Q1 FTP 2015 Presentation

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    This presentation contains certain forward-looking information that reflects the Company’s  current views and/or

    expectations with respect to: expectations relating to the markets the Company operates in; expected financial

    performance of the Landqart Mill and demand for its products, including but not limited to Durasafe® and the impact ofcurrency exchange rates and other market factors on the results of the Company’s  mills. Persons reading this

    presentation are cautioned that statements comprising forward-looking information are only predictions, and that the

    Company's actual future results or performance are subject to certain risks and uncertainties including, without

    limitation: those relating to potential disruptions to production and delivery, including as a result of equipment failures,

    labour issues, the complex integration of processes and equipment and other factors; fluctuations in the market price for

    products sold; trade restrictions or import duties imposed by foreign governments; labour relations; failure to meet

    regulatory requirements; changes in the market; potential downturns in economic conditions; fluctuations in the price

    and supply of required materials; foreign exchange fluctuations; availability of financing (as necessary); and other risk

    factors detailed in our Annual Information Form dated March 31, 2015 available on SEDAR at www.sedar.com and other

    filings with the Canadian securities regulatory authorities. In particular, financial forecasts and expectations are not

    indicators of future financial performance and there is no assurance that the Company’s assumptions' in support of such

    forecasts or expectations are correct, accurate or complete. These risks, as well as others, could cause actual results and

    events to vary significantly. The Company does not undertake any obligation to update any forward-looking information,

    except as required by applicable securities law.

    Unless otherwise noted, are references in this presentation to “$”  are to Canadian dollars. The selected financial

    information presented herein is qualified in its entirety by, and should be read in conjunction with, theCompany’s

     unaudited condensed consolidated financial statements as at and for the period ended March 31, 2015 and the related

    notes thereto and Management’s Discussion & Analysis, which are available on SEDAR

    This presentation contains reference to “EBITDA”, “adjusted net loss” and “adjusted net loss per share”, which are non-

    GAAP financial measures. For disclosure of the manner in which these measures are calculated and a reconciliation to net

    loss, please refer to the MD&A for the period ended March 31, 2015, available on SEDAR.

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    The financial information contained herein has been prepared in accordance with International Financial Reporting Standards.

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    • Total sales were $73.9 million for the first quartercompared to $ 74.4 million for the fourth quarter of

    2014.

    • Cash on hand excluding restricted cash at March 31,

    2015 was $32.8 million compared to $44.9 million at

    December 31, 2014.

    • The Company had $22.0 million in restricted cash at

    March 31, 2015 compared to $14.0 million at

    December 31, 2014.

    • During the first quarter of 2015, the Company paid

    $0.4 million in interest and spent approximately $1.1

    million on capital expenditures

    (including maintenance and project).

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       M   i    l    l   i   o   n   s

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    Sales by Quarter

    2013 2014 2015

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    Quarterly Cash Balance

    Cash and cash equivalents Restricted cash

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    • SG&A expenses were $11.5 million for the

    first quarter of 2015 compared to $10.5

    million for the fourth quarter of 2014.

    •Personnel expenses represent approximately50% of general and administration expenses.

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    Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015

       M   i    l    l   i   o   n   s    $

    Consolidated SG&A by Segment

    Security Pulp Corporate

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       M   i    l    l   i   o   n   s    $

     Consolidated SG&A by Nature

    General and administrative Commission, sales & marketing

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    • EBITDA loss for the Dissolving Pulp Segment for the

    quarter was $3.3 million compared to $3.7 million

    EBITDA loss in the fourth quarter of 2014. Results in the

    first quarter continued to be impacted by operational

    challenges experienced during the fourth quarter of

    2014.

    • Production costs averaged $965 per ADMT of dissolving

    pulp in the first quarter. Production costs were impactedby operational challenges and downtime of the turbine,

    among other factors.

    • Sales totaled $37.0 million for the quarter compared to

    $38.5 million for the fourth quarter of 2014.

    • The cogeneration facility generated $3.4 million in sales

    revenue from the generation of power in the first quarter

    compared to $3.1 million in the fourth quarter of 2014.

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    Quarterly EBITDA

    Dissolving Pulp Segment

    2013 2014 2015

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     Sales by Quarter

    Dissolving Pulp Segment

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    • The Company sold 38,957 air dried metric tonnes

    (“ADMT”) of dissolving pulp in the first quarter.

    The FSC mill produced 34,918 ADMT of dissolvingpulp during the first quarter.

    • The FSC mill held 7,910 ADMT of dissolving pulp

    inventory at March 31, 2015 compared to 11,949

    ADMT of Dissolving Pulp inventory at December

    31, 2014.

