Thank you and good morning everyone, and welcome to this call covering the Conifex results for Q1 of 2026. As mentioned, I'm the chairman and CEO of Conifex, and I'm pleased to be joined today by our CFO, Trevor Pruden, and our president, Andrew McLellan.

Let's deal quickly with a housekeeping item. We will be making forward-looking statements and references to non-IFRS measures, and therefore call your attention to the warning statements set out on the first two pages of the MD&A materials that we released this morning.

On our most recent call with you in late March, we made the point that we viewed 2026 as a transition year for Conifex. We expected curtailments and single-shift operations would produce EBITDA losses for us in the first half of 2026.

We also disclosed our intention to do everything in our power to achieve steady state two-shift operations and to generate positive EBITDA prior to the end of 2026. As a result of curtailments in our lumber and power business, we incurred a net loss of $9.4 million or 23 cents per share in Q1, and that compares to a higher net loss of $11.4 million in the proceeding quarter.

However, it trails the year-earlier net income of 2 cents a share that we managed to report. Our EBITDA loss in Q1 was $7.7 million, an improvement over the Q4 loss of $12.6 million, but nowhere near the positive EBITDA of $4.9 million we reported in Q1 of 2025.

Lumber production for the most recent quarter of 21.7 million board feet was equivalent to 36% of capacity. When summer logging resumes, we expect to rebuild log inventories to a level that enables us to achieve a consistent two-shift operation at our Mackenzie sawmill complex and power plant, and we expect this to occur during the closing months of 2026.

Based on analysts' consensus estimates for SPF prices in 2026, we do not expect to be EBITDA positive while we're operating on a single shift. However, with the lower unit costs associated with spreading our fixed harvesting and manufacturing costs over a larger production base, coupled with the expectation that duty deposit rates will be more modest later this year, we expect our two-shift operations will be EBITDA positive in the closing months of the year.

I want to talk about a one-time earnings charge that'll be showing up later this year, and it relates to the fact that on April 9th, the US Department of Commerce released its preliminary determination under its 7th annual review, which covers 2024 lumber exports to the US from Canada. Our preliminary rates are set at 10.66% for anti-dumping and 14.17% for countervailing duty versus the prevailing rates that are higher than that today.

During 2024, our export shipments were assessed at a much lower rate of just slightly more than 10% on a combined basis. Because of the earlier underpayments, if these interim rates remain in effect, towards the end of this year, we will record a likely non-cash export expense of around US$5.7 million or Canadian $7.8 million, together with accrued interest of approximately US$0.8 million or just over $1 million Canadian.

Expect that to show up at the time the final duty deposit rates are set. All of us at Conifex greatly appreciate the support our two lumber business lenders, Tandemfund and the Business Development Bank of Canada, as well as the support our power plant lender, Fiera, have provided us.

Their combined support has enabled us to overcome liquidity challenges flowing from the punishing duty and tariff impositions on lumber exports to the US. Over the past several months, we've learned more about the details on eligibility and funding timelines for other government programs, some of which appear to have been specifically designed to help tariff-impacted, export-dependent companies like Conifex.

The intention of these programs is to fund operational cash flow deficits as well as facility upgrades to reduce costs and support the production of value-added lumber products. Part of the study and analysis the financial professionals at the government funding agencies undertake includes an assessment of the competitive position and economic sustainability of various Canadian sawmill complexes.

It is well known that log costs generally represent two-thirds of the total cost of producing lumber, and therefore log costs are the single most important determinant of mid- and long-term competitiveness. Since we operate in a timber supply area where the annual sawlog harvest greatly exceeds local sawlog consumption, we have access to plentiful supplies of quality sawlogs, and they're available at affordable cost.

With respect to our conversion costs over the next few years, we intend to complete several high-return, rapid-payback capital projects designed to improve sawmill reliability and boost our lumber finishing capacity. We're satisfied that our cost structure, coupled with the revenue-generation enhancements we intend to put in place at our Mackenzie site, position our mill to be in the bottom half of the SPF cost curve compared to all other Canadian producers.

