Enhanced Audit Report for CAN/CSA...

#R145-1.12.06 Rev.06

Project No. 1046539-04

February 14, 2013

Mr. Dave TremblayGilbert Smith Forest Products Ltd.411 BorthwickP.O. Box 689Barriere, British ColumbiaCAN, V0E 1E0

SUBJECT: REGISTRATION PROGRAM

Dear Mr. Tremblay,

Please find attached the Audit Report raised as a result of our 24 Month Surveillance Audit of your management system to the CAN/CSA - Z809-2008 standard conducted in your Barriere facility on February 5-7, 2013.

We thank you and your organization for the support and co-operation given during the audit.

Best regards,SAI Global

Will Sloan

Team LeaderEncls.

SAI GLOBAL Confidential

P.O. Box 36002, 10991 No. One RoadRichmond, BC CAN V7E 1S0Telephone: 778-297-5524Facsimile: 778-297-1694

#R145-1.12.06 Rev.06

SUSTAINABLE FOREST MANAGEMENT SYSTEM

CAN/CSA-Z809-2008

Auditee: Gilbert Smith Forest Products Ltd.Address: 411 Borthwick P.O. Box 689

Barriere British Columbia CAN V0E 1E0

Contact: Mr. Dave TremblayDate(s) of Audit: February 05, 2013 to February 07, 2013Total Number of Audit Days: 2.5Audit Team Leader: Will SloanType of Audit: 24 Month Surveillance AuditAudit Frequency: 12 MonthsSIC / NACE Code: 0811 0851 A02.0 A02.0

REPORT CONTENTS

1. Executive Summary2.. Description of the Defined Forest Area (DFA)3. Organization 4. Audit Findings5. General Assessment and Recommendation

REPORT DISTRIBUTION

Gilbert Smith Forest Products Ltd.SAI GLOBAL FileWill Sloan

Statement of ConfidentialityThe information contained in this report is privileged and confidential and intended only for the use of the organization to who it is addressed. If you are not the intended recipient, you are hereby notified that any distribution, copying, disclosure or taking of any action in reliance on the contents of this transmission is strictly prohibited and review by any individual other than the intended recipient shall not constitute waiver of privilege. If you have received this report in error, please notify us immediately and return it to us.

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SECTION 1 - EXECUTIVE SUMMARY

Scope # Scope Description1 Forest management activities - planning, harvesting, road construction,

transportation and silviculture on the Defined Forest Area encompassing Forest License A18692, Forest License A89106, Timber License TO713 and all Non-replaceable Forest Licenses managed by the company.

Site:Gilbert Smith Forest Products Ltd.411 BorthwickP.O. Box 689BarriereBritish ColumbiaCAN, V0E 1E0

Summary of Audit Findings:A 24 Month Surveillance audit was conducted on February 5-7, 2013 on the Gilbert Smith Forest Products Ltd., Nicola-Thompson-Fraser sustainable forest management system. No nonconformance’s or Areas of Concern were noted, however 3 Opportunities for Improvement were identified. The audit team found that Gilbert Smith Forest ProductsLtd. SFM system generally conforms to the requirements of CAN/CSA Z809-2008 and adheres to the company’s requirements; 5 positive attributes of the management system were also noted.

Recommendations:

The results of the Surveillance Audit indicate that the Management System of GilbertSmith Forest Products Ltd. is suitable and effective and will continue to be recommended for registration to CAN/CSA-Z809-2008.

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SECTION 2 - DESCRIPTION OF THE DEFINED FOREST AREA (DFA):

Geographic Locations, Forest Types, Size, Legal Tenure and SLF Description:

Description of the Area for the Nicola Thompson Fraser SFM Plan

The Kamloops TSA is located in south central BC and covers approximately 2.77 million hectares of the Southern Interior Forest Region. Ranging from Logan Lake in the south to Wells Gray Park and TFL 18 in the north-west, the TSA includes the Blue River area and surrounds TFL 35. The TSA is bounded by the Columbia Mountains to the east and the Cariboo Mountains area to the west.

