurred. Following is a summary of the plans and reports that were

prepared for this purpose in 2016:

i 2016 Fire Protection and Suppression Plan

Submitted to the Province April 20, 2016, in compliance with Section 23 (B) of the

FML Agreement.

ii 2015 Forest Management Annual Report

Submitted to the Province October 31, 2016, in compliance with Section 6 (A) of the

FML Agreement.

The 2015 Forest Management Annual Report was originally submitted October 31,

2016 to SD. However, discrepancies in AAC calculations between the Company and

the Province delayed its approval. Both parties worked to rectify the discrepancies. By

the time the discrepancies were rectified in 2017, the scaling MOU was in effect. Both

parties agreed it was beneficial to reconcile the 2015-16 AAC to the new Scaling MOU

factors before finalizing the report which carried on into early 2018.

iii 2015-2017 Harvest and Renewal Plan

Submitted to the Province March 13, 2015, in compliance with Section 17(A) (i) of

the FML Agreement.

Page 28: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

25

7.0 FOREST INVENTORY

The forest inventory projects that are usually undertaken by the Company are necessary

to provide more detailed information than is provided by the Manitoba Forest

Inventory. This information is useful for block planning and wood flow (product)

projections. The more detailed projects include pre-harvest forest investigation (PHFI)

surveys and the enhanced forest inventory development. Only the PHFI surveys were

implemented in 2016.

7.1 Pre-Harvest Forest Investigations

The Company’s PHFI survey is used to obtain site-specific data to develop harvest and

forest renewal prescriptions for operating plan development. The Company’s PHFI

manual was developed with consideration of the Manitoba Sustainable Development

Forest Practices Guidebook on Pre-Harvest Survey Guidelines (2014).

In 2016 PHFI continued sampling at 1 plot per 5 hectares. The recording of soil erosion

risk rating also continued. The practice of measuring and recording all trees greater

than 9.0 centimetres in diameter at breast height (dbh) for actual dbh and height

remained.

The Manitoba Endangered Species and Ecosystems Act (MESEA) schedule and the

Species at Risk Act (SARA) registry including species listed by the Committee on the

Status of Endangered Wildlife in Canada (COSEWIC) were reviewed and updates

made to the PHFI training list as appropriate. In addition to Species at Risk, rare species

listed by the Manitoba Conservation Data Centre (MBCDC) for the applicable

ecoregions are periodically reviewed between the Company and MBCDC staff for

consideration on the PHFI training list.

In 2016, 33 blocks totaling 4,297 ha across the FML Area were subject to a PHFI

survey.

More information regarding the Company’s annual performance monitoring relating to

PHFI surveys and Species at Risk can be found in the Company’s Sustainable Forest

Management Annual Report.

Page 29: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

26

APPENDICES

Page 30: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

27

APPENDIX I – Forest Section Summaries for FML Area No. 2

1. Harvest by FMU

2. Forest Renewal and Tending by FMU

Site Preparation and Scarification Activities by FMU

Tree Planting Activities by FMU

Aerial Seeding Activities by FMU

Stand Tending – Vegetation Management Activities by FMU

Page 31: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

28

SASKATCHEWAN RIVER FOREST SECTION

Page 32: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

29

Saskatchewan River Forest Section

2016-2017 Forest Management Activities

Harvest

FMU Block Block Size (Ha) Est. Soft Vol. (m3) Est. Hard Vol. (m3)

