West Fraser. 2nd Quarter 2016

West Fraser 2nd Quarter 2016 For the period April 1 to June 30, 2016

Report to Shareholders reported earnings of $98 million or $1.22 basic earnings per share on sales of $1,111 million in the second quarter of 2016. These results compare with previous periods as shown in the table below. Adjusted EBITDA, Adjusted earnings and Adjusted basic EPS as described in this report reflect the adjustments described in the tables referred to in the section titled Non-IFRS Measures on page 11 of our 2016 second quarter Management s Discussion & Analysis. 2 Report to Shareholders ($ millions except earnings per share ( EPS )) Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 Sales 1,111 1,077 2,188 1,029 2,043 Adjusted EBITDA 1 138 130 268 72 245 Operating earnings 120 79 199 18 143 Earnings 98 42 140 14 63 Basic EPS ($) 1.22 0.51 1.72 0.17 0.76 Adjusted Earnings 1 64 49 113 12 111 Adjusted basic EPS ($) 1 0.80 0.60 1.40 0.15 1.32 1. In this report, reference is made to Adjusted EBITDA, Adjusted earnings and Adjusted EPS (collectively these measures ). We believe that, in addition to earnings, these measures are useful performance indicators. None of these measures is a generally accepted earnings measure under International Financial Reporting Standards ( IFRS ) and none has a standardized meaning prescribed by IFRS. Investors are cautioned that none of these measures should be considered as an alternative to earnings, EPS or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities. Operational Results In the quarter our lumber operations generated operating earnings of $78 million (Q1-16 $63 million) and Adjusted EBITDA of $113 million (Q1-16 $100 million). Increased U.S. lumber prices and strong sales partially offset by a stronger Canadian dollar contributed to the improvement in earnings. Greater sawmill efficiency after the completion of a number of capital improvements contributed to increased production at several of our operations. The panel segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $18 million (Q1-16 $12 million) and Adjusted EBITDA of $21 million (Q1-16 $15 million). Improving plywood prices and increased shipments were the primary contributors to the improved earnings. Our pulp & paper operations generated an operating loss of $5 million (Q1-16 earnings of $5 million) and Adjusted EBITDA of $4 million (Q1-16 $14 million). A stronger Canadian dollar was the main contributor to the reduced earnings. Outlook Our second quarter operating results affirm our expectation that we should exceed our 2015 lumber production by over 400 MMfbm. We expect to see continued gradual improvement in lumber prices as U.S. new home construction returns to average historical levels. In the event that a softwood lumber agreement is not reached by mid-october we are prepared for the potential that the U.S. industry will petition the U.S. government to initiate trade action against Canadian softwood lumber imports to the U.S. Ted Seraphim, our President and CEO, said We expect that our geographic diversification and investment of capital to modernize and improve the efficiency of our mills should substantially mitigate any negative effect of any trade action.

Management s Discussion & Analysis ( MD&A ) The Company s MD&A is available on the Company s website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company s profile. The Company West Fraser is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States. Forward-Looking Statements This Report contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading Outlook, are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes and results will depend on a number of factors that could affect the ability of the Company to execute its business plans, including those matters described in the 2015 annual Management s Discussion & Analysis under Risks and Uncertainties, and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws. On behalf of the Board of Directors, WEST FRASER TIMBER CO. LTD. 53 Report to Shareholders REPORT TO SHAREHOLDERS Ted Seraphim President and Chief Executive Officer July 21, 2016

2016 Management s Discussion & Analysis Introduction and Interpretation This discussion and analysis by West Fraser s management ( MD&A ) of the Company s financial performance during the second quarter of 2016 should be read in conjunction with the unaudited condensed consolidated interim financial statements and accompanying notes ( Financial Statements ) included in this quarterly report and the 2015 annual MD&A included in the Company s 2015 Annual Report. Dollar amounts are expressed in Canadian currency, unless otherwise indicated. The financial information contained in this MD&A has been prepared in accordance with International Financial Reporting Standards ( IFRS ) except as otherwise disclosed. 4 Management s Discussion & Analysis This MD&A contains historical information, descriptions of current circumstances and statements about potential future developments and anticipated financial results. The latter, which are forward-looking statements, are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and are subject to various risks and uncertainties. Forward-looking statements are included under the headings Business Outlook and Operating Activities (concerning reduction of inventories). Actual outcomes and results of these statements will depend on a number of factors including those matters described under Risks and Uncertainties in the 2015 annual MD&A, and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and we undertake no obligation to publicly revise them to reflect subsequent events or circumstances except as required by applicable securities laws. Throughout this MD&A reference is made to Adjusted EBITDA, Adjusted earnings and Adjusted basic earnings per share and net debt to total capital ratio (collectively these measures ), calculated as shown under the heading Non-IFRS Measures in this report. We believe that, in addition to earnings, these measures are useful performance indicators. None of these measures is a generally accepted earnings measure under IFRS and none has a standardized meaning prescribed by IFRS. Investors are cautioned that none of these measures should be considered as an alternative to earnings, earnings per share or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities. This MD&A uses the following terms that are defined in the Company s 2015 Annual Report: SPF (spruce-pine-fir lumber), SYP (southern yellow pine lumber), MDF (medium density fibreboard), LVL (laminated veneer lumber), BCTMP (bleached chemithermomechanical pulp) and NBSK (northern bleached softwood kraft pulp). This MD&A includes references to benchmark prices over selected periods for products of the type produced by West Fraser. These benchmark prices do not necessarily reflect the prices obtained by West Fraser for those products during such period. The information in this interim MD&A is as at July 21, 2016 unless otherwise indicated. Summary Information ($millions except as otherwise indicated) Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 Sales 1,111 1,077 2,188 1,029 2,043 Adjusted EBITDA 138 130 268 72 245 Equity-based compensation 30 (2) 28 (9) (10) Amortization (48) (49) (97) (45) (92) Operating earnings 120 79 199 18 143 Finance expense (7) (8) (15) (7) (15) Other 7 (16) (9) 21 (26) Tax provision (22) (13) (35) (18) (39) Earnings 98 42 140 14 63 Cdn$1.00 converted to US$ average 0.776 0.729 0.752 0.813 0.810

