The Partnership reported sales of $212.6 million and net income of $18.2 million, for the quarter ended June 30, 2008. Scheduled maintenance outages and higher freight and fibre costs during the quarter impacted the results unfavourably when compared to the first quarter of 2008 sales of $211.4 million and net income of $43.5 million,

Increased costs and reduced production from the scheduled maintenance outages in the second quarter of 2008 reduced net income by approximately $12 million. Higher fuel costs increased both the cost of delivering pulp and paper to customers and the delivered cost of fibre to the mills. The second quarter 2008 results are lower than those in the same period a year ago, when sales were $239.4 million with net income of $35.9 millionprimarily due to the scheduled maintenance outages and lower sales volumes, higher unitmanufacturing costs and the stronger Canadian dollar partially offset by increases in NBSK pulp list prices.

 Capital expenditures incurred were $9.6 million in thequarter. Fluctuations in working capital are financed through the Partnership’s accumulated cash and bank creditlines. For the second quarter of 2008, based on current estimates of full year cash flow and capital expenditures, the

The Prince George Pulp Mill continues to operate at a slightly reduced rate due to operation of a temporary chip screening system. Construction of a permanent system is underway and expected to be operational in the fourth quarter of 2008.

Pulp production volume lost as a result of the Prince George Pulp Mill fire and subsequent operation using the temporary chip screening system is approximately 6,000 tonnes in the second quarter of 2008 and 35,000tonnes in the first quarter of 2008. The financial impact of this reduced production volume is offset by accrued business interruption insurance recoveries of $3.3 million in the second quarter of 2008 and $11.4 million in the firstquarter of 2008.

Scheduled maintenance outages were taken at the Northwood and Intercontinental Pulp Mills in the second quarter of 2008 representing approximately 33,000 tonnes of reduced production.

There are no maintenance outages scheduled for the third quarter of 2008. The Intercontinental Pulp Mill and Prince George Pulp and Paper Mill are scheduled to complete their maintenance outages in the fourth quarter of 2008, which will result in an estimated 13,000 tonnes of reduced production. The Intercontinental Pulp Mill is planning toupgrade the capacity of its pulp machine during the outage.

Subsequent to the end of the quarter, negotiations were successfully concluded with the Communications, Energy and Paperworkers Union (CEP) and the Pulp, Paper and Woodworkers of Canada (PPWC) for renewal of the labour agreements and the agreements were ratified for terms of four years expiring on April 30, 2012.