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Fortress Updates Operations at Specialty Cellulose Mill

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Fortress Paper Ltd., Vancouver, B.C., Canada, this week issued an update of operations at its Fortress Specialty Cellulose Mill in Thurso, Qué., Canada. During the second quarter, the turbine component of the cogeneration project was successfully synchronized to the power grid on more than one occasion and has operated up to 4 megawatts without incident. The turbine will continue to undergo a series of additional tests by the manufacturer.

Due to an unexpected mechanical failure of the high pressure water pump and the backup pump, the cogeneration project will not be completed by the end of the second quarter as previously anticipated. The company is currently implementing multiple solutions to resolve this issue as quickly as possible and is working closely with the supplier, who has undertaken a comprehensive review of the water pump.

As the current water pump supplier expects the water pump to be operational in mid-July, the company anticipates its cogeneration facility producing power before the end of July. However, to mitigate the potential risk of further delays caused by the current water pump repair not being resolved by such date, the company has ordered another pump from another supplier, which should be delivered in approximately 10 weeks and require approximately one week to install. The company will proceed with the mandatory 100 hour grid test upon the installation of the repaired or replaced water pump.

Chadwick Wasilenkoff, chairman and CEO of Fortress Paper, noted that "while this further delay in the startup of the cogeneration facility is frustrating, we remain confident that in the near term this pump will be repaired or replaced. Once the cogeneration facility is operational, we will see production costs at the mill improve towards our originally targeted cost structure."

Fortress Paper operates internationally in two business segments—dissolving pulp and security paper products. The company operates its dissolving pulp business at the Fortress Specialty Cellulose Mill in Canada, which is also in the process of expanding into the renewable energy generation sector with the construction of a cogeneration facility. The company also is seeking to expand its dissolving pulp capacity with the recent acquisition of Fortress Global Cellulose Mill at Lebel-sur-Quévillon, Qué., which the company is evaluating to convert into a dissolving pulp mill and re-start the cogeneration facility.

The company operates its security paper products business at the Landqart Mill in Switzerland, where it produces banknote, passport, visa, and other brand protection and security papers, and at its high security production and research facility in Canada, where it manufactures optically variable thin film material.


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