Administratively, the Kamloops TSA falls within the jurisdiction of the Thompson Rivers Forest District. The topography of the Kamloops TSA is diverse ranging from hot, dry grasslands in the valley bottoms in the south to wet rugged mountains in the north. The TSA is bisected by the North Thompson River which joins the South Thompson River at Kamloops. Lush spruce and cedar forestsin the Engelmann Spruce-Subalpine Fir, Interior Cedar-Hemlock and Sub-boreal Spruce subzones dominate the forests on each side of the North Thompson River valley. Dry Douglas-fir and lodgepole pine forests of the Interior Douglas-fir and Montane Spruce subzones are extensive on the lower elevation slopes and plateau areas. Bunchgrass subzones cover the lowest grassland areas of the Thompson valleys. The diverse landscapes of the Kamloops TSA provide a variety of wildlife habitats, including grasslands, lakes and wetlands, forested slopes, and alpine areas. Grizzly bear, black bear, mule deer, moose, bighorn sheep, and many smaller furbearers, as well as many species of birds and amphibians, are common. In addition, the TSA includes portions of the range of three herds of mountain caribou.Water is a primary and fundamental resource of the Kamloops TSA. Numerous rivers, lakes and streams support many species of fish, such as rainbow trout, kokanee, steelhead, brook trout and white fish. Significant demands are also placed on water resources for domestic, agricultural and mining purposes. There are currently 16 community watersheds within the Kamloops TSA. Extensive grassland and forested areas provide important forage for both livestock and wildlife. Ranching continues to play an important role in the TSA. The range program in the TSA is the second largest in the province and has a significant impact on the local economy. Parks, recreation sites and trails, in addition to roaded and non-roaded areas, provide opportunitiesfor numerous outdoor activities. Residents and tourists enjoy recreation activities such as hiking, camping, hunting, fishing, wildlife viewing, boating, mountain-biking, snowmobiling, downhill and cross country skiing, and ski touring. Major highways pass through areas of exceptional natural scenery, providing easy access to national and provincial parks, such as Wells Gray Provincial Park and Jasper National Park.Excluding Wells Gray Park, the timber harvesting land base makes up about 45% of the Kamloops TSA (see table below). Apart from lodgepole pine stands, which occupy about 30% of the timber harvesting land base, other commonly found tree species within the TSA include Douglas-fir (33%), spruce (18%), ponderosa pine, western red cedar, western hemlock, trembling aspen and subalpine fir.

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Gilbert Smith - DFA Species Type

% Species Composition for FL 18692

Western Redcedar / Hemlock

White Pine

Lodgepole Pine

Douglas Fir

Spruce

Sub-alpine Fir

Deciduous

Kamloops DFA

Timber harvesting land base determination (from most recently available TSR data package – Kamloops TSA) Land Classification

TSR 3 Reduction (ha) TSR 4 no harvest reduction

Total Area 2,666,375 2,770,266Wells Gray Provincial Park 528,000 539,102Total Area Without Wells Gray Park

2,138,375 2,231,164

Non-crown 364,894 367,187Non-productive, non-forest 364,371 356,420Existing Roads 24,045 28,553Non-productive Reductions 753,310 752,159Productive Forest 1,385,065 1,479,005Parks 0 68,021Non-commercial brush 2,466 1,650Inoperable 95,709 96,471Environmentally Sensitive 108,967 66,656Deciduous 37,878 0Low Site Growing Potential 31,141 30,138Non-merchantable stands 45,938 79,435Riparian 21,841 21,527Hudson's Bay Trail 103 342Tod Mountain (Sun Peaks) 159 2,148Community Watershed Intakes 2 4

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Wells Gray Community Forest 0 11,128Old Growth Management Areas

0 92,177

Total Productive Reductions 344,204 469,700Long Term THLB 1,040,861 1,009,305

Area of DFA:

Gilbert Smith portion of the DFA =145,644 ha

Legal Tenure / Licence Description:

Forest License A18692, Forest License A89106, Timber License TO713 and NRFL’s.

