Forward - Looking Statements

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2 Forward - Looking Statements Certain statements contained in this presentation constitute forward-looking statements. The words anticipate, continue, estimate, expect, may, will, project, should, believe and similar expressions typically are used to identify forward-looking statements. The use of forward-looking statements reflects our current views and/or expectations with respect to our performance, business and future events, and in this presentation includes statements relating to: our expectations relating to our business at the Landqart Mill and the Fortress Specialty Cellulose Mill; our expectations relating to achieving targeted production capacity and cost position at our Fortress Specialty Cellulose Mill; expectations relating to financial performance, EBITDA and margins; foreign exchange impact on EBITDA and revenues; the state of the dissolving pulp markets; expectations regarding future global demand for dissolving pulp and textile fibres; expectations relating to the security papers industry and banknote markets; and expected use of proceeds from transactions. Forward-looking statements are based on the then-current expectations, forecasts and assumptions about the business and the industry and markets in which we operate, including: that our orders at the Landqart Mill will be sustained over the short and long term; there will be no unforeseen delays, disruptions or other market forces negatively affecting our production volumes, sales and relationships with our customers; that the market conditions for dissolving pulp will follow expected trends; that we will successfully achieve planned sales targets and production cost improvements; that foreign exchange rates will not vary materially from current levels and will have the impact on our financial results as projected by management; that the equipment will operate as expected; that we will realize significant cost savings from production improvements, cost reduction initiatives and the cogeneration facility; that current depressed dissolving pulp prices are indicative of unusual market conditions and are not sustainable over the medium to long-term; that demand for viscose staple fiber will continue to grow which will result in an increased demand for dissolving pulp; that our strategy of diversifying geographical sales mix will assist in mitigating the application of antidumping duties and reduce our reliance on shipments to China; that the Landqart mill will be successful in securing new orders and operate on a consistent and regular basis; that we will be able to diversify our customer base; that we will obtain any necessary financing on acceptable terms; and that our operations and strategy will allow us to meet our debt repayment obligations or that other arrangements will be available to us on favorable terms. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict, including, without limitation: that we may experience additional unforeseen delays, financing difficulties or costs that will impact our projects, operations, financial performance and liquidity; that our dissolving pulp operations and cogeneration plant will not meet anticipated production capacities, efficiencies, utilization rates, cost structure and sales volumes; and those risks relating to our reputation, competition, changes in the market, potential downturns in economic conditions, dependence on major customers, fluctuations in the price and supply of raw materials, foreign exchange fluctuations, labour, regulatory requirements and other risk factors listed from time to time in our filings with the Canadian securities regulatory authorities which are available on SEDAR at These risks, as well as others, could cause actual results and events to differ materially from those anticipated in such forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements and information, which are qualified in their entirety by this cautionary statement. These statements speak only as of the date of this presentation and we do not undertake any obligations to update such forwardlooking statements, except as required by applicable securities law. When we disclose production costs in this presentation, such costs are based on a variety of factors and inputs which may not be comparable to similar types of costs disclosed by other companies. All financial information presented herein is qualified in its entirety by, and should be read in conjunction with our audited and unaudited financial statements and management s discussion and analysis which are available on SEDAR at Market and industry data contained in this presentation is based upon information, surveys or studies conducted by independent third parties and independent industry or general publications and our knowledge of, and experience in, the markets in which we operate. We have no reason to believe that such information is false or misleading in any material respect, however market and industry data is subject to variation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. This information has not been independently verified by us or any of our respective directors, officers or representatives and no representation is given as to the accuracy of any of the data from third party sources referred to in this presentation. 2

3 CHIEF EXECUTIVE OFFICER, Fortress Paper Ltd. Yvon Pelletier Mr. Pelletier was named CEO of Fortress Paper Ltd on October ; he has held the position of President of Fortress Specialty Cellulose since February Mr. Pelletier has over 30 years of experience in the pulp and paper industry and has held leadership roles in technical, operational, and commercial areas. CHIEF FINANCIAL OFFICER, Fortress Paper Ltd. Kurt Loewen Mr. Loewen is a Chartered Professional Accountant in Canada and has been with Fortress Paper since August In addition to Chief Financial Officer has held the positions of Controller and Corporate Secretary of Fortress Paper. He served in public practice in audit and accounting at Deloitt & Touche LLP. EXECUTIVE CHAIRMAN, Fortress Paper Ltd. Chad Wasilenkoff Former CEO, President and founder of Fortress Paper Ltd. Founded, financed and held executive positions with several successful public companies in Canada. CHIEF EXECUTIVE OFFICER, Landqart AG. Axel Wappler Mr. Wappler has over 25 years of international experience in the paper and manufacturing industries, with leadership roles in operations, sales and executive management. PRESIDENT, Fortress Specialty Cellulose Giovanni Iadeluca Mr. Iadeluca is a Chartered Professional Accountant with over 20 years of senior management experience in the manufacturing industry. Mr. Iadeluca was formerly the Chief Executive Officer of AV Terrace Bay Inc., a wholly owned subsidiary of the Aditya Birla Group. 3

