Conifex Timber (TSE:CFF) reported a narrower loss for the third quarter of 2026 as its Mackenzie sawmill and power plant remained idle, and said it is seeking additional funding to support a planned sawmill restart in early 2027.
The company posted a net loss of CAD 7.9 million, or CAD 0.19 per share, compared with a CAD 9.5 million loss, or CAD 0.23 per share, in the second quarter. Its EBITDA loss was CAD 5.7 million, down 10% from the prior quarter and 25% from the first quarter, Chairman and CEO Ken Shields said.
Shields said the power plant was shut down for scheduled major maintenance during the third quarter and was expected to return online within days, delivering power to the grid and generating revenue in the fourth quarter.
Funding for a Sawmill Restart
Conifex remains committed to reaching steady-state, two-shift operations at its Mackenzie sawmill complex in early January 2027, Shields said. Its immediate priorities include securing additional capital to build enough log and lumber inventory to sustain that level of operations in 2027 and beyond.
Shields said the Business Development Bank of Canada recently provided CAD 19 million of additional liquidity, while existing lenders PenderFund and Fiera have continued to support the lumber and power businesses, respectively.
The company also arranged CAD 30 million in financing during the third quarter through the Canada Enterprise Emergency Funding Corporation’s Large Enterprise Tariff Loan program. Shields said no scheduled principal repayments are required until September 2028, after which the loan is repayable from a portion of lumber business cash flow. The financing also allows interest to be added to principal until Conifex reaches a specified trailing 12-month EBITDA level.
Shields said Conifex is seeking further government funding but cautioned that there is no guarantee it will obtain additional support. The company also plans to work with existing lenders to seek more flexibility under its credit facilities.
Duties and Capital Projects
Shields said cumulative softwood lumber duty and tariff deposits of US$49.4 million, or approximately CAD 69 million, have materially affected Conifex’s operations. As of September 30, lumber business borrowings from PenderFund, the Business Development Bank of Canada and draws on the tariff loan totaled CAD 67 million, net of cash, he said.
Asked whether the company could monetize some of the value of its duty deposits, Shields said Conifex had ideas but that it was premature to disclose them. He described the deposits as a potential source of liquidity relief if the company needs to consider other avenues.
Conifex is also pursuing capital projects intended to lower conversion costs, improve sawmill reliability, increase planer capacity and reduce reliance on the U.S. export market. Shields said the projects represent approximately CAD 15.3 million of investment, with forecast payback periods of two to three years for individual projects.
Last month, the company entered an agreement with Pacific Economic Development Canada for CAD 10 million in interest-free, unsecured repayable funding and a CAD 1 million non-repayable grant. Shields said the capital projects are largely financed.
Outlook for Lumber Markets
Conifex expects its integrated Mackenzie lumber and power site to record negative EBITDA early in the 2027 restart and ramp-up year before moving to positive EBITDA in 2028. Shields tied that outlook to analyst price estimates, lower unit costs from higher production, an expected decline in duty deposit rates late in 2027 and benefits from completed capital projects.
President and Chief Operating Officer Andrew McLellan said the company expects weaker U.S. demand and continued Canadian supply contractions, with lumber prices steady and flat in 2027 and “a bit of a bounce” in 2028.
In response to an analyst’s question about costs across British Columbia, Shields estimated that industry costs were below US$450 per 1,000 board feet before duties and closer to US$500 including duties. He noted that duty expense rates differ among producers.
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.