Selected Quarterly Information ($millions, except earnings per share ( EPS ) amounts which are in $) Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Sales 1,111 1,077 1,013 1,044 1,029 1,014 964 1,030 Earnings 98 42 (15) 56 14 49 43 70 Basic EPS 1.22 0.51 (0.18) 0.67 0.17 0.58 0.51 0.83 Diluted EPS 0.86 0.50 (0.18) 0.05 0.17 0.53 0.51 0.83 Adjusted Earnings and Adjusted Basic Earnings Per Share ($millions except EPS amounts which are in $) Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 Earnings 98 42 140 14 63 Adjustments to earnings: Equity-based compensation (30) 2 (28) 9 10 Exchange loss (gain) on long-term financing (1) (9) (10) (4) 23 Loss on power agreements 19 19 (18) 12 Gain on disposal of WestPine equipment (5) (5) Net tax effect on the above adjustments 2 (5) (3) 4 (4) Increase in Alberta provincial tax rate 7 7 Adjusted earnings 64 49 113 12 111 Adjusted basic EPS 1 0.80 0.60 1.40 0.15 1.32 1. Adjusted basic EPS is calculated by dividing Adjusted earnings by the basic weighted average shares outstanding. Discussion & Analysis of Non-Operational Items In the current quarter we generated earnings of $98 million compared to earnings of $42 million in the previous quarter and $14 million in the second quarter of 2015. For a description of operational results see Discussion & Analysis by Product Segment which follows this section. Our results include several significant non-operational items which are identified as adjustments in the table above this section and shown under the heading Non-IFRS Measures in this MD&A. After taking into account these adjustments, we generated Adjusted earnings of $64 million compared to Adjusted earnings of $49 million in the previous quarter and $12 million in the second quarter of 2015. In the current quarter a recovery of $30 million was recorded related to equity-based compensation compared to an expense of $2 million in the previous quarter. A recovery or expense is recorded on the issuance of share options or phantom or directors deferred share units and an additional expense or recovery is recorded each quarter based primarily on valuation models that consider various factors relating to outstanding options and units. The most significant of these factors is the change in the market value of our shares from the beginning to the end of the particular period. The expense or recovery does not necessarily represent the actual value which will ultimately be received by the holders of options and units. The change in our share price from $52.11 at March 31, 2016 to $37.77 at June 30, 2016 is reflected in the calculation for the current quarter. 5 Management s Discussion & Analysis Any change in the value of the Canadian dollar relative to the value of the U.S. dollar results in the revaluation of our U.S. dollar-denominated assets and liabilities. The result of these revaluations is included in other income. The Canadian dollar was stronger against the U.S. dollar at the end of the current quarter compared to the previous quarter resulting in a $1 million loss on intercompany financing compared to a loss of $17 million in the previous quarter and a $2 million gain on long-term debt compared to a gain of $26 million in the previous quarter. There was no gain or loss on working capital due to the change in value in the current quarter compared to a $10 million loss in the previous quarter. Our WestPine MDF facility experienced a fire during the previous quarter and production has been suspended until full repairs can be completed. Estimated insurance proceeds of $5 million related to replacement of equipment resulted in a gain on disposal being recorded in other income (see Note 8 to the Financial Statements). During the previous quarter we terminated our power purchase agreements that had provided us with a portion of the electricity generated from two power plants in Alberta at substantially predetermined rates. The termination of the agreements resulted in a loss of $19 million recorded in other income in that quarter (see Note 9 to the Financial Statements). The results of the current quarter include a provision for income tax of $22 million compared to $13 million in the prior quarter and to $18 million for the second quarter of 2015. Note 10 to the Financial Statements provides a reconciliation of income taxes calculated at the statutory rate to the income tax expense. The funded position of our defined benefit pension plans and other retirement benefit plans is estimated at the end of each quarter. The funded position, as shown in Note 6 to the Financial Statements, is determined by subtracting the value of plan assets from the value of plan obligations. A decrease in the discount rate used to calculate plan liabilities from the beginning of the current period, partially offset by the rate of return on assets held that was higher than the discount rate, resulted in an after-tax actuarial loss of $45 million which is included in other comprehensive earnings.

2016 Management s Discussion & Analysis (continued) DISCUSSION & ANALYSIS BY PRODUCT SEGMENT Lumber Segment Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 SPF (MMfbm) Production 982 963 1,945 931 1,811 Shipments 997 952 1,949 960 1,773 SYP (MMfbm) Production 552 547 1,099 515 988 Shipments 562 529 1,091 506 963 6 Management s Discussion & Analysis Sales ($millions) Lumber 697 645 1,342 612 1,201 Wood chips and other residuals 80 84 164 75 145 Logs and other 18 29 47 15 37 795 758 1,553 702 1,383 Adjusted EBITDA ($millions) 113 100 213 45 162 Amortization ($millions) (35) (37) (72) (32) (65) Operating earnings ($millions) 78 63 141 13 97 Adjusted EBITDA margin (%) 14 13 14 6 12 Benchmark prices (per Mfbm) SPF #2 & Better 2 x 4 1 US$ 311 271 292 270 289 SPF #3 Utility 1 US$ 247 208 228 207 234 SYP #2 West 2 x 4 2 US$ 406 387 397 363 393 SPF #2 & Better 2 x 4 Cdn$ 3 401 372 388 332 357 SPF #3 Utility Cdn$ 3 318 285 303 254 289 SYP #2 West 2 x 4 Cdn$ 3 523 531 527 446 485 1. Source: Random Lengths Net FOB mill. 2. Source: Random Lengths Net FOB mill Westside. 3. Calculated by applying the average Canadian/U.S. dollar exchange rate for the period to the U.S. dollar benchmark price. Operating earnings increased in the quarter compared to the previous period, substantially due to improved U.S.-dollar lumber pricing and increased sales volumes. A stronger Canadian dollar partially offset the improved pricing. Freight costs, generally priced in U.S. dollars, were lower due to the strengthened Canadian dollar. Higher production compared to the first quarter of 2016 reflects improved efficiencies at both our U.S. and Canadian sawmills following a number of capital improvements in the past two years and more operating days in the current quarter. Increased sales volumes reflect the improved production. Following a significant decline in shipments to China in the third quarter of 2015, when a weak Russian ruble promoted market share gains for Russian lumber into China, our SPF shipments to China have gradually increased with current quarter volumes up over 10% from volumes shipped in the third quarter of 2015. As shown in the table below, the allocation of our SPF shipments to our largest destinations has not changed significantly in the past year and a half. SPF Sales by Destination First Half 2016 2015 MMfbm % MMfbm % U.S. 1,118 57 2,072 57 Canada 477 24 780 22 China 232 12 530 15 Other 122 7 232 6 Total 1,949 3,614

