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 and pulp and textile fibres; and expectations relating to the security papers industry and banknote markets. 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 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 forward-looking 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 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") ~ 200,000 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 ~10,000 tonne mill located in Switzerland Diverse international customers in Europe, Americas, Africa and Asia 400 Sales ~$396 million of upgrades and expansion since 2007** 300 Consolidated sales of over $307 million in All figures expressed in Canadian dollars All figures in metric tonnes or air dried metric tonnes (ADMT) **Excluding divestures and FGC Sales

4 Growing end-markets High barriers to entry Strong order book EBITDA margins anticipated to benefit from focus on improving cost structure Significant shareholder alignment (insiders own ~18% of shares outstanding, CEO purchased 75,000 shares in June 2016) 4

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6 Dissolving Pulp Cotton Linter Pulp Polyester Nylon, Acrylic, etc. VSF Cotton Synthetics World Textile Market 6

7 2015 World Fiber Production 96.7 Million tonnes (mt) Cellulosic, 6.1 mt 6% 2005 World Fiber Production 66.8 mt Cellulosic, 3.4 mt 5% Natural Fibers, 29.9 mt 25% Synthetic, 60.7 mt 63% Natural Fibers, 26.9 mt 40% Synthetic, 36.5 mt 55% 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, Hawkins Wright, 2010 World Survey on Textiles & Nonwovens Natural Fibers (Cotton) -6.3 % 7

8 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% Textile fibre demand growth expected to increase by over 60% through 2030 VSF growth has historically outpaced textile fibre demand growth Arable Land Requirement 2.00 Competition for other agricultural products results in less arable land available for cotton production VSF Irrigated Cotton Rain-fed Cotton Source:The Future of Cellulose Fibres. Franz Martin Hämmerle. September

9 (L/Ha) Cotton accounts for ~11% of global pesticide use and ~24% of global insecticides use 11,000 L 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 the global water use 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, The Future of Cellulose Fibres. Franz Martin Hämmerle. September

10 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Price ($US per Tonne) 5,000 High correlation between prices of Cotton, VSF and Dissolving Pulp VSF prices have increased ~ 1476 Yuan (~$224 USD) since January 2016 low, yet DP prices have lagged behind and have only risen ~$25 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 recovered to historical premium 3,000 2,500 VSF 2,000 1,500 1, Dissolving Pulp Recent cotton price trend reversal 0 Source: CCF Group Dissolving Pulp (CCF China) VSF Cotton

11 Dissolving pulp production capacity, ~200,000 ADMT/yr. Pulp mill capacity utilization provides significant margin upside potential as operations continue to improve targeting 80% in 2016 and 88% by 2018 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 11

12 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 contract with Hydro Quebec through May 2025 Continued improvement - targeting 95% efficiency in power generation during 2016 MWH 200, , ,000 80,000 Power Generation 11,513 19,779 $( 000s) 20,000 15,000 10,000 40,000 3,020 5,000 *Based on 352 Days of Production Annually at Contracted Rate Power Generation Cogen Revenue - 12

13 Thousands Millions $ Millions $ 200 Sales ADMT 180,000 Sales totaled $38.8 million for Q compared to $35.4 million for the fourth quarter of , ,000 60,000 The cogeneration facility generated $5.0 million in sales revenue from the generation of power in both the first quarter of 2016 and the fourth quarter of 2015 Operating EBITDA for the Dissolving Pulp Segment for Q was $1.3 million, an increase of $4.6 million over the prior year comparative period (5) (10) (15) (20) (25) (30) (35) ** 2013 ** *LTM1Q16 Sales Shipments EBITDA *Last Twelve Months at end of Q **Includes NBHK 20, *LTM1Q16 The results of the first quarter were negatively impacted by a ten day shutdown instigated by a blockage issue in the mill and limited digester capacity due to winter conditions; an issue the Company has allocated significant resources to resolve ADMT 10-5 Ending Inventory Dissolving Pulp Segment Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Dissolving Pulp 13

14 Price ($US per Tonne) 3,000 $850 CAD Delivered Cost 0.75 CAD/USD Dissolving Pulp *PO Price $US/CAD 800 1,066 1,200 1,600 1,600 2,133 EBITDA $850 CAD Delivered Cost 1.00 CAD/USD Dissolving Pulp *PO Price $US/CAD ,200 1,200 1,600 1,600 EBITDA (9) , , , , Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Dissolving Pulp (CCF Price $US) CAD *Average Sales Price of Dissolving Pulp ($/admt, net of duties if applicable) 14

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16 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 Replacement of physically aging banknotes currently in circulation Cyclical increases in money supply Economic expansion in emerging markets New focus on durability Sources: BIS, ECB, SNB and Management Estimates 16

17 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 17

18 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 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 Well-positioned to increase market share and expand margins Strong order book with fixed orders from existing customers for production in 2016 and 2017 State-of-the-art and highly efficient facilities Established reputation for producing banknotes of highest security and quality Proven and experienced operational management team Average of ~20 years experience in the security paper products industry 18

19 Landqart Mill, Switzerland Invested ~$94 million 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 Majority of production operating at >90% utilization level 19

20 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 20

21 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 21

22 Millions$ Millions$ Sales *LTM1Q16 Security Shipments EBITDA 8.1% 7.5% 5.1% tonnes 12,000 10,000 8,000 6,000 4,000 2, % 8.0% 6.0% 4.0% Q sales were $41.2 million compared to $39.2 million for Q Sales were $146.8 million in the twelve months December 31, 2015 compared to $138.7 in the prior year The Landqart mill continues to build on a strong order book for 2016 and 2017 comprised of a mix of new and repeat orders EBITDA was $11.9 million in the twelve months December 31, 2015 compared to $7.0 million in the prior year EBITDA and margins are expected to continue to improve in the short to medium term 2 2.3% 2.0% * LTM1Q16 EBITDA EBITDA as % of Sales *Last Twelve Months at end of Q % 22

23 June 6 th 2016 entered into a purchase agreement with Gam Investment Management (Switzerland) on behalf of Procimmo Swiss Commercial Fund II for the sale of its lands and buildings at the Landqart mill site Purchase price of CHF 44,500,000 (approximately CDN$59 million), subject to customary conveyancing adjustments Closing is subject to certain customary conditions for transactions of this nature including the purchaser obtaining financing The completion of the transaction is expected to occur prior to July 21, Net proceeds are expected to be used to repay the Company's convertible debentures and for general corporate purposes 20-year triple-net lease, renewable for an additional two 10-year periods on the same terms and conditions as the primary lease with Landqart having certain repurchase rights 23

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25 Millions $ Millions $ 400 Sales *LTM1Q16 Total sales were $80.0 million for the first quarter 2016 compared to $74.6 million for the fourth quarter of 2015 Sales were $307.6 million in the twelve months December 31, 2015 compared to $275.9 in the prior year EBITDA 20 - (20) 2015 EBITDA was $10.4 million, an increase of $32.9 million compared to EBITDA loss of $22.5 million for the 2014 year (40) (60) *LTM1Q16 *Last Twelve Months at end of Q

26 Millions $ Cash including restricted cash was $46.9 million at March Repayments of principal for debt outstanding as at March 31, 2016 are required as follows: - Includes $15.3 million restricted cash of which the majority is expected to be available before the end of 2016 Q Year $ millions Quarterly Cash Balance Thereafter Total Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Debt including $106.5 million with Quebec government at 5% Cash and cash equivalents Restricted cash 26

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