Volume and Species Harvested):

± 112,000 m3 of Cedar, Douglas –fir, Spruce and Pine on an annual basis.

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SECTION 3 - ORGANIZATION:

Description of the DFA Workforce:Company forest management activities and Contract harvesting road building and silviculture activities.

Management Objectives and Responsibilities on the DFA:As described in the scope.

Aboriginals Consultation Process:

Ministry of Forests and Range responsibility with company internal processes of referrals and consultation.

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SECTION 4 - AUDIT FINDINGS:

Scope # Registration Scope Description1 Forest management activities - planning, harvesting, road

construction, transportation and silviculture on the Defined Forest Area encompassing Forest License A18692, Forest License A89106, Timber License TO713 and all Non-replaceable Forest Licenses managed by the company.

Audit Objective:

Stage 2 – 24 Month Surveillance To confirm the management system complies with the applicable elements of the Standard; to confirm the organization complies with its own policies and procedures; to confirm the management system is suitable for the organization; to confirm that the management system is suitable and effective, and enables the client to achieve its own objectives.

Audit Criteria: CSA Z809:2008

Audit Scope: Facilities/organizational units/functional units audited are located 411 Borthwick P.O. Box 689, Barriere British Columbia, CAN V0E 1E0 on the Nicola-Thompson-Fraser SFM area

Description of SAI Global and the SAI Global Audit Team:

SAI Global is a third party management system certification Registrar. Established in 1984, SAI Global has worked with thousands of organizations in North America and around the world, issuing registration certificates to those that meet international and national management system standards.

The SAI Global Sustainable Forest Management audit team members bring with them considerable experience in the area of sustainable forest management and environmental management systems auditing. Audit teams are comprised of certified auditors and registered professional foresters. All audit team members are subject to strict confidentiality and conflict of interest agreements.

The following personnel conducted this audit:

Audit Team

Position NameTeam Leader Will Sloan

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Audit Coverage:

Noted Deviations from the Audit Plan:

All elements identified in the audit plan were audited; in addition, 5.2 e, List of Interested Parties, was added as a result of PAG and First Nation comments.

Operations / Cut-Blocks Visited during the field audit include:

A89106, CP 704, Blk 3: Not active, ½ block complete. Reviewed:o Stand retention against SP requirements;o Boundary;o Utilization;o VQO against SP requirements.

A89106, CP 704, Blk 2: Harvest complete, Nov/Dec 2012. Reviewed:o Stand retention against SP requirements;o Boundary;o Private land identification;o Utilization.

A89106, CP 704, Blk 4: Eco Sense Holdings Ltd. Active bunching, skidding, processing, loading, hauling and piling. Interviewed owner/buncher operator and foreman/buncher operator/dozer operator. Reviewed:

o Stream crossing skid crossing installation and removal;o Stand retention against SP requirements;o Site disturbance against SP requirements;o Boundary;o Operational controls such as Regionally Important Wildlife handout,

maps, SP’s and Harvest Plans;o Records for pre-work meetings, MSDS, training;o Fuel management;o Operator awareness and knowledge of block issues;o Private land identification;o Utilization;o Riparian management around NCD’so OGMA retention;o Deletions from THBL, as applies to PAS.

Personnel (ie Staff/contractors) interviewed in the field:

Dave Tremblay, GSFP Woodlands Manager; Glenn Foss, GSFP Operations/Planning Supervisor, EMS Coordinator; Owner/buncher operator, Eco Sense Holdings; Foreman/operator, Eco Sense Holdings.