4 Market Capitalization ~$117M Shares issued and outstanding: 14,312,206 - Insiders own or have direction and control of over 29.28% Share Price as at Feb 14, 2017: $8.15 (USD$6.23) Oct Nov Dec Jan Feb-17 All figures as at February 14, 2017, Exchange rate: $1.00 CAD=$.76USD 4

5 Fortress Market Capitalization Is Significantly Less Than Aggregate Investments Made in PP&E (as at September 30, 2016) Aggregate Investment in PP&E/Plant Upgrades $408M* Enterprise Value $270M** 3Q16 Book Value $221M Market Cap $117M** *CAPEX on property, plant and equipment as at Sept 30, 2016: Security Papers Segment $97M since 2007, Dissolving Pulp Segment: $311M since 2010 ** Market cap as at Feb 14, 2017 and EV= market cap as at Feb net debt at Sept 30 th

6 Millions $ Premier manufacturer and operator in two distinct global business segments: Dissolving Pulp and Security Papers Sales Mix By Segment, FY 2015 Both segments have favorable end-market fundamentals Dissolving Pulp Segment ( DP ) serves Viscose Staple Fibre ("VSF") and rayon filament markets Fortress Specialty Cellulose ("FSC") ~ 165,000 ADMT mill located in Canada 24 megawatt cogeneration power facility supplies renewable energy to Hydro Quebec Security Papers, 48% Dissolving Pulp 52% Security Papers Segment produces banknote, passport & visa papers Landqart s ~10,500 tonne mill located in Switzerland Diverse international customers in Europe, Americas, Africa and Asia Consolidated sales of over $325 million LTM3Q Sales 100 All figures expressed in Canadian dollars All figures in metric tonnes or air dried metric tonnes (ADMT) *Last Twelve Months at end of Q *LTM3Q16 6

7 Growing end-markets High barriers to entry Strong order book EBITDA margins anticipated to benefit from focus on improving cost structure 7

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9 Growth rate (%) (Ha/MT) 100% 80% 60% 40% 20% 0% -20% Textile Fibres Demand 84% Food Demand 63% Population Arable Land 42% 43% 34% 21% 24% 12% 20% 16% 6% 11% -1.2% -2.5% -3.7% -4.9% Per capita fibre consumption has risen from ~ 5kg in 1960 to over 12kg in 2015 Textile fibre demand growth expected to increase by over 60% through 2030 VSF growth has historically outpaced textile fibre demand growth Arable Land Requirement Competition for other agricultural products results in less arable land available for cotton production VSF Irrigated Cotton Rain-fed Cotton Source: The Fiber Year 2015, ICAC, The Future of Cellulose Fibres. Franz Martin Hämmerle. (September 2011) 9

10 (L/Ha) Cotton accounts for ~11% of global pesticide use and ~24% of global insecticides use 11,000 L of water to produce 1 pair of jeans from cotton, or 4 pairs of jeans requires a swimming pool quantity of water Cotton consumption is responsible for 2.6% of global water use, including all uses of fresh water for agriculture and personal consumption but cotton acreage accounts for just 2.4% of the world's arable land 16,000 14,000 12,000 10,000 8,000 Annual Water Consumption 8,300 11,700 14,300 6,000 4,000 2, VSF GM Cotton Conventional Cotton Organic Cotton Source: World Wildlife Fund for Nature and The Future of Cellulose Fibres, Franz Martin Hämmerle. (September 2011) 10

11 2015 World Fiber Production 96.7 Million tonnes (mt) Cellulosic, 6.1 mt 6% 2005 World Fiber Production 71.8 mt Cellulosic, 3.4 mt 5.0% Natural Fibers, 29.9 mt 31% Synthetic, 60.7 mt 63% Natural Fibers, 31.9 mt 44% Synthetic, 36.5 mt 51% Growth in Volume World Total Fiber Production 34.6% Cellulosic Fibers (VSF) 80.3 % Synthetic Fibers (Polyester, Nylon etc.) 66.0 % Source: The Fiber Year 2015 and Hawkins Wright, 2010 World Survey on Textiles & Nonwovens Natural Fibers (Cotton) -6.3 % 11

