REBUILD OF PAPER MACHINE NUMBER ONE

In November 2005, the mill was shutdown for 25 days to do a major rebuild of the paper machine. The rebuild consisted of installing 79 new dryer felt rolls (GL+V) and new bearing lubrication system (Safematic), replacing the machine mechanical drive with a sectional AC electric drive (Siemens) and replacement of the entire press section with a no-draw/ shoe press arrangement (Metso). The machine is now capable of running 3000 feet per minute.

After a typical learning curve, the results are as expected. Production has increased by about 45,000 tons per year and overall sheet quality has improved. Production costs have decreased allowing us to be more competitive in the market place.

WASHER LINE REPLACEMENT / SECONDARY FIBER PLANT UPGRADE

While the machine was being rebuilt in November 2005, we also did a complete replacement of our pulp mill washer line (GL+V) and upgraded our secondary fiber plant from 150 tons per day to 250 tons per day. The new washer line gave us a cleaner, more uniform virgin fiber supply to the paper machine while the upgraded secondary fiber plant provided the fiber we need for the increased production due to the machine rebuild.

FOCUS FOR 2008

One of our beliefs is that care of the environment and good business are not mutually exclusive but rather go hand-in-hand. Therefore in 2008, major capital expenditures will be focused on reducing fresh water consumption, reducing the environmental impact of the mill and lowering our purchased power consumption. Recognizing that fresh water is a valuable resource that can no longer be taken for granted, our goal is to voluntarily lower our withdraw from the Floridian Aquifer by 20% in 2008. Considering the water issues throughout Georgia and neighboring states, this is the right decision. We will also spend significant capital to upgrade our waste water treatment plant to ensure compliance now and into the future. Our mill has the most restrictive discharge permit in the country and we are dedicated to meet these requirements now and in the future as the mill continues to grow. Finally, we will invest in projects to lower our dependency on purchased power. This will not only lower our cost of manufacture but will also reduce the environmental impact of the utility who uses fossil fuel to generate power.