Operating earnings increased compared to the second quarter of 2015, mostly due to improved lumber pricing, a weaker Canadian dollar and higher production and sales volumes. In addition, no softwood lumber duties were incurred in the current quarter while duties in the amount of $12 million were incurred in the comparable period of 2015. Higher production reflects more operating days, increased output at our 100 Mile House, B.C. sawmill following a capital project and the acquisition of our Manning, Alberta sawmill in the fourth quarter of 2015. Improved lumber pricing, a weaker Canadian dollar and increased production and sales volumes, along with no softwood lumber duties applicable during 2016, also contributed to increased operating earnings on a year-to-date basis in 2016 compared to the same period of 2015. Production increases reflect the restart of our 100 Mile House sawmill after capital improvements, the additional output from our Manning sawmill and more operating days. Panels Segment Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 Plywood (MMsf 3 /8 basis) Production 205 202 407 200 398 Shipments 210 197 407 208 397 MDF (MMsf 3 /4 basis) Production 37 52 89 53 107 Shipments 40 58 98 53 104 LVL (Mcf) Production 513 570 1,083 377 745 Shipments 497 562 1,059 426 781 Sales ($millions) Finished products 122 132 254 132 258 Wood chips and other residuals 5 4 9 3 7 Logs and other 1 2 3 1 2 128 138 266 136 267 7 Management s Discussion & Analysis Adjusted EBITDA ($millions) 21 15 36 21 47 Amortization ($millions) (3) (3) (6) (4) (7) Operating earnings ($millions) 18 12 30 17 40 Adjusted EBITDA margin (%) 16 11 14 15 18 Benchmark price Plywood (per Msf 3 /8 basis) 1 Cdn$ 430 405 418 421 433 1. Source: Crow s Market Report Delivered Toronto. Our panels segment is comprised of our plywood, MDF and LVL operations. The increase in operating earnings compared to the first quarter was mainly attributable to improved plywood prices and increased shipments. We sell most of our plywood within Canada where demand remains strong. Our MDF production and shipments continue to be affected by a firerelated closure of our WestPine mill during the previous quarter. Business interruption insurance, recorded in cost of products sold, offset much of the effect of the reduced MDF shipments. Operating earnings were similar in the quarter compared to the same period in the previous year. Higher plywood prices were offset by increased log costs at our plywood mills. Reduced MDF production and shipments resulted from the WestPine closure but business interruption insurance mitigated the effect of the closure. Increased LVL production and shipments reflect improving U.S. housing construction, as LVL is primarily used in single family home construction. The decrease in operating earnings in the first half of this year compared to the same period in 2015 was mostly attributable to weaker plywood prices and substantially higher log costs for our plywood mills. The effect of reduced shipments of MDF due to the WestPine closure was partially offset by business interruption insurance and increased LVL shipments.

2016 Management s Discussion & Analysis (continued) Pulp & Paper Segment Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 8 Management s Discussion & Analysis BCTMP (Mtonnes) Production 161 163 324 154 312 Shipments 156 168 324 161 331 NBSK (Mtonnes) Production 131 126 257 120 241 Shipments 142 118 260 126 244 Newsprint (Mtonnes) Production 31 33 64 32 66 Shipments 32 34 66 34 65 Sales ($millions) 214 212 426 220 450 Adjusted EBITDA ($millions) 4 14 18 8 38 Amortization ($millions) (9) (9) (18) (9) (19) Operating earnings ($millions) (5) 5 (1) 19 Adjusted EBITDA margin (%) 2 7 4 4 8 Benchmark price (per tonne) NBSK US$ 1,3 980 943 962 980 988 NBSK China US$ 2,3 617 590 603 675 669 Newsprint US$ 4 550 538 544 550 565 NBSK - Cdn$ 5 1,263 1,294 1,279 1,205 1,220 NBSK China Cdn$ 5 795 810 802 830 826 Newsprint Cdn$ 5 709 738 723 676 698 1. Source: Resource Information Systems, Inc. U.S. list price delivered U.S. 2. Source: Resource Information Systems, Inc. China list price delivered China. 3. The differences between the U.S. and China NBSK list prices are largely attributable to the customary sales practice of applying material discounts from the U.S. list price for North American sales compared to relatively small discounts from the China list price for sales into China. 4. Source: Resource Information Systems, Inc. delivered 48.8 gram newsprint. 5. Calculated by applying the average Canadian/U.S. dollar exchange rate for the period to the U.S. dollar benchmark price. The pulp & paper segment is comprised of our NBSK, BCTMP and newsprint businesses. Operating earnings for the segment decreased compared to the previous quarter. Although U.S.-dollar prices for all of our products in this segment improved compared to the previous quarter, the stronger Canadian dollar more than offset these price improvements. Minor scheduled maintenance shutdowns at our Cariboo NBSK mill and our Slave Lake BCTMP mill in the quarter combined with operational disruptions at our Quesnel BCTMP mill resulted in higher maintenance costs compared to the previous quarter. Overall production was similar to the previous quarter during which our Hinton mill underwent a scheduled nine-day maintenance shutdown and our Quesnel BCTMP mill reduced production to participate in a BC Hydro electricity load-shedding program. Newsprint production was down slightly in the current quarter, the result of a four and a half day maintenance shutdown. Although the Canadian dollar was weaker against the U.S. dollar this quarter compared to the second quarter of 2015, operating earnings decreased slightly in the current period. U.S.-dollar BCTMP and NBSK pulp prices faced downward pressure although the price declines were partially offset by the weaker Canadian dollar. Production of both BCTMP and NBSK was higher in the quarter primarily due to significant operational disruptions in the comparable period of 2015. Operating earnings also decreased in the first half of the year compared to the same period in the previous year reflecting price declines for NBSK and BCTMP. The weaker Canadian dollar partially offset the U.S.-dollar price reductions. Production substantially improved in the current year, as our mills all experienced fewer operational disruptions.

BUSINESS OUTLOOK Operations Our second quarter operating results affirm our expectation that we should exceed our 2015 lumber production by over 400 MMfbm. This increase reflects not only the acquisition of the Manning sawmill in late 2015, but also the completion of several capital improvement projects in 2015. We expect that our plywood production will be similar to the previous year while our MDF production will reflect the suspension of operations at our WestPine facility due to the fire that occurred in early March of 2016. Extensive repairs to that mill began in the second quarter and we expect that it will be operational in the fourth quarter of this year. Our LVL production has increased compared to 2015 driven mainly by North American new home construction. We are optimistic that this trend will continue. Our Hinton NBSK pulp mill continues to be the subject of intensive management oversight. The mill experienced some operational disruptions late in the second quarter but it largely operated in accordance with our plan which contemplates consistent improvement. We are anticipating increased production compared to 2015 levels over the balance of the year. Log costs will continue to be a concern for our Canadian lumber and plywood operations, particularly in regions of B.C. that have been heavily affected by the mountain pine beetle infestation. Markets In the second quarter lumber prices strengthened as North American spring building demand resulted in strong orders. We expect to see continued gradual improvement in lumber prices as U.S. new home construction returns to average historical levels although some volatility can be expected as increased production is absorbed by the market. We remain encouraged by Chinese lumber demand while we recognize that the structure of its lumber market will continue to produce volatility in demand and pricing. The 2006 Softwood Lumber Agreement between Canada and the United States expired on October 12, 2015. A standstill period, during which the U.S. government and industry have committed to refrain from bringing trade action against Canada, will expire in October 2016. Government representatives of Canada and the U.S. have been meeting in an effort to reach a new agreement. We are supportive of these efforts. In the event an agreement is not reached by mid-october we expect that the U.S. lumber industry will petition the U.S. government to initiate trade action against Canadian softwood lumber imports to the U.S. Although we do not believe that there is any legal basis for such a trade action to succeed, we expect the U.S. government to respond positively to any U.S. lumber industry petition as it has several times in the past. However, we expect that our geographic diversification and investment of capital to modernize and improve the efficiency of our mills should mitigate any negative effect of any trade action. 9 Management s Discussion & Analysis Pulp prices remain under pressure as new pulp capacity in the U.S. and South America, scheduled to enter the market later this year, will need to be absorbed. Cash Flows Current and anticipated cash flows are expected to support our capital investment program, the continuation of our dividend and, possibly, additional share buybacks. In the second quarter our capital spending was $57 million and we project total spending in 2016 on capital improvements to be approximately $250 million. In the second quarter we repurchased 1,566,996 Common shares for $64 million. We will continue to consider share buybacks depending on both our cash flow expectations and our share valuation as our normal course issuer bid does not expire until September 2016. CAPITAL STRUCTURE AND LIQUIDITY Our capital structure consists of Common share equity and long-term debt. In addition, we maintain operating credit facilities which include a $500 million committed revolving facility, a US$25 million demand line to support our U.S. operations, two demand letters of credit ( LC s ) facilities allowing issuance of up to $75 million in LC s and an $8 million revolving facility available to our jointly-owned newsprint operation. These credit facilities are available to meet the funding requirements of our Company. Our outstanding Common share equity consists of 77,551,248 Common shares and 2,281,478 Class B Common shares for a total of 79,832,726 shares issued and outstanding as at July 21, 2016.

2016 Management s Discussion & Analysis (continued) Each Class B Common share may at any time be exchanged for one Common share. The rights attached to the Common shares and Class B Common shares are equal in all other respects, including the right to dividends and the right to vote. The Common shares are listed and traded on the Toronto Stock Exchange under the symbol WFT while our Class B Common shares are not. Certain circumstances or corporate transactions may require the approval of the holders of our Common shares and Class B Common shares on a separate class-by-class basis. As of July 21, 2016 there were 2,224,870 share purchase options outstanding with exercise prices ranging from $12.36 to $73.99 per Common share. On June 30, 2016, $147 million was owed under our credit facilities. LC s in the amount of $47 million were supported by our facilities, leaving $421 million of credit available for further use. 10 Management s Discussion & Analysis Our cash requirements, other than for operating purposes, are primarily for interest payments, repayment of debt, additions to property, plant, equipment and timber, acquisitions and payment of dividends. In normal business cycles and in years without a major acquisition or debt repayment, cash on hand and cash provided by operations have normally been sufficient to meet these requirements. Summary of Financial Position ($millions except as otherwise indicated) Q2-16 Q4-15 Q2-15 Cash 1 27 13 30 Current assets 944 971 913 Current liabilities 543 606 508 Ratio of current assets to current liabilities 1.7 1.6 1.8 Net debt 2 548 617 391 Shareholders equity 2,021 2,147 2,132 Net debt to total capital 3 21% 22% 15% 1. Cash consists of cash and short-term investments. 2. Total debt less deferred financing costs less cash plus cheques issued in excess of funds on deposit. 3. Net debt divided by net debt plus shareholders equity. See Non-IFRS Measures in this MD&A. Debt Ratings As shown in the table below, we are rated by three leading rating agencies. All three ratings are considered investment grade. During June 2016, Standard & Poor s affirmed its rating but revised its outlook from Positive to Stable, attributing the change to its tempered view of lumber prices and the uncertain progress of the softwood lumber trade negotiations. Agency Rating Outlook Dominion Bond Rating Service BBB(low ) Stable Moody s Baa3 Stable Standard & Poor s BBB- Stable These ratings are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating agencies.

