Background

During the period of June 15-18,Woodlands, Lumby, underwent aStandard. The registration cycleannually. This report summarizeGlobal re-audit.

Scope of Certificatio

The sustainable forest managemactivities on the defined forest arA20191, FL A74912, FL A18666TO816). These activities includedeactivation and maintenance a

SustainabOkanag

Overview of the Okanaga

The Defined Forest Area for Tolko’s OkBros./BCTS/Westbank First Nations Okin the Okanagan and Arrow TSAs includLicence T0816 and FLTC A76247. FL ACompany. A portion of Bell Pole Compa

The Okanagan Woodlands Operation cadministrative offices and silviculture aca harvest of 1,756,254 M3.

The DFA has forests with a mix of agetowards trees 140 to 250 years of ageforest types.

Tolko Industries Ltd.

le Forest Management Systeman Regional Woodlands (Lumby)

2010, Tolko Industries Ltd, Okanagan Regionalsurveillance audit to the CAN/CSA Z809

is over 3 years with surveillance audits conducteds the audit process and results of the QMI-SAI

n

ent requirements as they apply to the forest managementea (TFL 49, FL A18632, FL A18667, FL A18672, FL, FL A78062, FL A76247, FL A80260, FL A80627 andplanning, harvest and hauling of logs, road construction,

nd silviculture activities.

n Regional Woodlands

anagan Regional Woodlands is part of the Tolko/Gormananagan Operations SFMP DFA. It includes Tolko’s traditional operating areasing TFL 49, FL’s A18632, A18667, A18672, A20191, and A74912, Timber18632 is managed by Tolko on behalf of the licensee, Selkirk Timberny Ltd’s FL A18666, which is also managed by Tolko, is included in the DFA.

onsists of road construction and maintenance, harvesting, hauling logs,tivities. At the time of the audit the total area of the DFA was 790,253 ha, with

classes and species types. The distribution of age classes is weighed slightly(25 percent of all forests). Coniferous tree species comprise 96 percent of the

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Executive Summary

The CAN/CSA Z809:2002 third-party surveillance audit was undertakenby QMI-SAI Global. QMI-SAI Global is an independent third partyregistrar that is accredited by the Standards Council of Canada (SCC) forregistrations to the CAN/CSA Z809:2002 standard. This ensures theintegrity and credibility of the audit process.

The audit assessed active and completed harvest operations throughinterviews with Tolko staff and contractors. The audit also assessed theSFM and supporting EMS documentation and records at the Tolko Lumbyoffice.

For this surveillance audit, the on-going effectiveness of the SFM systemto deliver the intended outputs was assessed against selected elementsof the CAN/Z809 2002 Standard. Based on the results of the audit, it wasidentified that Tolko Industries Ltd, Okanagan SFM, has continued tocommit the time, resources, and effort necessary to establish, implement,maintain and continually improve an effective SFM system.

No non-conformances were identified during the audit; however 2 areasof concern and 5 opportunities for improvement were noted as detailed inthis report.

Cable yarding is used where conditions warrant. This reduces the impact on theterrain while still allowing harvest to occur.

CAN/CSA Z809:2002Re-Registration Audit

Non-conformance (NCR).… 0Areas of Concern (AOC)…...2Recommendations(OFI).…...5Positive Aspects….…….……5

Non-conformances

Non-conformance (NCR):A systemic failure of the programParticipant’s EMS/SFM systemto meet an EMS/SFM objective,performance measure orindicator.

All non-conformances require anaction plan within 30 days.Non-conformance must beaddressed by the operation orregistration cannot be achieved /

maintained.

Area of Concern (AOC):An isolated lapse in EMS/SFMsystem implementation whichdoes not indicate a systemicfailure to consistently meet anEMS/SFM objective,performance measure orindicator.

Opportunity for Improvement(OFI):Are isolated observations thatare non-critical to theachievement / maintenance ofEMS/SFM objectives.