Our immediate priority is to secure additional capital to ensure we maintain robust sawlog inventories sufficient to sustain two-shift operations as well as to fund rapid-payback capital projects, both of which move us to a lower and more enviable position on the North American lumber industry cost curve. We continue to believe that the mid- and long-term demand fundamentals for SPF remain strong and will contribute to an improved pricing environment, and our beliefs are reinforced by the contractions in Canadian supply that have occurred over the past three years.

We're presently involved in negotiations determining how the new credit facilities we expect to receive will be integrated with the credit facilities presently in place with our lumber and power plant lenders. Summing up, first, a cautionary note: although we are encouraged by the positive discussions and progress we've had to date with the financial professionals representing government funding organizations, there's no guarantee that we will be successful obtaining funding.

For this reason, we plan to continue working collaboratively with our existing lenders to obtain additional flexibility under our existing credit facilities, including potentially amending certain repayment terms and amortization periods. My final point, and a more important point, is that I sense that some of the options we have to create value are underappreciated by many of you on the line.

We believe that we have numerous drivers that will assist us in generating incremental cash flow over the next few years, and for this reason, we believe the economic sustainability of a two-shift operation at our Mackenzie site is sufficiently compelling for Conifex to receive favorable consideration from government funding agencies. Thank you for your interest in our company, and Trevor and I look forward to responding to any questions analysts and shareholders may have.

We'll turn it back to the operator.

Hey Ken, it's Christian here. I was just wondering where you see the BC cost curve right now and what sort of relief do you expect when AR7 takes effect in the back half of the year?

Good questions, Christian. I think a little-known fact is that stumpage rates in the Interior region of BC have fallen a great deal.

In Q1 of 2026, the Interior BC stumpage rate was $2.68 per cubic meter. I believe the Alberta stumpage rate was about twice that, and I believe that stumpage rates in Ontario and Quebec were 3 to 4 times the BC level in Q1.

What we've found in our area is that we are paying very low stumpage rates. It looks like about 55% of the harvest in BC is at a 25 cents stumpage as under-present conditions.

The other thing that's happened in our operating area is that we believe the sustainable log supply in the Northern Prince George, Southern Mackenzie region is about 10 million cubic meters, and the demand is only 8 million cubic meters. We think that the supply-demand balance in sawlogs has enabled BC companies to migrate to a much lower position on the industry cost curve.

Your analysis of Canfor's consolidated North American lumber results, which includes their remaining mills in BC, but some of the mills that have closed by Canfor and West Fraser, lately, were clearly high-cost mills that are no longer upping the average cost incurred by BC mills. We think that our analysis indicates that we have a competitive advantage over Quebec and Ontario mills.

As you're probably aware, an Ontario company recently reported that its EBITDA loss per thousand board feet in Q1 was something like $186 per thousand board feet, and BC mills that operated on a two-shift basis in Q1 would not have incurred operating losses at that level. That's probably more information than you wanted, Christian, but that's our view of it.

I appreciate it. That's great color.

Second question I have here is what specific financial and market conditions would you need to see before considering ramping to two shifts and increasing your mill utilization?

The big variable there, Christian, is the availability of funding to support the log inventory build-up. Over time, people in BC, I think, Christian, will be aware that they have some close-in stands that have a low delivered log cost, and then they've got some remote stands in more difficult terrain that would have higher log costs.

We think that lumber production in BC is going to be quite sensitive to price changes because if there is some weakness in prices, some of the operators that have high-cost stands, those stands will not be economic, and we could see the downtime adjust if there's any material further price weakness in SPF.

Perfect. That's all I had.

Thank you so much.

Okay. For those of you on the line, thank you for your interest in Conifex.

All of us are working hard to get rid of the red ink around here and be on a profitable trajectory. Thank you.