Selected Cash Flow Items ($millions) Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 Operating Activities Earnings 98 42 140 14 63 Amortization 48 49 97 45 92 Loss on power agreements, net of settlement costs 11 11 (18) 12 Change in inventories 180 (96) 84 119 62 Change in other working capital items (51) (36) (87) 34 (23) Other 6 7 13 34 Cash provided by (used in) operating activities 281 (23) 258 194 240 Financing Activities Debt and operating loans (150) 116 (34) (124) (75) Finance expense paid (10) (1) (11) (9) (11) Common share repurchases (62) (50) (112) Dividends and other (6) (6) (12) (6) (12) Cash provided by (used in) financing activities (228) 59 (169) (139) (98) Investing Activities Additions to capital assets (57) (49) (106) (49) (118) Other 3 4 7 6 6 Cash used in investing activities (54) (45) (99) (43) (112) Increase (decrease) in cash (1) (9) (10) 12 30 Operating Activities Cash used in operating activities during the first quarter of each year generally increases substantially as logging activity in Canada increases during the winter season and log inventories are built to sustain production activities during the second quarter. Following the normal cycle, cash is then generally generated during the second quarter as logging is curtailed and the log inventory is consumed in operations. 11 Management s Discussion & Analysis Investing Activities Additions to capital assets in the current quarter included $42 million for the lumber segment, $1 million for the panels segment, $11 million for the pulp & paper segment and $3 million for our corporate segment. NON-IFRS MEASURES The following summarizes the non-ifrs measures we use in this MD&A. None of these measures is a generally accepted measure under IFRS and none has a standardized meaning prescribed by IFRS. Investors are cautioned that none of these measures should be considered as an alternative to earnings, earnings per share or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities. Adjusted EBITDA ($millions) Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 Earnings 98 42 140 14 63 Add: Amortization 48 49 97 45 92 Finance expense 7 8 15 7 15 Tax provision 22 13 35 18 39 EBITDA 175 112 287 84 209 Add: Equity-based compensation (30) 2 (28) 9 10 Other (7) 16 9 (21) 26 Adjusted EBITDA 138 130 268 72 245

2016 Management s Discussion & Analysis (continued) 12 Management s Discussion & Analysis Adjusted EBITDA by Segment ($millions) Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 Lumber Earnings before tax 76 53 129 8 90 Add: Amortization 35 37 72 32 65 Finance expense 4 5 9 4 9 EBITDA 115 95 210 44 164 Add: Other (2) 5 3 1 (2) Adjusted EBITDA 113 100 213 45 162 Panels Earnings before tax 22 9 31 17 36 Add: Amortization 3 3 6 4 7 Finance expense 1 1 2 1 2 EBITDA 26 13 39 22 45 Add: Other (5) 2 (3) (1) 2 Adjusted EBITDA 21 15 36 21 47 Pulp & Paper Earnings before tax (6) (20) (26) 14 12 Add: Amortization 9 9 18 9 19 Finance expense 2 2 4 2 4 EBITDA 5 (9) (4) 25 35 Add: Other (1) 23 22 (17) 3 Adjusted EBITDA 4 14 18 8 38 Corporate and Other Earnings before tax 28 13 41 (7) (36) Add: Amortization 1 1 1 EBITDA 29 13 42 (7) (35) Add: Equity-based compensation (30) 2 (28) 9 10 Other 1 (14) (13) (4) 23 Adjusted EBITDA 1 1 (2) (2) Total Adjusted EBITDA 138 130 268 72 245

Adjusted Earnings and Adjusted Basic Earnings Per Share ($millions except EPS amounts which are in $) Q2-16 Q1-16 YTD-16 Q2-15 YTD-15 Earnings 98 42 140 14 63 Adjustments to earnings: Equity-based compensation (30) 2 (28) 9 10 Exchange loss (gain) on long-term financing (1) (9) (10) (4) 23 Loss on power agreements 19 19 (18) 12 Gain on disposal of WestPine equipment (5) (5) Net tax effect on the above adjustments 2 (5) (3) 4 (4) Increase in Alberta provincial tax rate 7 7 Adjusted earnings 64 49 113 12 111 Adjusted basic EPS 1 0.80 0.60 1.40 0.15 1.32 1. Adjusted basic EPS is calculated by dividing Adjusted earnings by the basic weighted average shares outstanding. Net Debt to Total Capital Ratio ($millions except as otherwise indicated) Q2-16 Q4-15 Q2-15 Net debt Cash and short-term investments (27) (13) (30) Deferred financing costs 1 (7) (7) (8) Cheques issued in excess of funds on deposit 36 29 8 Operating loan 147 181 35 Long-term debt (includes current portion) 399 427 386 548 617 391 Shareholders equity 2,021 2,147 2,132 Total capital 2,569 2,764 2,523 Net debt to total capital 21% 22% 15% 1. For our balance sheet presentation, these costs are applied to reduce the associated debt or, in instances when the operating loan is undrawn, these costs are included in other assets. 13 Management s Discussion & Analysis RISKS AND UNCERTAINTIES For a review of the risks and uncertainties to which our Company is subject, see the 2015 annual MD&A which is included in our 2015 Annual Report. SIGNIFICANT MANAGEMENT JUDGMENTS AFFECTING FINANCIAL RESULTS For a review of significant management judgments affecting financial results and critical accounting estimates, see the 2015 annual MD&A which is included in our 2015 Annual Report. DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING Our management, including the President and Chief Executive Officer and the Vice-President, Finance and Chief Financial Officer, acknowledge responsibility for the design of disclosure controls and procedures and internal controls over financial reporting. There has been no change in our internal controls over financial reporting during the three months ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. ADDITIONAL INFORMATION Additional information relating to our Company, including our Company s Annual Information Form, is available on SEDAR at www.sedar.com.

