Canfor, Pacific Bioenergy partnering on new pellet plants

September 24, 2014, Vancouver, B.C. – Canfor Corporation has
announced its plans to construct a pellet plant at the company’s Chetwynd and
Fort St. John sawmill sites. The pellet plants will be constructed and operated
in partnership with Pacific Bioenergy Corporation.

The two plants will have a combined annual production
capacity of 175,000 tonnes of wood pellets, the sale of which is tied to a long
term agreement with a power utility customer. The total investment of $58
million will include electrical self-generation capacity of 3 megawatts
supported through BC Hydro's Power Smart Load Displacement Program.

"These investments enhance our utilization of sawmill
residuals and contribute to our Company's overall sustainable value
proposition," said Canfor Corporation President and CEO Don Kayne.
"We are pleased to continue our strong partnership with BC Hydro on
renewable energy, and contribute to the province's goals of sustainable power
generation."

"BC Hydro is proud to partner in projects that generate
renewable energy and reduce overall electricity demand on BC Hydro's
system," said Joanna Sofield, Power Smart general manager. "This
project will displace 19.1 gigawatt hours of Canfor's electricity consumption
per year for 20 years, with a positive impact on all BC Hydro customers. This
investment by Canfor is a great fit with Power Smart's Industrial
Program."

The pellet plants are scheduled to commence production in
the third and fourth quarters of 2015.