57 HU-23 32.91 1,858.16

57 HU-26 13.19 1,818.90

59 ALK-3 27.65 1,114.04 3,646.92

59 ARL-4 40.77 2,073.21 2,448.85

59 ARL-5 65.94 8,588.17 5,456.52

59 BT-3 77.39 8,665.36

59 HY-14 69.66 10,804.39

59 HY-15 61.78 9,094.76

59 HY-23 57.17 13,577.45

59 HY-28 21.95 4,073.28

59 HY-29 48.26 7,682.56

59 HY-30 70.21 11,272.23

59 HY-31 65.19 11,418.15

59 HY-33 61.07 9,899.80

59 LK-20 2.83 408.65

59 LK-22 15.41 2,225.04 154.37

Total Saskatchewan River 731.37 104,574 11,707

Page 33: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

30

Forest Renewal and Tending

Site Preparation and Scarification

FMU Block Area Treated (Ha) Treatment Treatment Method

53 TM-50 25.86 Scarification Anchor Chains 53 TM-53 113.11 Scarification Anchor Chains 58 SR-2 120.28 Scarification Anchor Chains

Total Saskatchewan River 259.25

Tree Planting

FMU Block Area Planted (Ha) Species Trees Planted

50 CT-202 73.97 Black Spruce 44,220

Jack Pine 11,900

53 TM-205 168.01 Black Spruce 243,360

Jack Pine 28,590

White Spruce 18,840

53 TM-206 36.46 Black Spruce 23,713

Jack Pine 6,470

White Spruce 1,200

53 TM-207 28.73 Black Spruce 58,820

58 OL-69 60.47 Jack Pine 25,425

58 OL-71 69.05 Black Spruce 24,420

58 TM-211 13.08 Black Spruce 47,427

Jack Pine 12,940

White Spruce 2,400

59 AAT-7 112.34 Black Spruce 360

White Spruce 34,200

59 AAT-8 86.91 Black Spruce 720

Jack Pine 13,300

White Spruce 50,090

59 AAT-9 83.79 Black Spruce 42,810

White Spruce 26,510

59 HY-10 46.08 Black Spruce 81,850

White Spruce 15,580

59 HY-19 42.44 Black Spruce 28,400

White Spruce 27,700

59 HY-20 31.34 Black Spruce 20,400

White Spruce 17,800

59 HY-8 41.71 Black Spruce 31,720

White Spruce 23,620

59 HY-9 164.34 Black Spruce 123,420

White Spruce 73,140

Total Saskatchewan River 1,058.72 1,161,345

Page 34: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

31

Aerial Seeding None in 2016

Stand Tending – Vegetation Management

FMU Block Area Treated (Ha) Treatment Treatment Method

53 M-2 59.48 Herbicide Aerial Application

53 MA-37 38.38 Herbicide Aerial Application

53 TM-27 7.3 Herbicide Aerial Application

53 MB-31 19.95 Herbicide Aerial Application

53 MC-37 24.48 Herbicide Aerial Application

53 TM-39 19.56 Herbicide Aerial Application

53 TM-40 19.62 Herbicide Aerial Application

53 TM-5 55.72 Herbicide Aerial Application

53 MA-36 7.41 Herbicide Aerial Application

53 MA-38 52.13 Herbicide Aerial Application

53 MB-33 13.13 Herbicide Aerial Application

53 MB-37 60.74 Herbicide Aerial Application

53 MB-44 18.72 Herbicide Aerial Application

53 PI-1 50.2 Herbicide Aerial Application

53 PI-4 43.25 Herbicide Aerial Application

53 TD-17 82.27 Herbicide Aerial Application

53 TD-31 57.13 Herbicide Aerial Application

53 TD-43 30.52 Herbicide Aerial Application

53 TD-46 24.05 Herbicide Aerial Application

53 TD-51 29.62 Herbicide Aerial Application

53 TM-21 94.05 Herbicide Aerial Application

53 TM-25 37.72 Herbicide Aerial Application

59 AB-6 59.55 Herbicide Aerial Application

59 MV-15 9.63 Herbicide Aerial Application

59 MV-3 26.22 Herbicide Aerial Application

59 PF-5 6.16 Herbicide Aerial Application

Total Saskatchewan River 946.99

Page 35: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

32

HIGHROCK FOREST SECTION

Page 36: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

33

Highrock Forest Section

2016-2017 Forest Management Activities

Harvest

None in 2016

Forest Renewal and Tending Site Preparation and Scarification

FMU Block Area Treated (Ha) Treatment Treatment Method

67 HO-28 81.05 Scarification Anchor Chains

67 HO-29 158.78 Scarification Anchor Chains

67 NA-38 20.36 Scarification Anchor Chains

67 ST-5 9.17 Scarification Anchor Chains Total Highrock 269.36

Tree Planting

FMU Block Area Planted (Ha) Species Trees Planted

67 BZ-23 4.67 Black Spruce 8,460

67 BZ-24 78.33 Black Spruce 105,820

Jack Pine 11,900

White Spruce 1,800

67 BZ-44 201.01 Black Spruce 188,720

Jack Pine 52,300

White Spruce 65,400

67 DL-8 72.22 Black Spruce 70,050

Jack Pine 2,640

White Spruce 11,320

67 ST-35 21.50 Black Spruce 17,285

67 ST-36 2.16 Black Spruce 5,000

67 ST-5 45.05 Black Spruce 47,105

Jack Pine 26,880

White Spruce 3,440

Total Highrock 424.94 618,120

Aerial Seeding None in 2016

Herbicide Treatment None in 2016

Page 37: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

34

NELSON RIVER FOREST SECTION

Page 38: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

35

Nelson River Forest Section

2016-2017 Forest Management Activities

Harvest

None in 2016

Forest Renewal and Tending

Site Preparation and Scarification None in 2016

Tree Planting

FMU Block Area Planted (Ha) Species Trees Planted

83 SI-51 99.31 Black Spruce 172,460

83 SI-52 39.65 Black Spruce 68,500

83 SI-54 3.13 Black Spruce 27,700

Total Nelson River 142.09 268,660

Aerial Seeding

None in 2016

Page 39: 2016 Forest Management Annual Report Forest Management ......2016 Forest Management Annual Report 1.0 INTRODUCTION 1.1 Sale of Mill Facilities On August 22, 2016 Tolko Industries Ltd

36

Herbicide Treatment

FMU Block Area Treated (Ha) Treatment Treatment Method

84 JO-39 119.15 Herbicide Aerial Application

84 JO-47 5.66 Herbicide Aerial Application

84 JO-50 7.39 Herbicide Aerial Application

84 JO-51 10.17 Herbicide Aerial Application

84 JO-57 6.98 Herbicide Aerial Application

84 JO-58 25.88 Herbicide Aerial Application

84 JO-62 0.13 Herbicide Aerial Application

84 JO-63 5.49 Herbicide Aerial Application

84 JO-64 8.43 Herbicide Aerial Application

84 JO-66 4.75 Herbicide Aerial Application

84 JO-68 2.43 Herbicide Aerial Application

84 JO-70 6.48 Herbicide Aerial Application

84 JO-77 9.97 Herbicide Aerial Application

84 LL-39 0.33 Herbicide Aerial Application

84 LL-40 7.42 Herbicide Aerial Application

84 LL-41 6.56 Herbicide Aerial Application

84 LL-47 6.95 Herbicide Aerial Application

85 BQ-87 54.66 Herbicide Aerial Application

85 GS-11 17.28 Herbicide Aerial Application

85 GS-9 3.42 Herbicide Aerial Application

85 JO-32 8.85 Herbicide Aerial Application

85 PC-1 121.83 Herbicide Aerial Application

85 PC-2 15.21 Herbicide Aerial Application

85 PC-25 77.19 Herbicide Aerial Application

85 PC-28 50.38 Herbicide Aerial Application

85 PC-31 106.14 Herbicide Aerial Application

85 PC-34 96.62 Herbicide Aerial Application

85 PC-4 58.37 Herbicide Aerial Application

85 PC-7 104.21 Herbicide Aerial Application

87 GS-39 4.87 Herbicide Aerial Application

Total Nelson River 953.20