12 Dissolving Pulp Cotton Linter Pulp Polyester Nylon, Acrylic, etc. VSF Cotton Synthetics World Textile Market 12

13 Feb-08 Nov-08 Aug-09 May-10 Feb-11 Nov-11 Aug-12 May-13 Feb-14 Nov-14 Aug-15 May-16 Feb-17 Price ($US per Tonne) 5,000 High correlation between prices of Cotton, VSF and Dissolving Pulp VSF prices have increased ~ 5196 Yuan (~$ 754 USD) since January 2016 low, yet DP prices have lagged behind and have only risen ~$115 USD since its 2016 low and remain below longer term trend price 4,500 4,000 3,500 Historically VSF traded at a premium to Cotton Cotton VSF recovering to historical premium 3,000 2,500 VSF 2,000 1,500 1, Dissolving Pulp Recent cotton price trend reversal positive for VSF pricing 0 Source: CCF Group as at Feb 15, 2017 Dissolving Pulp (CCF China) VSF Cotton

14 Dissolving pulp production capacity, ~165,000 ADMT/yr. Pulp mill capacity utilization provides significant margin upside potential as operations continue to improve Abundant and secure fiber and energy costs provide a competitive advantage Highly trained technical production staff to expand market opportunity Management focused on cost reductions, production improvement, power generation and product development to improve margins Fortress Specialty Cellulose Mill, Thurso, Quebec 14

15 Cogeneration power plant came on line September 2013 Generates reliable energy and reduces energy costs for FSC mill External sales to Hydro Quebec provide stable and predictable financial benefit 24 MW contracts with Hydro Quebec through September 2028 including incremental power increase through April 2040 Targeting over 5% power generation efficiency improvement in 2017 MWH 200, , ,000 80,000 40,000 11,513 Power Generation 19,778 20,336 $( 000s) 25,000 20,000 15,000 10,000 5,000 Based on 352 Days of Production Annually at Contracted Rate *Last Twelve Months at end of Q LTM3Q16* Power Generation Cogen Revenue - 15

16 In November 2016, Fortress Paper announced a $23.4 million investment in a digester capacity increase and production of value added products The project includes the installation of a fifth digester which is expected to result in an incremental annual production capacity increase of 8,500 ADMT in 2018 and 17,000 ADMT in 2019 Strategic project of utilizing birch to manufacture dissolving pulp and development in hemicellulose derivative products. Birch grows abundantly across Canada and is considered an underutilized species of tree Funding for the project from non-repayable contributions by Federal and Provincial agencies should approximate $12.5 million with the balance from the Hydro Québec "Rate L" tariff, cash on hand and operating cash-flows 16

17 Millions $ Millions $ Sales ADMT 200, , ,000 80,000 40,000 Sales totaled $48.9 million for Q compared to $43.8 million in Q The cogeneration facility generated $5.6 million in sales revenue from the generation of power in Q compared to $4.7 million in Q *LTM3Q16 ** ** Sales Shipments (5) (15) EBITDA Operating EBITDA for the Dissolving Pulp Segment for Q was $11.9 million, an increase of $8.7 million over Q The results of Q were impacted by improved productivity and production costs, continued stable electricity generation and improved pricing (25) (35) *LTM3Q16 EBITDA *Last Twelve Months at end of Q **Includes NBHK 17

18 Price ($US per Tonne) $850 CAD Delivered Cost 0.75 CAD/USD Dissolving Pulp *PO Price $US/CAD 3, ,067 1,200 1,600 1,600 2,133 EBITDA $850 CAD Delivered Cost.90 CAD/USD Dissolving Pulp *PO Price $US/CAD ,200 1,333 1,600 1,778 EBITDA , , , , Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Dissolving Pulp (CCF Price $US) CAD *Average Sales Price of Dissolving Pulp ($/admt, net of duties if applicable) based on 165,000 ADMT production 18

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20 80000 SNB: Banknote Circulation 20,000,000 ECB: Banknotes in Circulation ,000, ,000, ,000, Jan-05 Jan-10 Jan-15 Global demand for cash is growing at a rate of 4% 6% per year Multiple demand drivers: New or upgraded security features Expanding ATM usage - 4.8% projected growth rate from % of production is for replacement of physically aging banknotes currently in circulation Economic expansion in emerging markets The global market size for banknotes is forecasted to increase from $9.5 billion in 2016 to $11.2 billion in 2021 Sources: BIS, ECB, SNB, Currency News, Smithers Pira, Atmia Benchmarking study, and Management Estimates 20

21 Estimated Commercial Sector Security Substrate Production Capacity, 2014 Crane 7% Innovia 10% Louisenthal 22% Other 11% Landqart 11% Fabriano 15% De La Rue 13% Arjo 12% Source: Management Estimates. All Percentages Approximate Highly Concentrated and Disciplined Industry 21