Condensed Consolidated Balance Sheets (In millions of Canadian dollars, except where indicated unaudited) Assets June 30 December 31 2016 2015 14 Condensed Consolidated Balance Sheets Current assets Cash and short-term investments $ 27 $ 13 Receivables 333 298 Income taxes receivable 13 11 Inventories (note 3) 541 631 Prepaid expenses 30 18 944 971 Property, plant and equipment 1,599 1,609 Timber licences 560 570 Goodwill and other intangibles 363 369 Other assets 13 36 Deferred income tax assets 58 80 $ 3,537 $ 3,635 Liabilities Current liabilities Cheques issued in excess of funds on deposit $ 36 $ 29 Operating loans (note 4) 144 178 Payables and accrued liabilities 316 351 Reforestation and decommissioning obligations 47 48 543 606 Long-term debt (note 4) 395 423 Other liabilities (note 5) 416 269 Deferred income tax liabilities 162 190 1,516 1,488 Shareholders Equity Share capital (note 7) 560 579 Accumulated other comprehensive earnings 129 164 Retained earnings 1,332 1,404 2,021 2,147 $ 3,537 $ 3,635 Number of Common shares and Class B Common shares outstanding at July 21, 2016 was 79,832,726.

Condensed Consolidated Statements of Changes in Shareholders Equity (In millions of Canadian dollars, except where indicated unaudited) April 1 to June 30 January 1 to June 30 2016 2015 2016 2015 Share capital Balance beginning of period $ 571 $ 587 $ 579 $ 587 Common share repurchases (11) (19) Balance end of period $ 560 $ 587 $ 560 $ 587 Accumulated other comprehensive earnings Balance beginning of period $ 132 $ 106 $ 164 $ 55 Translation gain (loss) on foreign operations (3) (8) (35) 43 Balance end of period $ 129 $ 98 $ 129 $ 98 Retained earnings Balance beginning of period $ 1,338 $ 1,385 $ 1,404 $ 1,387 Actuarial gain (loss) on post-retirement benefits (45) 54 (105) 9 Common share repurchases (53) (95) Earnings for the period 98 14 140 63 Dividends (6) (6) (12) (12) Balance end of period $ 1,332 $ 1,447 $ 1,332 $ 1,447 Shareholders Equity $ 2,021 $ 2,132 $ 2,021 $ 2,132 15 Condensed Consolidated Statements of Changes in Shareholders Equity

Condensed Consolidated Statements of Earnings and Comprehensive Earnings (In millions of Canadian dollars, except where indicated unaudited) April 1 to June 30 January 1 to June 30 2016 2015 2016 2015 Sales $ 1,111 $ 1,029 $ 2,188 $ 2,043 16 Condensed Consolidated Statements of Earnings and Comprehensive Earnings Costs and expenses Cost of products sold 775 749 1,524 1,406 Freight and other distribution costs 156 159 315 303 Export taxes 12 12 Amortization 48 45 97 92 Selling, general and administration 42 37 81 77 Equity-based compensation (30) 9 (28) 10 991 1,011 1,989 1,900 Operating earnings 120 18 199 143 Finance expense (7) (7) (15) (15) Other (note 9) 7 21 (9) (26) Earnings before tax 120 32 175 102 Tax provision (note 10) (22) (18) (35) (39) Earnings $ 98 $ 14 $ 140 $ 63 Earnings per share (dollars) (note 11) Basic $ 1.22 $ 0.17 $ 1.72 $ 0.76 Diluted $ 0.86 $ 0.17 $ 1.36 $ 0.76 Comprehensive earnings Earnings $ 98 $ 14 $ 140 $ 63 Other comprehensive earnings Translation gain (loss) on foreign operations (3) (8) (35) 43 Actuarial gain (loss) on post-retirement benefits 1 (45) 54 (105) 9 Comprehensive earnings $ 50 $ 60 $ $ 115 1. Net of tax recovery of $17 million for the three months ended June 30, 2016 (three months ended June 30, 2015 - $19 million tax provision) and $38 million for the six months ended June 30, 2016 (six months ended June 30, 2015 $2 million tax provision).

Condensed Consolidated Statements of Cash Flows (In millions of Canadian dollars, except where indicated unaudited) April 1 to June 30 January 1 to June 30 2016 2015 2016 2015 Operating activities Earnings $ 98 $ 14 $ 140 $ 63 Adjustments Amortization 48 45 97 92 Finance expense 7 7 15 15 Foreign exchange loss (gain) on long-term financing (1) (4) (10) 23 Loss (gain) on power agreements, net of settlement costs (18) 11 12 Post-retirement expense 18 15 35 28 Contributions to post-retirement benefit plans (16) (18) (28) (21) Tax provision 22 18 35 39 Income taxes received (paid) 4 (12) (5) (54) Other (28) (6) (29) 4 Changes in non-cash working capital Receivables 6 28 (30) (26) Inventories 180 119 84 62 Prepaid expenses (10) (15) (15) (16) Payables and accrued liabilities (47) 21 (42) 19 Cash flows from operating activities 281 194 258 240 Financing activities Repayment of operating loans (150) (124) (34) (75) Finance expense paid (10) (9) (11) (11) Dividends (6) (6) (12) (12) Common share repurchases (62) (112) Cash flows from financing activities (228) (139) (169) (98) Investing activities Additions to capital assets (57) (49) (106) (118) Government assistance 3 7 Other 6 6 Cash flows from investing activities (54) (43) (99) (112) 17 Condensed Consolidated Statements of Cash Flows Change in cash (1) 12 (10) 30 Foreign exchange effect on cash 13 2 17 7 Cash beginning of period (21) 8 (16) (15) Cash end of period $ (9) $ 22 $ (9) $ 22 Cash consists of Cash and short-term investments $ 27 $ 30 Cheques issued in excess of funds on deposit (36) (8) $ (9) $ 22

