Conifex Secures C$30M Federal Loan to Support Mackenzie Sawmill Restart

Conifex Timber Inc. has secured up to C$30 million in federal financing to strengthen liquidity and support plans to restart its Mackenzie sawmill and adjoining 36-megawatt biomass power plant in British Columbia. The financing comes after a prolonged operating curtailment and a second quarter marked by sharply lower lumber production, negative EBITDA and limited liquidity.

MONTREAL (Scrap Monster): Canadian forest-products producer Conifex Timber Inc. has secured up to C$30 million in federal financing through Canada’s Large Enterprise Tariff Loan facility as it works toward restarting its Mackenzie, British Columbia sawmill.

The financing gives Conifex additional liquidity following a prolonged operating curtailment at Mackenzie and is intended to support operations while the company works to restore normalized two-shift production.

Conifex also plans to resume generation at its adjacent 36-megawatt biomass power plant when the sawmill restarts.

C$30 Million Loan Provides New Liquidity

The seven-year loan carries a market-based interest rate and is secured by substantially all of Conifex’s property.

Portions of the facility will rank either alongside, or behind, the company’s existing secured lenders.

The Canada Enterprise Emergency Funding Corporation will provide the financing through the Large Enterprise Tariff Loan program, which was created to support large Canadian businesses facing tariff-related disruption.

Canada’s Department of Finance said Conifex supports approximately 260 direct jobs in Mackenzie and that most of its products are exported to the United States, leaving the company exposed to ongoing softwood-lumber trade measures.

Restart Is Planned, but Not Yet Guaranteed

Conifex said the new financing gives it the confidence to plan a restart and focus on the work required to reestablish normalized two-shift operations at the Mackenzie mill.

The company has not announced a firm restart date.

Its latest disclosure continues to treat the restart as forward-looking. Conifex cautioned that actual timing will depend on financing availability, operating conditions and the company’s ability to execute its restart plan.

Existing Lender Adds Up to C$11 Million for Mill Improvements

Conifex’s existing lumber lender has separately agreed to reimburse the company for up to C$11 million of capital expenditures designed to improve operating performance and EBITDA at the Mackenzie mill.

Conifex said access to that reimbursement depends in part on the company funding its required share of qualifying capital expenditures.

Taken together, the federal facility and lender support give Conifex additional room to address both near-term liquidity and mill-performance improvements.

Mackenzie Mill Has 240 Million Board Feet of Annual Capacity

The Mackenzie operation is a two-line sawmill with approximately 240 million board feet of annual lumber capacity when operating on a two-shift basis.

The mill produces Western Spruce-Pine-Fir dimensional lumber and is integrated with Conifex’s adjacent biomass power operation.

The power plant has a nameplate capacity of 36 megawatts and can produce more than 230 gigawatt-hours of electricity annually.

Conifex has a long-term electricity purchase arrangement with BC Hydro covering approximately 200 gigawatt-hours of annual output.

Production Fell to 14.1 Million Board Feet in Q2

The financing follows a weak second quarter for Conifex.

Lumber production totaled 14.1 million board feet, down 35% from 21.7 million board feet in the first quarter and 60% from 35.3 million board feet in the second quarter of 2025.

The mill operated at approximately 23% of annualized capacity during the quarter.

Shipments totaled 23.6 million board feet, down 39% from a year earlier but up 10% from the first quarter as Conifex drew down finished lumber inventories.

Conifex’s planer continued operating for several weeks after the sawmill curtailment, allowing the company to process accumulated rough inventory and extend shipments into the shutdown period.

Q2 Net Loss Reached C$9.5 Million

Conifex reported a net loss of C$9.5 million in the second quarter, compared with a C$9.4 million loss in the first quarter and a C$8.3 million loss a year earlier.

EBITDA was negative C$6.3 million, improving from negative C$7.7 million in the first quarter but deteriorating from negative C$3.2 million in the second quarter of 2025.

Total sales were C$23.0 million, including C$19.0 million from Conifex-produced lumber and C$2.8 million from bioenergy.

Liquidity Had Fallen to C$1.3 Million

The new financing is particularly important in light of Conifex’s balance-sheet position at the end of June.

The company reported approximately C$101.8 million of debt and only C$1.3 million of available liquidity at June 30.

Net working capital was negative C$6.1 million.

Conifex also stated in its second-quarter filing that material uncertainty existed that could cast significant doubt on its ability to continue as a going concern.

The company said its ability to continue operations depended on generating positive cash flow, obtaining additional financing, modifying debt-repayment terms and securing covenant relief.

The federal loan addresses one of those immediate financing needs, although Conifex continues to face operating, trade and lumber-market risks.

Sawmill Curtailment Extended Beyond Original Seven Weeks

Conifex originally announced a roughly seven-week sawmill curtailment beginning May 19 because of limited sawlog availability during the seasonal spring breakup.

The shutdown later extended beyond the original schedule.

By August, Conifex said a successful restart depended on several conditions, including access to additional financing.

The adjoining biomass plant also entered its annual maintenance shutdown in May, with the company saying power generation would resume alongside the sawmill.

U.S. Duties Continue to Pressure Cash Flow

Trade costs remain another major challenge.

Conifex expensed C$3.7 million in countervailing and antidumping duty deposits during the second quarter.

The combined cash-deposit rate was 35.16%, with an additional 10% Section 232 tariff applying to Canadian softwood lumber.

Since the current softwood-lumber trade dispute began, Conifex said cumulative U.S. duty deposits paid, net of certain prior sales of those deposits, had reached US$49.4 million by June 30.

The Department of Finance said the federal loan is intended in part to help Conifex manage the effects of the continuing trade dispute and preserve employment in Mackenzie.

Financing Includes New Warrant Arrangements

The federal financing package also carries equity-linked provisions.

Conifex has agreed to issue common-share purchase warrants to the Canada Enterprise Emergency Funding Corporation, although the number of warrants, exercise price and other material terms have not yet been finalized.

The company has separately agreed to issue PenderFund up to 1,584,000 additional warrants, each exercisable for one common share at C$0.50, with an expiry date of January 17, 2031.

Conifex also plans to extend the expiry of PenderFund’s existing 4.32 million warrants by one year to the same January 17, 2031 date.

The warrant arrangements remain subject to Toronto Stock Exchange approval.

Why the Financing Matters

The immediate importance of the loan is liquidity.

Conifex entered the second half of 2026 with a curtailed mill, reduced power generation, negative EBITDA and only C$1.3 million of available liquidity.

Up to C$30 million of federal financing, combined with potential reimbursement of up to C$11 million in mill capital expenditures, gives the company substantially more financial room to prepare Mackenzie for a restart.

The larger industry question is whether restarted production can operate economically in a market still affected by lumber-price volatility, U.S. duties, fibre availability and elevated financing costs.

Conifex itself expects Canadian softwood-lumber conditions to remain challenging through the remainder of 2026 and has cautioned that further supply rationalization may be needed if demand recovery remains slow.

What to Watch Next

• Restart date: Conifex has not yet announced when the Mackenzie sawmill will resume production.
• Operating rate: Whether the mill can return to normalized two-shift production.
• Capex program: How quickly Conifex deploys qualifying mill-improvement spending tied to the C$11 million reimbursement commitment.
• Power generation: Timing of the 36-MW biomass plant restart and electricity deliveries to BC Hydro.
• U.S. lumber duties: Final 2026 administrative-review rates and their impact on cash costs.
• Liquidity: Whether the new financing is sufficient to stabilize operations while lumber markets remain weak.