22 Landqart Mill, Switzerland Invested ~$97 million in capital expenditures in the Landqart Mill since 2007 Sustained focus on product innovation builds reputation and market share which contributes to higher margins Continuous commitment to improving efficiency and operating costs CAPEX in property, plant and equipment as at Sept 30,

23 Strong market position, track record & established customer base Sole manufacturer of banknote paper for Switzerland and have manufactured banknotes for dozens of other countries including the Euro Produce passport and visa papers for several European, Asian and African countries State-of-the-art and highly efficient facilities Established reputation for producing banknotes of highest security and quality Well-positioned to increase market share and expand margins Strong order book with fixed orders from existing customers for production in 2017 and 2018 Proven and experienced operational management team Average of ~20 years experience in the security paper products industry Leading industry player with proprietary technology Proprietary Durasafe and Durafort technologies represent the next generation of banknote paper and provide a competitive advantage R&D and innovative security features well positioned to meet customers needs 23

24 Windows Security Paper With Watermark 35g/mˢ Transparent window 40 µm Polymer core 40 µm Durasafe three layer construction Plain security paper 35g/mˢ Zone of polymerinfiltrated paper Total grammage: 110g/mˢ Total Thickness: 40 µm 24

25 Swiss 50 Franc SNB launched the 9 th series of the Swiss Franc on April 12, This is the first of six banknotes expected to be phased in by the SNB between 2016 and 2019 The National Bank of Kazakhstan released the new 20,000 Tenge note December 2015 Moroccan 25 Dirhams released in Dec 2012 was the worlds first banknote issued on Durasafe substrate Kazakhstan 20,000 Tenge Moroccan 25 Dirhams 25

26 A new finishing line has been ordered to eliminate the main bottleneck at the Landqart mill. Anticipated increase in finished product capacity up to 15% (depending on product mix) by Q Increased operational flexibility Improved quality, efficiency and reliability Reduced fixed and internal logistics costs Estimated ~CHF 4 million capex equipment financing for the majority of the project at 1.29% 26

27 Millions$ Millions$ Sales *LTM3Q16 Sales Shipments tonnes 12,000 10,000 8,000 6,000 4,000 2,000 - Q sales were $33.3 million compared to $44.2 million in Q Results in Q were unfavorably impacted by product mix, mill production and efficiency issues which have since been mitigated at the mill EBITDA 8.1% 5.5% 5.1% 2.3% *LTM3Q16 EBITDA EBITDA % of sales *Last Twelve Months at end of Q % 8.00% 6.00% 4.00% 2.00% 0.00% Operating EBITDA loss for the Security Paper Products Segment for Q was $1.8 million compared to operating EBITDA of $4.7 million in Q The Landqart mill sold 2,431 tonnes of security paper in Q3 2016, compared to 2,714 tonnes in Q EBITDA and margins are expected to improve in the medium to long term 27

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29 Millions $ Millions $ 400 Sales 300 Sales were $307.6 million in the 2015 fiscal year compared to $275.9 in the prior fiscal year *LTM3Q16 EBITDA EBITDA was $7.6 million in Q compared to $6.3 million in Q EBITDA was $10.4 million, an increase of $32.9 million compared to EBITDA loss of $22.5 million for the 2014 year (20) (40) (60) *LTM3Q16 *Last Twelve Months at end of Q

30 Millions $ Cash was $95.3 million at September 30, Includes $17.3 million restricted cash Repayments of principal for debt outstanding as at September 30, 2016 are required as follows: Q Quarterly Cash Balance Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Cash and cash equivalents Restricted cash Year $ millions 2016 * ** Thereafter Total ***228.1 Subsequent to Q *The company made $36.2 million in debenture debt repayments on December 31, 2016 ***The company secured a $40 million loan on January 20, 2017 which matures in 2031, repayable in monthly installments of principal and interest commencing Feb 2, 2017 **The company made $25.0 million in debenture debt repayments on Feb 3,

31 January 20, 2017 Fortress Paper Ltd. announced that its wholly owned subsidiary, Fortress Bioenergy Ltd, has entered into a credit agreement with IAM Infrastructure Private Debt Fund LP ("IAM"), as lender, in relation to a $40 million secured loan The "IAM Loan" which matures 14 years from the date of advance, is repayable in monthly payments of principal and interest over the term. The IAM Loan will accrue interest at a rate of 6% per annum Net proceeds have been used to repay in full, the $25,000,000 convertible debenture issued by the Company in favour of Fonds de solidarité. The Debenture had an interest rate of 7% per annum and was set to mature on June 20, the balance of the funds will be used for general corporate purposes *More details on the IAM Loan and debenture repayment can be found within the Fortress Paper news releases issued on January 20, 2017 and February 3,

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