Notes to Condensed Consolidated Interim Financial Statements (Figures are in millions of Canadian dollars, except where indicated unaudited) 1. Nature of operations ( West Fraser, we, us or our ) is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States. Our executive office is located at 858 Beatty Street, Suite 501, Vancouver, British Columbia. West Fraser was formed by articles of amalgamation under the Business Corporations Act (British Columbia) and is registered in British Columbia, Canada. Our Common shares are listed for trading on the Toronto Stock Exchange under the symbol WFT. 18 Notes to Condensed Consolidated Interim Financial Statements 2. Basis of presentation and statement of compliance These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board and using the same accounting policies and methods of their application as the December 31, 2015 annual financial statements. These condensed consolidated interim financial statements should be read in conjunction with our 2015 annual financial statements. 3. Inventories Inventories at June 30, 2016 were written down by $11 million (March 31, 2016 $14 million; December 31, 2015 $21 million; June 30, 2015 $22 million) to reflect net realizable value being lower than cost. 4. Long-term debt and operating loans Long-term debt June 30, December 31, 2016 2015 US$300 million senior notes due October 2024; interest at 4.35% $ 388 $ 415 US$8 million note payable due October 2020; interest at 2.00% 10 10 Note payable due in installments to 2025; interest ranging from 4.82% to 5.50% 1 2 399 427 Deferred financing costs (4) (4) $ 395 $ 423 The fair value of the long-term debt is $379 million (December 31, 2015 $406 million) based on rates available to us at the balance sheet date for long-term debt with similar terms and remaining maturities. Operating loans We have $615 million in revolving lines of credit of which $144 million (net of deferred financing costs of $3 million) were drawn as at June 30, 2016 (December 31, 2015 $178 million, net of deferred financing costs of $3 million). Our revolving lines of credit consist of a $500 million revolving credit facility which matures September 30, 2020, a $32 million (US$25 million) demand line of credit dedicated to our U.S. operations, two demand lines of credit totalling $75 million dedicated to letters of credit, and an $8 million demand line of credit dedicated to our jointly-owned newsprint operation. Interest on the facilities is payable at floating rates based on Prime, U.S. base, Bankers Acceptances or LIBOR at our option. As at June 30, 2016, letters of credit in the amount of $47 million have been issued under these facilities. All debt is unsecured except the $8 million joint operation demand line of credit, which is secured by that joint operation s current assets.

5. Other liabilities June 30, December 31, 2016 2015 Post-retirement (note 6) $ 288 $ 142 Reforestation 82 76 Decommissioning 29 29 Other 17 22 $ 416 $ 269 6. Post-retirement benefits We maintain defined benefit and defined contribution pension plans covering a majority of our employees. The defined benefit plans generally do not require employee contributions and provide a guaranteed level of pension payable for life based either on length of service or on earnings and length of service, and in most cases do not increase after commencement of retirement. We also provide group life insurance, medical and extended health benefits to certain employee groups. The status of the defined benefit pension plans and other retirement benefit plans, in aggregate, is as follows: June 30, December 31, 2016 2015 Projected benefit obligations $ (1,743) $ (1,532) Fair value of plan assets 1,457 1,409 Impact of minimum funding requirement (11) $ (286) $ (134) Represented by Post-retirement assets $ 2 $ 8 Post-retirement liabilities (note 5) (288) (142) $ (286) $ (134) The significant actuarial assumptions used to determine our balance sheet date post-retirement assets and liabilities are as follows: June 30, 2016 March 31, 2015 December 31, 2015 Discount rate 3.25% 3.75% 4.00% Future compensation rate increase 3.50% 3.50% 3.50% The change in the discount rate on obligations and the difference between the actual rate of return and the discount rate on plan assets generated an actuarial gain (loss) on post-retirement benefits, included in other comprehensive earnings, as follows: April 1 to June 30 January 1 to June 30 2016 2015 2016 2015 Actuarial gain (loss) $ (62) $ 73 $ (143) $ 11 Tax recovery (provision) 17 (19) 38 (2) $ (45) $ 54 $ (105) $ 9 19 Notes to Condensed Consolidated Interim Financial Statements 7. Share capital During the three months ended June 30, 2016 we purchased 1,566,996 of our Common shares (six months ended June 30, 2016 2,629,748 Common shares) under our normal course issuer bid program, which expires on September 16, 2016. The purchase price averaged $41.11 per share and totalled $64 million for the three months ended June 30, 2016 (six months ended June 30, 2016 $43.47 per share and $114 million).

Notes to Consolidated Financial Statements (continued) 8. Insurance proceeds Our WestPine MDF mill, located in Quesnel British Columbia, was closed due to a fire on March 9, 2016 and will remain closed until repairs are complete. The mill is insured for property damage and business interruption. For the three and six months ended June 30, 2016 the impact on pre-tax earnings is as follows: Estimated business interruption, less policy deductible $ 6 Estimated gain on disposal of equipment (note 9) 5 $ 11 20 Notes to Condensed Consolidated Interim Financial Statements Estimated business interruption insurance is recorded as a reduction of cost of products sold in each period the mill remains closed. Estimated insurance proceeds to be spent to replace equipment are accounted for as proceeds of disposition, and the resulting gain has been included in other income. The final amount of the insurance claim will be determined after the mill reconstruction is complete and the mill returns to expected production rates. 9. Other April 1 to June 30 January 1 to June 30 2016 2015 2016 2015 Foreign exchange gain (loss) on working capital $ $ (2) $ (10) $ 9 Foreign exchange gain (loss) on intercompany financing 1 (1) (1) (18) 4 Foreign exchange gain (loss) on long-term debt 2 5 28 (27) Gain on disposal of WestPine equipment (note 8) 5 5 Gain (loss) on power agreements 18 (19) (12) Other 1 1 5 $ 7 $ 21 $ (9) $ (26) 1. Relates to US$200 million of financing provided to our U.S. operations. IAS 21 requires that the exchange gain or loss be recognized through earnings as the financing is not considered part of our permanent investment in our U.S. subsidiaries. The balance sheet amounts and related financing expense are eliminated in these consolidated financial statements. In March 2016 the termination of our three-year power strip agreement was negotiated. In addition, Capital Power Corporation gave notice of its intent to terminate its role as buyer of the Sundance C Power Arrangement effective March 24, 2016. As a result of this termination, our role as a party to the Power Syndicate Agreement (Sundance C) also terminated. These agreements had provided us with a portion of the electricity generated from two power plants in Alberta at substantially predetermined rates. Prior to the termination we recorded the agreements at fair value with the resulting gains or losses being recorded through other income. As at the release date of these condensed consolidated financial statements, we have been advised that the Balancing Pool is investigating the circumstances associated with the termination and the Balancing Pool may challenge the validity of the termination or the effective date of the termination. A change in the effective termination date could result in an additional loss. The amount of such loss is not reasonably determinable and will be recorded through earnings at such time as it can be determined.

