TimberWest Releases 2008 Second Quarter Results

With log sales volumes down 24% in Q2, 2008 relative to the same period in 2007 and sales realizations down 18%, the Company generated a Distributable Cash loss of $3.2 million in the quarter, after taking a restructuring charge in May of $7.7 million for the permanent closure of Elk Falls, its last remaining sawmill.

Non-core real estate sales were $4.9 million during the quarter. Stronger real estate sales, lower harvesting costs, and aggressive management of working capital resulted in the Company ending the quarter with $211.9 million of debt, $6.9 million higher than at the end of the first quarter. The Company remained in compliance with all of its debt covenants for the quarter, however, it is possible that the Company may not be able to remain in compliance with its covenants later in the year. "We continue to work on resolving this issue and by the end of the third quarter expect to either amend the existing facilities or put new ones in place," said Mr. McElligott.

Safety

Safety continues to be a priority for the Company and its MIR results continue to show improvement at 0.61 for the first half of 2008 compared to 1.19 for the same period last year. In addition, 82 of its 109 contractors are now SAFE Certified by the BC Forest Safety Council and the Company expects the remainder to achieve their SAFE company certifications by year end. Beginning in 2009, only SAFE Certified contractors will be permitted to work on TimberWest's land base. TimberWest successfully concluded its Safe Company certification review audit during the quarter with a score of 97%.

Real Estate Operational Results

The Company is pleased with the momentum of the sales program so far this year. Net proceeds from the sale of non-core real estate for the second quarter of 2008 were $4.6 million, or $10,000 per acre compared with $0.3 million or $6,800 per acre a year earlier. Net sales proceeds on a year to date basis were $7.0 million, or $14,000 per acre compared with $0.5 million or $7,800 per acre a year earlier.

During the quarter, TimberWest hosted analysts for a presentation and tour of its real estate assets. It was well received and a copy of the presentation can be found on TimberWest's website. A few highlights from that presentation include the fact that TimberWest owns approximately 40% of the southeast quadrant of Vancouver Island; part or all of 82 lake bottoms and 75 kilometers of waterfront; that 94% of the population of Vancouver Island lives within 20 minutes of its development nodes; and that over $6.3 billion in major private and public construction projects are currently underway throughout Vancouver Island.

Many of TimberWest's development properties are in the process of being rezoned. During the quarter, the Provincial Agricultural Land Commission approved the exclusion from the Agricultural Land Reserve of 166 hectares (410 acres) of TimberWest land in Campbell River in return for including 480 hectares (1,186 acres) of higher quality agricultural land in the Reserve.

The excluded land, between Campbell River Airport and the Island Highway, has been serviced with water and sewer facilities and has been designated for industrial use in the City's Official Community Plan. It will be marketed to manufacturing, distribution, and service businesses best able to benefit from its excellent location. Discussions also continued with potential joint venture partners on different development nodes during the quarter. -- www.cnxmarketlink.com