Thank you very much, and good morning everyone, and welcome to our call covering our second quarter and six-month results. I'm Ken Shields, the Chair and CEO of Conifex, and I'm joined today by our CFO, Trevor Pruden, and our President and Chief Operating Officer, Andrew McLellan.

Let's quickly set aside 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 pages 1 and 2 of our Management Discussion and Analysis document dated August 14th, 2026, that we released this morning. On our previous calls with you in March and May of this year, we expressed our belief that 2026 would be a transition year for Conifex.

Curtailments and single-shift operations in the first half of 2026 would help us preserve cash and would limit EBITDA losses during a period of high duties and low lumber prices. We also disclosed that management was advancing initiatives with the aim of securing additional funding, recognizing that the resumption of operations in the back half of 2026 is contingent on securing additional funds.

The Mackenzie timber supply area supports two distinct harvesting seasons. The winter logging season is our next available operating window.

We will assess the near-term timing of a restart based on lumber market conditions prevailing at the time our financing closes. We remain focused on returning our employees and contractors to work as operations resume, with the goal of hosting two-shift steady-state operations before the end of 2026.

We continue to believe this year-end objective is achievable and it would support positive EBITDA generation. As a result of curtailments in our lumber and power business, we incurred a net loss of $9.5 million in Q2 versus $9.4 million in Q1.

Our per-share loss was 23 cents in both periods. Our EBITDA loss in Q2 was $6.3 million, $1.4 million less than our Q1 EBITDA loss of $7.7 million.

Lumber production in the first half of 2026 of 35.8 million board feet was equivalent to a capacity utilization rate of approximately 30%. Turning to financing considerations, we are grateful for the continued support of our existing lenders through this period.

[Enderfund?] has supported our lumber business through bridge financing and credit facility amendments, and Tsay Keh has similarly supported our power generation business through deferrals and credit facility amendments.

The Business Development Bank of Canada has also provided additional liquidity. This combined support has provided much-needed liquidity while we pursue additional financing currently through other government entities.

It's well known that the Government of Canada has programs in place to provide financing to Canadian enterprises that have been materially affected by tariffs and are unable to access other funding. The loan programs are designed to preserve Canadian jobs and operations and bridge otherwise viable businesses through periods of trade-related disruptions.

Conifex's circumstances align closely with the intent of the government programs. We are the largest employer in the Mackenzie region, and our operations have been directly and materially affected by cumulative softwood lumber duty and tariff payments, which aggregate $49.4 million US.

The scale of these duties and tariff payments puts our financing need in context. As I just mentioned, cumulative duties and tariffs on deposit with US Customs and Border Protection amount to $49.4 million, which is equivalent to approximately $68 million Canadian.

Coincidentally, our lumber business borrowings and working capital deficits also total $68 million. In other words, absent the requirement to fund cash deposits in the US, Conifex would have a very manageable financial position.

We believe this alignment between the challenges the government programs are designed to help overcome and our current liquidity and funding pressures, that combination positions, in our opinion, our funding applications to receive favorable consideration. Competitiveness in the lumber industry is importantly driven by delivered log costs, which generally represent approximately two-thirds of the total cost of producing lumber.

The Mackenzie timber supply area carries a structural sawlog surplus, with an annual harvest of 2.3 million cubic meters of sawlogs against our annual consumption requirement of approximately 800,000 cubic meters. Consequently, we have high fiber availability at delivered costs that are amongst the most affordable in the entire interior region of BC.

The next step in advancing our competitiveness is completing the financing required to execute several high-return, rapid-payback capital projects, none of which can be assured. These projects are designed to reduce conversion costs, improve sawmill reliability, boost planer capacity, and lessen our dependence on the US export market.

In aggregate, the projects represent approximately $15.3 million of investment, with two- to three-year payback periods forecast for the individual projects. The projects include equipment upgrades in our planer, improvements to our dry kiln, and lumber grade optimization improvement.

Taken together, our competitive delivered log costs and targeted capital program, if successfully completed as currently planned, are expected to move our Mackenzie site well down the SPF lumber industry cost curve. We believe our position on the cost curve, coupled with the fiber advantages available to us in Mackenzie, provide a durable foundation for sustained cash flow-positive operations through future lumber price cycles.

We're presently involved in negotiations to determine how additional credit facilities we expect to receive will be integrated with the credit facilities presently in place with our lumber business and power plant lenders. Our immediate priorities are to: number one, secure additional capital to ensure we're in a position to launch our winter logging programs; number two, build sawlog inventories to levels sufficient to commence and sustain two-shift sawmill operations before the end of the calendar year; and three, restart our power plant and operate it on a 7x24 basis; and additionally, complete the series of quick-payback capital projects I referenced earlier.

Based on analysts' consensus estimates for SPF prices in 2027, the lower unit costs associated with spreading our fixed harvesting and manufacturing costs over our entire production base, and the expectation that duty deposit rates decrease later this year and again the following year, with those assumptions, we currently expect our integrated lumber and power production site at Mackenzie will be EBITDA-positive in 2027. We continue to believe the mid- and long-term supply and demand fundamentals for SPF remain strong and will contribute to an improved pricing environment, reinforced by structural contractions in Canadian and European SPF exports to the US that have occurred over the past three years.

Prior to closing, permit me to mention a cautionary note. Although we are most encouraged by the progress we've made and the positive feedback we've received from government funding organizations, there's no guarantee that Conifex will successfully obtain additional funding from any government program.

For this reason, we plan to continue working collaboratively with our existing lenders to provide additional flexibility under our existing credit facilities, including potentially amending certain repayment terms and amortization periods. Thank you for your interest in Conifex, and Trevor and I look forward to responding to any questions analysts and shareholders may have, we'll turn the meeting back to the operator.

Hey, Ken. A couple questions for me here.

Maybe first off, where do you see BC Interior cash costs at the mill right now before any duties? Then as a follow-on, to what levels do you think Conifex move to if you complete your capital projects?

Christian, I answered the question that in 2027, once we're ramped up on a two-shift basis, that we expect to be EBITDA-positive based on the consensus SPF price from analysts. The last time I added up what six or seven of you were expecting for prices in 2027, it was $522 US.

Implicit in that is that our cash costs, once we have 10 percentage points in lower duties, would be fairly close to $522 US.

Got it. That's super helpful.

Then just on the residuals as well. Obviously, there've been a couple pulp shuts in BC over the last several years.

Do you see BC producers generally more challenged here to efficiently run capacity, given potentially reduced offtake opportunities?

Yes, and Andrew McLellan has been monitoring that situation closely. Since we're not operating today, we don't have first-hand experience based on delivering chips to our chip customers.

There is a chance that there will be lower deliveries and lower prices on Interior BC chips. We have a bit of a unique situation because we have a power plant, and we have a fiber shortage in the power plant.

We can always burn our entire chip production in our power plant, and so we'll end up not getting paid for the chips, but we will end up having strong EBITDA from the power plant.

Perfect. That's great color.

Thanks, Ken. I'll turn it over here.

Okay. Thank you, operator.

Just thank you to all of you that have shown your interest in Conifex, and I look forward to chatting to you on our next call. Enjoy the rest of the day.