10. Tax provision The tax provision differs from the amount that would have resulted from applying the British Columbia statutory income tax rate to earnings before tax as follows: April 1 to June 30 January 1 to June 30 2016 2015 2016 2015 Income tax expense at statutory rate of 26% $ (31) $ (9) $ (45) $ (27) Non-taxable amounts 8 (2) 10 (2) Rate differentials between jurisdictions and on specified activities (2) 1 (4) 1 Increase in Alberta provincial tax rate (7) (7) Unrecognized capital losses 1 (3) Other 3 (1) 3 (1) Tax provision $ (22) $ (18) $ (35) $ (39) 11. Earnings per share Basic earnings per share is calculated based on earnings available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding. Diluted earnings per share is calculated based on earnings available to Common shareholders adjusted to remove the actual share option expense (recovery) charged to earnings and after deducting a notional charge for share option expense assuming the use of the equity-settled method, as set out below. The diluted weighted average number of shares is calculated using the treasury stock method. When earnings available to Common shareholders for diluted earnings per share are greater than earnings available to Common shareholders for basic earnings per share, the calculation is anti-dilutive and diluted earnings per share are deemed to be the same as basic earnings per share. April 1 to June 30 January 1 to June 30 2016 2015 2016 2015 Earnings Basic $ 98 $ 14 $ 140 $ 63 Share option expense (recovery) (28) 8 (25) 6 Equity-settled share option adjustment (3) (2) Diluted $ 70 $ 22 $ 112 $ 67 Weighted average number of shares (thousands) Basic 80,867 83,530 81,574 83,529 Share options 812 1,350 888 1,391 Diluted 81,679 84,880 82,462 84,920 21 Notes to Condensed Consolidated Interim Financial Statements Earnings per share (dollars) Basic $ 1.22 $ 0.17 $ 1.72 $ 0.76 Diluted $ 0.86 $ 0.17 $ 1.36 $ 0.76

Notes to Consolidated Financial Statements (continued) 12. Segmented information Pulp & Corporate Lumber Panels Paper & Other Total April 1, 2016 to June 30, 2016 Sales To external customers $ 771 $ 126 $ 214 $ $ 1,111 To other segments 24 2 $ 795 $ 128 $ 214 $ 22 Notes to Condensed Consolidated Interim Financial Statements Operating earnings before amortization $ 113 $ 21 $ 4 $ 30 $ 168 Amortization (35) (3) (9) (1) (48) Operating earnings 78 18 (5) 29 120 Finance expense (4) (1) (2) (7) Other 2 5 1 (1) 7 Earnings before tax $ 76 $ 22 $ (6) $ 28 $ 120 April 1, 2015 to June 30, 2015 Sales To external customers $ 675 $ 134 $ 220 $ $ 1,029 To other segments 27 2 $ 702 $ 136 $ 220 $ Operating earnings before amortization $ 45 $ 21 $ 8 $ ( 11 ) $ 63 Amortization (32) (4) (9) (45) Operating earnings 13 17 (1) ( 11 ) 18 Finance expense (4) (1) (2) (7) Other (1) 1 17 4 21 Earnings before tax $ 8 $ 17 $ 14 $ ( 7 ) $ 32

Pulp & Corporate Lumber Panels Paper & Other Total January 1, 2016 to June 30, 2016 Sales To external customers $ 1,500 $ 262 $ 426 $ $ 2,188 To other segments 53 4 $ 1,553 $ 266 $ 426 $ Operating earnings before amortization $ 213 $ 36 $ 18 $ 29 $ 296 Amortization (72) (6) (18) (1) (97) Operating earnings 141 30 28 199 Finance expense (9) (2) (4) (15) Other income (3) 3 (22) 13 (9) Earnings before tax $ 129 $ 31 $ (26) $ 41 $ 175 January 1, 2015 to June 30, 2015 Sales To external customers $ 1,330 $ 263 $ 450 $ $ 2,043 To other segments 53 4 $ 1,383 $ 267 $ 450 $ Operating earnings before amortization $ 162 $ 47 $ 38 $ ( 12 ) $ 235 Amortization (65) (7) (19) (1) (92) Operating earnings 97 40 19 ( 13 ) 143 Finance expense (9) (2) (4) (15) Other 2 (2) (3) (23) (26) Earnings before tax $ 90 $ 36 $ 12 $ ( 36 ) $ 102 The geographic distribution of external sales is as follows 1 : April 1 to June 30 January 1 to June 30 2016 2015 2016 2015 Canada $ 251 $ 228 $ 498 $ 446 United States 656 551 1,276 1,084 China 117 166 233 330 Other Asia 71 68 148 148 Other 16 16 33 35 $ 1,111 $ 1,029 $ 2,188 $ 2,043 1. Sales distribution is based on the location of product delivery.

WEST FRASER TIMBER CO. LTD. TEL: 604.895.2700 FAX: 604.681.6061 www.westfraser.com