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Members of the public participation process interviewed:

One member of the public attended the field portion of the audit and was interviewed:

Not enough buffers around special sites (a general observation of forestry practices and not specific to GSFP);

Slow to make changes to SFMP; Facilitator is excellent, going out of the way to explain to PAG members; Audits summaries now have acceptable level of detail, and improvement over

past practices; Meeting minutes are accurate and capture a suitable level of detail; Size of waste piles; what are incentives/penalties for excessive waste

o Possibly a presentation to PAG on how waste is determined and penalized would be beneficial

FN contacts should be reviewed to make sure that information is going to the right person;

Retention is good, especially on CP 704, Blk 4. Good to see more clumps rather than single tree/stub retention;

GSFP should consider adding track to the Regionally Important Wildlife package in addition to the photos. This would help with identification of elusive species especially in snow conditions.

Provincial Government personnel interviewed:

Richard Freeman, Compliance and Enforcement Officer, Forests, Lands and Natural Resource Operations, Thompson/Okanagan Clearwater

No open contraventions and none in last 12 months; No public complaints in last 12 months; Focus of C&E inspections is high risk, such as fire and self-reported incidents; Only 1 inspection in last year, for compliance to Wildfire Act; Generally a good operator; Good at correcting issues when they are identified;

Aboriginal People interviewed:

First Nation participation: GSFP sent the SAI FN letter to the 7 FN contacts for their portion of the DFA. One response was received, from Simpcw FN requesting that one of their band members attend the field portion of the audit. This individual has not been involved in the SFM process to date and can not answer the FN specific communications of the Standard. However, he did provide the following comments:

Arnie Bowie, Forest Technician, Simpcw Resource Group (SRG) GSFP is compliant and going beyond legal requirements; He is thinking of joining the PAG;

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SFM process should review the FN contacts to determine if information is being given to the right people. For example, with his band Simpcw, SFM information is only going to Chief and Council whereas if SRG was included it may receive more attention;

Size of waste piles.

No other response was received from FN, including those listed as active members in PAG membership list. GSFP has working relationships with the Simpcw FN, including managing of the band’s NRFL’s.

VOITs verified (field & office)

Indicator Description/Target Number Field and/or Office

Improvement

All Indicators are Z809:2008 CORE indicators unless otherwise noted.NA indicates Not Audited during this surveillance audit

1.1.1 Ecosystem Area by Type, Target 1.

O TSR reporting. Variance: none.

1.1.2 Forest Area by type or species composition, Target 2.

O Variance: none

Reviewed with Silviculture/Planning Supervisor

1.1.3 Forest area by seral stage or age class, Targets 3 and 4.

O Variance:Two age classes meet this target within 50 years (attaining target sooner than 50 years seen as a benefit).TSR reporting.

Reviewed with Operations/Planning Supervisorfor OGMA replacement process.

1.1.4 Degree of within-stand structural retention or age class, Target 5a and 5b.

NA VarianceFor Targets 5a and 5b: 10%

1.2.1 Degree of habitat protection for selected focal species, including species at risk, Targets 6, 7 and 8

O Variance: as provided for within the legal framework

Reviewed with Operations/Planning Supervisor

1.2.2 Degree of suitable habitat in the long term for selected focal species, including species at risk, Targets 7, 8 and 9.

O Variance: as provided forwithin the legal framework.


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Improvement

1.2.3 Proportion of regeneration comprised of native species, Target 10.

NA Variance: as provided for within the legal framework.

1.2.4 Grass seeding application on newly constructed roads (non-core indicator). Target 11.

NA Variance: 3 months.

1.4.1 Proportion of identified sites with implemented management strategies, Targets 6, 12 a & b and 13.

NA, Target 6 not

applicable to Kamloops

TSA

Variance12b target to be met on at least 90% of cutblocks where ecosystems identified as “prioritized Red-listed ecological communities” occurred.For remaining targets there is no variance other than what is provided for within the legal framework.

1.4.2 Protection of identified sacred and culturally important sites, Target 14.

O Variance: none.Reviewed with Operations/Planning Supervisor

1.4.3 Management and or protection of special geological features (non-core indicator). Target 15.

NA Variance: none

2.1.1 Reforestation Success, Targets 16 and 17.

O, Target 17 only

Variance16. 12 months beyond the 3-year target17. None, other than what is provided for within the legal framework.

Reviewed with Silviculture/Planning Supervisor

2.2.1 Additions and deletions to the forest area, Target 18.

NA Variance: none

2.2.2 Proportion of the calculated long-term sustainable harvest level that is actually harvested, Target 19.

NA Variance: According to the Cut Control Regulation and Policy.

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Improvement

2.2.3 Level of conformance to riparian management area and lakeshore commitments contained within plans* (non-core indicator), Target 20.

* Plans prepared by licencees are in accordance with legal and higher level plan requirements

NA Variance: 5%.

3.1.1 Level of soil disturbance, Targets 17, 21 and 22.

O for Target 17 only; F

Variance: noneField Reviewed:A89106, CP 704, Blk 4

3.1.2 Level of downed woody debris, Target 23

F Variance: none

Field Reviewed:A89106, CP 704, Blk 4

3.2.1 Proportion of watershed or water management areas with recent stand-replacingDisturbance, Target 24.

NA Variance: 5% of cutblocks harvested areas requiring further hydrological assessment had no further assessments completed.

3.2.2 Managing water quality through road inspections (non-core indicator). Target 25

NA Variance: none

4.1.1 Net Carbon Uptake, Targets 3, 16 and 18.

O, Target 3 only

Variance:Two age classes meet this target within 50 years (attaining target sooner than 50 years seen as a benefit).TSR reporting.

Reviewed with Operations/Planning Supervisorfor OGMA replacement process.

5.1.1 Quantity and quality of timber and non-timber benefits, products, and services produced in the DFA, Targets 19, 27, 28, 29, 30 and 31.

O Variance: for target 19, According to the Cut Control Regulation and Policy.

Reviewed with Operations/Planning Supervisor (Target 27, 30 & 31 only)

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Improvement

5.2.1 Level of investment in initiatives that contribute to community stability, Targets 19, 31, 32 and 33.

O, Target 31 only

Variance: for target 19, According to the Cut Control Regulation and Policy.

Reviewed with Operations/Planning Supervisor (Target 31 only)

5.2.2 Level of investment in training and skills development. Target 34

NA Variance: 10%

5.2.3 Level of direct and indirect employment, Targets 19, 32 and 33.

NA Variance: for target 19, According to the Cut Control Regulation and Policy.

5.2.4 Level of Aboriginal participation in the forest economy, Target 35

O Variance: none

See OFI for details


6.1.1 Evidence of a good understanding of the nature of Aboriginal title and rights, Target 27.

O Variance: none


6.1.2 Evidence of best efforts to obtain acceptance of management plans based on Aboriginal communities having a clear understanding of the plans, Target 27.

O Variance: none


6.1.3 Level of management and/or protection of areas where culturally important practices and activities (hunting, fishing, gathering) occur, Targets 14 and 27.

O Variance: none


6.2.1 Evidence of understanding and use of Aboriginal knowledge through the engagement of willing Aboriginal communities, using a process that identifies and manages culturally important resources and values, Targets 14 and 27.

O Variance: none


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Improvement

6.3.1 Evidence that the organization has co-operated with other forest-dependent businesses, forest users, and the local community to strengthen and diversify the local economy, Targets 28, 29, 31, 36 and 37.

O, Target 31, 36 & 37 only

Variance:36. 10%37. 5%

Reviewed with Operations/Planning Supervisor (Target 31, 36 & 37 only)

6.3.2 Evidence of co-operation with DFA-related workers and their unions to improve and enhance safety standards, procedures, and outcomes in all DFA-related workplaces and affected communities, Target 38.

NA Variance: none

6.3.3 Evidence that a worker safety program has been implemented and is periodically reviewed and improved, Target 39

O Variance: none

See OFI for details


6.4.1 Level of participant satisfaction with the public participation process, Target 40.

O Variance: none


6.4.2 Evidence of efforts to promote capacity development and meaningful participation inGeneral, Targets 28 and 41

NA Variance: none

6.4.3 Evidence of efforts to promote capacity development and meaningful participation for Aboriginal communities, Targets 27, 35 and 41.

O, Targets 27 & 35 only

Variance: none


6.5.1 Number of people reached through educational outreach, Target 41.

NA Variance: none

Website is maintained:Sustainable Forestry

6.5.2 Availability of summary information on issues of concern to the public, Targets 42.

O Variance: none

Website is maintained: see above.


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http://www.for.gov.bc.ca/dcs/sustainable_forestry/sustainable_forestry.htm

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Review of Changes:

No changes were noted from the last audit, however a revised SFMP has been prepared and is in draft form but had not been approved by the PAG at the time of the audit, therefore was not included in the audit.

Summary:

The findings were discussed with Mr. Tremblay. The Audit Team Leader commenced the closing meeting by thanking the Gilbert Smith Forest Products Ltd. staff for the cooperation and courtesy extended to the audit team during the audit.

In addition, the Audit Team Leader detailed the registration process, the requirements for future surveillance audits, and the re-assessment process.

The official closing meeting was attended by the personnel listed in Attachment #2.

The SAI Global Audit Team recorded the following audit results:

Documentation Review:

The audit team reviewed the SFM documentation (interim SFM monitoring report, SFM plan) and supporting EMS documents:

Nicola Thompson Fraser SFMP dated April 2012 GSFP input of 2012 SFM Annual Report (Appendix 3 of SFMP) EMS Manual, dated December 11, 2012

Status of any previously recorded non-conformances (NCRs)

No previously recorded or outstanding NCRs.

Positive Aspects of the Management System:

Thorough Management Review with detailed meeting minutes. Commitment to initiating corrective actions for OFI’s identified in the internal

audit. Good performance against the VOITs included in the audit sample. Good interaction between the PAG member, FN, Contractor and GSFP staff was

noted during the field portion of the audit. Good understanding by the contractor, EcoSense Holdings, in their impacts on

sustainable forestry and on-block conditions.

Non-conformances:

No instances of Non Conformity were encountered during the course of this audit.

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Opportunities for Improvement (OFI):

5.2 e List of Interested Parties:

Consider reviewing the PAG list to verify the validity of the listings: for example the affiliation for Al Clarke is listed as Radio NL but he has not worked for the radio station since March, 2012; and Simpcw First Nation is listed as North Thompson Band;

Consider recording the attendance of the members listed as “active” to verify they are still active as defined by the Terms of Reference.

Indicator specific:

Target 35: 5.2.4 Level of Aboriginal participation in the forest economy. Target is Maintain and/or increase the number of working relationships. Reporting does not allow for comparison over time to see if the intent of the target of maintaining or increasing FN working relationships is occurring. Consider reviewing the target and reporting to verify they are in alignment.

Target 39, 6.3.3, SAFE certification for licensees: Consider including the SAFE Companies certificate number and expiry date as part of the reporting process.

Areas of Concern (AoC):

No instances of Areas of Concern were encountered during the course of this audit.

Please note that these Opportunities for Improvement will be reviewed as part of the preparation for the next audit.

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SECTION 5 - GENERAL ASSESSMENT AND RECOMMENDATION:

Based on the review of the company’s SFM program, and the audit results, the following recommendation is made:

Surveillance Audit:

The results of the Surveillance Audit indicate that the Management System of GilbertSmith Forest Products Ltd. is suitable and effective and will continue to be recommended for registration to CAN/CSA-Z809-2008.

An effective inter-action exists between all elements of the management system;the entire management system is effective in light of any changes and top management has demonstrated a commitment to maintain the effectiveness of the system.

Forest Areas for the Next Audit:Gilbert Smith Forest Products Ltd. operations on the Nicola-Thompson-Fraser SFM DFA.

Will SloanSAI Global Team Leader Date: February 14, 2013

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