Positive Aspects

Are features of the EMS/SFMsystem that are considered asenhancements to the expectedlevel of EMS/SFM performance.

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The auditors

The QMI audit team who performed the audit consisted of Will Sloan, RFT, EMS(LA) and Dave Barker, RPF,SFM(LA). The auditors are Forest Professionals and certified lead auditors.

Key Areas of Non-conformance

No areas of non-conformancewere identified during the audit.

Key Areas of

ConcernThe following Areas of Concernwere identified during the audit:

7.3.4 Rights and Regulations,health and safety of DFA-related workers: the audit teamdid not receive safetyorientations at 4 of the 5 activecontractor field sites visited. Inaddition, 5 of 6 active worksites had MSDS’s that wereoutdated or not available toworkers as required byWorkSafe BC.

Ensure that all relevant DFA-related worker safetyrequirements are met.

7.3.7b, SFM Plan: The audit found no reference to the conclusions drawn from the management review asrequired by the Standard.

Ensure that conclusions drawn from the management review are included in the SFMP.

Key Opportunities for Improvement

7.4.5 Document Control: consider reviewing all documents for consistency in formatting and revision dates.The audit found the inspection form did not follow the Tolko format and the fire pre-org plan did not haverevision dates on each page.

7.4.6 Operational Control: consider recording more detailed information during the block development stagewhen features are noted as marked in the field but do not make it into the Site Plan. The audit found one non-classified wetland that was noted in the Block Summary Report for 404-LL5026 as having been MFZ ribbonedbut with no further details, such as size or rational.

7.5.4 Internal Audit: consider recording elements and indicators audited over the time frame of the certificate toenable better tracking of what needs to be done to meet the requirements of all elements/indicators over the

Extensive road work is often required. This example on the Yeoward Road isone of the largest bin walls constructed for forestry operations.

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certificate period. The audit found that while the 2010 internal audit report and associated records noted whichelements where audited, there is no record of indicators nor how the audit cycle will ensure that all elementsare audited.

7.6 Management Review: consider including and approving a management review conclusion within theannual review that could then be incorporated into the SFM Plan as required by 7.3.7 b.

7.3.6 Indicator Specific:

Old Indicator 11/New Indicator 24: consider revising the indicator to seed to situations where seedingwill make a significant improvement to the environment. Currently, the target requires that all newroads have seeding completed within 2 years regardless of environmental impact.

Positive Aspects

Improved water management on roads was noted,specifically the Yeoward Road where French drains,corner realignment and other measures have been takento better control water and on the Terrace Main at KM 29½ were extra culverts were installed to handle increasedrun off from the 2009 Terrace Mountain fire.

Staff, hourly employees and contractors intervieweddemonstrated a continued strong commitment tosustainable forestry.

Members of the PAG were glowing in praise of the work ofTolko to explain complex forestry issues.

The current Tolko Okanagan Regional Woodlandsinspection form has a note to review any SFM indicatorsfound in the area.

Tolko supported the suggestion of a First Nation group toinclude a presentation to the PAG from a known FirstNations expert on spiritual factors to consider.

values. Also note the size of the wood being utilized.

QM-SAI Global forestry specialist group registers/certifies forest companies to ISO 14001, OHSAS 18001, CSA Z809 SFM, FSC FM & CoC,SFIS, SFI CoC and PEFC. The group, led by Guillaume Gignac, Product Manager, Forestry, consists of a highly qualified team ofprofessional foresters, technical and industry experts. Contact marketingservices@qmi.com for more information.

Company Contact:Rob Kennett, RPF, Regional Forester – Planning and SilvicultureTolko Industries Ltd.Okanagan Regional Woodlands Phone 250-547-1219 or e-mail Robert.Kennett@tolko.com

This report may only be reproduced by the intended client, with the express consent ofQMI-SAI Global. Information in this issue is of a general nature with respect to auditfindings and is not intended to be acted upon without appropriate professional advice.

Forwarder being used to reduce the impacts to soil