“As of this week, our WoodEx sawmill is now operating on a full one-shift basis. Since this past August, our Kootenay Wood preserving operations has been operating near a 1.5 shift basis. In addition, harvesting operations from our private timberlands has been progressing since late July. As of this month, we are operating at a steady-state on these lands and have commenced silviculture operations with an order of 1.2 million new seedlings.”
operation only set up to do fence poles or similar products. Both were close to bankruptcy when they were recently
acquired by JFI in exchange for JFI penny stock. Neither mill can handle the
production that JFI needs to accommodate the recent approximately $40 m purchase of private forest lands from Tembec. Also, word is they substantially
overpaid for the Tembec land and many locals are wondering how they can ever be
profitable after obtaining its capital via 100% financial debt at high interest
rates of up to 22%. The debt deals were with BG Capital (i.e. Bobby Genovese, who
also holds a significant equity investment in JFI).
cut near to 24 hours a day and find an outlet to sell the logs and at a high
pace in order to make the business viable. One important thing to understand is
clearcutting, why it’s important and why JFI needs to use this technique. Why is clearcutting with no silviculture (re-planting of trees) so
desirable? Here is an excerpt from an article that explains.
logging Crown Land that’s under the provincial Forest Practices Act. The act
requires a comprehensive logging plan – something that can take months and add
about $5 a cubic metre to the cost of wood harvested. There are restrictions on
how much of the land can be logged at one time. The size of an allowable cut
block varies from site to site. On private land, reforestation isn’t required.
Unless property is in the Forest Land Reserve, the logger doesn’t pay stumpage.
The cost of logging with plans, reforestation and stumpage would eat up half to
two-thirds of the $50 to $200 (JFI) is getting per tree”.
mills in the Kootenays that are close to recently acquired (ex-Tembec)
timberlands and made offers, but nobody wants to sell. These include Galloway
Lumber, J. H. Huscroft Lumber and WynnWood. They even tried a hostile takeover
of WynnWood using one of WynnWood’s minority shareholders, but none of the
other shareholders agreed and the deal fell through. So although it appears
none of these local mills are for sale the question is whether JFI will get
desperate (it needs a bigger mill, period) and offer a big price plus penny stock
to cause the owners to re-consider.
listed company Canfor (CFP.to). We don’t know if JFI has tried to purchase the
Canfor mills but we do know that JFI has been selling logs to Canfor. Canfor is
certified by the Forest Stewardship Council (FSC) which means it can’t buy logs
from an outfit that doesn’t practice sustainable silviculture (replanting of
trees) or they will place their FSC certification in jeopardy.
and not re-plant trees. Its lands purchased from Tembec are Managed Forest and
they’re not allowed to clear cut. Therefore to move forward it has the
must remove the government classification of Managed Forest (which
requires replanting) on their lands. This they’ve reportedly tried to do with
they can’t do that, they can purchase mills that are not FSC certified and
as you read above, they’ve had no luck so far.
they can’t do that, they can have the mills they sell logs to remove their
FSC certification. We strongly believe that Canfor will not remove its FSC
is not FSC certified. WynnWood and JHH have a similar certification called
SFI (Sustainable Forestry Initiative) and would not remove their
certification under their present ownership.
straight, they decided to play dirty. The Nature Conservancy of Canada met with
JFI to make sure they’d follow the rules and were told by JFI that they would
indeed follow the correct environmental practices of sustainability. So the NCC
was hopping mad when just a few days later they found out that JFI had already
cut down trees in a covenant area they weren’t supposed to touch. The NCC put
the word out and Canfor refused to buy any more logs until they get with the
program, which is why JFI announced yesterday the order of 1.2m seedlings. In
other words, it’s not that they are “nice guys” and voluntarily commenced
silviculture as suggested by the news release. Far from it; they were logging
illegally, they got caught, their buyer stopped buying and from now on they’re
going to be monitored very closely by the big national agency they annoyed; they really picked the wrong enemy there. So they had no choice but to start the
silviculture program, and that’s going to cost them way too much money for the
their plans are to acquire sawmills, so we believe they will keep trying. The
local sawmills should be aware that some of the players of JFI have been
also known to use middle men to purchase land in the past so those mills should
do their due diligence if they decide to sell. Mike Jenks and 4064 Investments
use middle man to purchase 1/3 of Denman Island. So sawmills be aware. Every company Bobby Genovese has been involved with has
suffered a bad fate so if you care about your people, the jobs,
environment and your reputation you will not sell at any price.