Conifex Timber (TSE:CFF) reported a second-quarter net loss of C$9.5 million as curtailments in its lumber and power operations continued amid weak lumber prices and elevated softwood lumber duties.
The company’s loss compared with a net loss of C$9.4 million in the first quarter. Loss per share was C$0.23 in both periods. Conifex reported an EBITDA loss of C$6.3 million for the second quarter, improving from an EBITDA loss of C$7.7 million in the first quarter.
Restart Depends on Financing and Market Conditions
Conifex produced 35.8 million board feet of lumber in the first six months of 2026, representing capacity utilization of about 30%. The company said the Mackenzie Timber Supply Area has two distinct harvesting seasons, with the winter logging season representing its next opportunity to resume operations.
Shields said the timing of a restart will depend on lumber market conditions when its financing closes. The company is targeting a return to two-shift, steady-state operations before the end of 2026, an objective it believes is achievable and supportive of positive EBITDA generation.
“We remain focused on returning our employees and contractors to work as operations resume,” Shields said.
The company identified several immediate priorities:
- Securing capital to support a winter logging program.
- Building sawlog inventories sufficient to begin and sustain two-shift sawmill operations before year-end.
- Restarting its power plant and operating it continuously, seven days per week.
- Completing a series of capital projects intended to provide rapid paybacks.
Government Funding Application Underway
Conifex said it has received continued support from its existing lenders while it pursues further financing, including from government entities. PenderFund has supported the lumber business through bridge financing and credit-facility amendments, while Sierra has provided deferrals and amendments for the power generation business. The Business Development Bank of Canada has also provided additional liquidity, according to Shields.
The company is seeking funding through Canadian government programs intended to support enterprises materially affected by tariffs that cannot access other financing. Shields said Conifex’s cumulative softwood lumber duty and tariff deposits with U.S. Customs and Border Protection totaled US$49.4 million, or about C$68 million.
That amount is equal to Conifex’s lumber business borrowings and working-capital deficit, Shields said. He argued that without the cash deposits required in the United States, the company would have a more manageable financial position.
“We believe this alignment between the challenges the government programs are designed to help overcome and our current liquidity and funding pressures” supports the company’s application for favorable consideration, Shields said.
However, he cautioned that there is no assurance Conifex will receive government funding. The company plans to continue discussions with existing lenders regarding additional flexibility, including potential changes to repayment terms and amortization periods.
Cost Position and Capital Program
Shields said delivered log costs generally account for roughly two-thirds of lumber production costs. He said the Mackenzie Timber Supply Area has a structural sawlog surplus, with annual harvesting of 2.3 million cubic meters compared with Conifex’s annual consumption requirement of approximately 800,000 cubic meters.
As a result, the company believes it has fiber availability at delivered costs among the most affordable in British Columbia’s interior region.
Conifex is seeking financing for approximately C$15.3 million in capital projects, which it said are expected to have individual payback periods of two to three years. The projects include planer equipment upgrades, dry-kiln improvements and lumber-grade optimization initiatives. The company said the projects are designed to lower conversion costs, improve sawmill reliability, increase planer capacity and reduce dependence on the U.S. export market.
Shields said the projects are not assured, but if completed as planned, the capital program and the company’s fiber advantages could move its Mackenzie operation lower on the SPF lumber industry cost curve.
2027 EBITDA Outlook and Chip Market Considerations
Based on analyst consensus estimates for SPF lumber prices in 2027, lower unit costs from operating at full production, and anticipated reductions in duty deposit rates later this year and again in 2027, Conifex expects its integrated Mackenzie lumber and power site to generate positive EBITDA in 2027.
In response to a question from Raymond James analyst Christian Dreher, Shields said the most recent consensus estimate he had reviewed for 2027 SPF lumber prices was US$522. He said that, after a projected 10-percentage-point reduction in duties and a ramp-up to two-shift operations, Conifex’s implied cash cost would be “fairly close” to that level.
Shields also addressed potential pressure on wood-chip markets following pulp mill shutdowns in British Columbia. He said Conifex could face lower chip deliveries and prices, though the company has not been operating and therefore lacks recent direct experience delivering chips to customers.
Conifex’s power plant provides an alternative use for its chip production, Shields said. The company could burn all of its chips in the plant if necessary, foregoing chip-sale revenue but potentially generating strong EBITDA from power operations.
About Conifex Timber (TSE:CFF)
Conifex Timber Inc is a Canada based forestry company. It operates through two segments: Lumber and Bioenergy. The main activities of the lumbar segment include timber harvesting, reforestation, forest management, sawmilling logs into lumber and wood chips, and value-added lumber finishing. The firm’s primary activities of the bioenergy segment are the generation of electrical power and the development of other opportunities in bioenergy and bioproducts which are complementary to the company’s harvesting and manufacturing operations.