    ADMT

    ADMT

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    Quarterly Shipments

    Dissolving Pulp Segment

    Dissolving Pulp NBHK

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    Ending Inventory

    Dissolving Pulp Segment

    Dissolving Pulp NBHK

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    Although dissolving pulp prices decreased in 2014, strong and stable demand for cellulose base fibre has

    helped mitigate price erosion for dissolving pulp. Other factors that are contributing to stabilizing price erosion

    while new VSF capacity is being absorbed include:

    • Global demand growth for viscose pulp coupled with decelerating capacity expansion;

    • MOFCOM duty and current price levels (including low dissolving pulp prices and an increase in bleached

    hardwood kraft pulp prices) have resulted in some pulp producers moving away from VSF grades to

    produce fluff pulp and paper pulp;

    • Chinese dissolving pulp producers are running at less than 50% of global capacity due to cost

    competitiveness, consequently China’s dependence on importing dissolving pulp increased from 2013 to

    2014;

    • Chinese cotton linter pulp production in 2014 was at its lowest levels in the last seven years with operatingrates down as low as 40% due to cost increases, environmental challenges and plant closures;

    • Previously announced conversion projects being delayed indefinitely, while a Canadian dissolving pulp

    producer announced an extended shutdown in 2014 due to market conditions; and

    • Recent improvements in VSF pricing in April 2015.

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    • Replacement of a section of the lime kiln in the chemical preparation area is scheduled for repair

    during the October 2015 annual maintenance shut-down. Until such time, management is taking

    measures to maximize availability of the chemical preparation area in order to increase productivity.

    • As management expects the dissolving pulp market to remain below long term trend pricing in the

    near term, the focus continues to be on ongoing cost reduction initiatives to position the mill further

    down the cost curve.

    • Management estimates that a 1% change in the US dollar against the Canadian dollar would have

    impacted the operating income for the period ended March 31, 2015 by approximately $0.3 million.

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     -

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     Sales by Quarter

    Security Paper Products Segment

    Sales Shipments

    • EBITDA for the Security Paper Products Segment for the

    quarter was $2.3 million compared to $3.2 million in the

    fourth quarter of 2014.

    Sales were $36.8 million for the quarter compared to$36.0 million for the fourth quarter.

    • The Landqart mill sold 2,715 tonnes of security paper in

    the fourth quarter, compared to 2,270 tonnes in the

    fourth quarter.

    • Sales for the first quarter of 2015 were negatively affected

    by a strengthening of the Swiss franc and product mix.

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    Quarterly EBITDA

    Security Paper Products Segment

    2013 2014 2015

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    • The Landqart mill continues to build on a strong order book for 2015 comprised of a mix of new and

    repeat orders. Multiple new orders were received in the first quarter of 2015, totaling approximately

    9,500 tonnes of production in 2015 and 2016.

    • Production of Durasafe® for the substrate of the ninth series of the Swiss franc for the Swiss National

    Bank (“SNB”) began in 2014 and is expected to continue in 2015 and beyond.

    • Recent unexpected monetary policy changes in Switzerland resulted in a material appreciation of the

    Swiss franc against the euro in January of 2015. The Landqart mill is exposed to foreign currency

    exchange fluctuations, as a significant amount of its sales are denominated in euros and some major

    costs are denominated in Swiss francs.

    • The Landqart mill has implemented a foreign exchange counter measure program which has

    identified areas to materially mitigate the negative financial impact in both the short and medium

    term.

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    Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015

    Cash 43.1 41.7 51.4 44.9 32.8

    Restricted Cash 17.8 16.7 20.3 14.0 22.0

    Working Capital 106.3 87.9 88.0 86.6 80.1

    Total Debt* 230.7 232.1 234.3 232.3 235.2

    • The company has performance bonds in the amount of €15.9 million secured by

    cash.

    • The Company anticipates that approximately $4.7 million in cost improvement

    capital expenditures will be required during the remainder of 2015.

    • The Company ensures it remains in compliance with all of its existing debt

    covenants in order to facilitate future access to capital.

    • Business maintenance capital expenditures are expected to be $5.0 million at

    Fortress Specialty Cellulose Mill and $3.0 million at Landqart Mill annually.

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    *Total debt is net of unamortized borrowing costs (Q1 2015: $11.5 million)

    $ (Millions)

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    Q1 2015

    Year $ millions

    2015 1.3

    2016 42.2

    2017 37.9

    2018 10.9

    2019 79.8

    Thereafter 74.5

    Total 246.6

    On December 3, 2014, the Fortress Specialty Cellulose Mill entered into

    an amendment agreement with Investissement Quebec in respect of its

    $102.4 million project financing loan.

    Under the new agreement:

    • No principal repayments will be made or interest accrued or paid

    on the balance of the loan until December 31, 2016.

    • Maturity date of the loan was extended from April 30, 2020 to

    December 31, 2026 with equal quarterly payments beginning in

    2017.

    • The Company cancelled 715,000 outstanding warrants and issued

    1,000,000 replacement warrants to the lender.

    • The Company recorded a debt extinguishment gain of $2.6 millionat December 31, 2014.

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    Repayments of principal for debt outstandingas at March 31, 2015 are required as follows: