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Fortress Specialty Cellulose Mill update

July 2, 2013 – Fortress Paper Ltd. released an update on its operations at its Fortress Specialty Cellulose Mill in Thurso, Quebec. An unexpected mechanical failure delays the start up of the facility.

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 four 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, in order 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.

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