In accordance with the Manitoba Environment Act (C.C.S.M. c. E125)

THIS LICENCE IS ISSUED TO:

for the Development, being the carrying out of forest management activities within the geographical boundaries of Forest Management Licence Area #03, as detailed in the "Louisiana-Pacific Canada Ltd. Forest Management Licence #3 Ten Year Forest Management Plan 1996 - 2005", subject to the specifications, limits, terms and conditions of this Licence.

"all-weather road" means a graded and/or gravelled road that may be passable by vehicles under both wet and dry weather conditions;

"buffer" means a strip of land that is managed to reduce or eliminate the impacts of land use practices on sensitive areas or natural features;

"chance road" means a temporary ungravelled road with minimal grade development, that may be passable by vehicles only when dry or frozen;

"cutover" means an area from which timber has been harvested;

"cutting block" means a forested area with defined boundaries in which specific forest stands or parts thereof are approved for harvest;

"Director" means an employee so designated pursuant to The Environment Act;

"F.M.L. Area" means Forest Management Licence #3 Area established in an agreement between the Province of Manitoba and the Licencee in September 1994, pursuant to The Forest Act. The agreement defines the area in which the Licencee is authorized to undertake cutting, removal, renewal and management of crown timber, and management of crown lands;

"FMU" means Forest Management Unit;

"Forest Management Plan" means the Louisiana-Pacific Canada Ltd. Forest Management Licence #3 Ten Year Forest Management Plan 1996 - 2005;

"habitat" means the place where an organism lives and/or the conditions thereof, including soil, vegetation, water and food;

"hardwood" means trees belonging to the botanical group Angiospermae having broad leaves that shed annually;

"harvesting" means the cutting and removal of trees from a forested area;

"ice bridge" means a temporary crossing constructed from ice, snow, and/or log material that may be passable by vehicles under frozen conditions;

"I.R.M.T." means the regional Integrated Resource Management Team of Manitoba Natural Resources located in the Western Region, which is organized to review and develop permit conditions for activities which may impact timber and non-timber resources. The membership includes regional specialist staff from Forestry, Wildlife, Lands, Fisheries, Water Resources, and Parks and Natural Areas, as well as staff from Regional Operations involved with enforcement.

"leachate" means organic compounds removed from materials, such as cut logs or bark residue, by the action of percolating water;

"pre-harvest survey" means a site specific investigation of a potential harvest site, to document the stand characteristics and any non-timber values that may need to be protected, and to determine appropriate harvest and renewal treatments;

"quota holder" means a person or company that has an annual timber volume allotment which allows the harvest of timber on provincial Crown land under authority of a Timber Sale;

"reforestation" means the establishment of trees on previously forested lands by natural processes or artificial restocking (i.e. planting and/or seeding), also referred to as forest regeneration;

"rehabilitate" means physical treatment of a disturbed site to reclaim its productive potential. This may include, but is not limited to: levelling the surface, establishing appropriate slopes to prevent erosion, loosening compacted surface soils to enable vegetation to root successfully, and revegetation to promote the development of the former species composition;

"regeneration survey" means a survey carried out to determine the number and species of trees that are successfully established on a site;

"scarification" means a method of seed bed preparation which consists of exposing patches of mineral soil through mechanical action;

"silviculture" means the science and methods used to tend, harvest and replace forests;

"site preparation" means the physical or chemical methods used to prepare a site for planting or to promote natural reforestation;

"slash" means the residue left on the ground after harvesting, including unused logs, uprooted stumps, branches, tops, etc.;

"softwood" means cone bearing trees with needles or scale like leaves, belonging to the botanical family Gymnospermae;

"stand" means a community of trees sufficiently uniform in species, age, arrangement or condition to be distinguishable as a group from the forest or other growth on the area;

"succession" means the orderly and progressive replacement of one plant community by another until a relatively stable community, known as climax vegetation, occupies the area;

"temperature inversion" means a stable atmospheric condition in which cooler air at the earth's surface is prevented from rising by a layer of warmer air above;

"The Act" means The Environment Act and Regulations thereunder, as amended from time to time;

"third party operator" means a person or company who harvests timber under contract to a company;

"winter road" means a road which is capable of being used only in winter.

GENERAL TERMS AND CONDITIONS

1. The Licencee shall ensure that all company, quota holder, third party, Repap Manitoba Inc. and special allocation operations within its F.M.L. area, adhere to all specifications, limits, terms and conditions contained in this Licence, unless specifically exempted.

2. The Licencee shall be permitted to harvest timber from coded/leased Crown Land within FMUs 10, 11, and 13 provided that:
   
   1. the harvesting is done in accordance with the terms and conditions of this Licence;
      
   2. the harvesting is done in accordance with the policies of the Crown Land Classification Committee governing clearing of coded/leased Crown Land and pursuant to The Forest Act and regulations;
      
   3. forest renewal is carried out as required by the Forestry Branch, Manitoba Natural Resources, and the I.R.M.T.; and
      
   4. the hardwood timber harvested and utilized by the Licencee is declared against the cumulative volume allocated to the Licencee on an annual basis by the Louisiana-Pacific Canada Ltd. Forest Management Licence Agreement.

3. The Licencee shall:
   
   1. meet with private landowners who wish to sell hardwood from their property to Louisiana-Pacific Canada Ltd., in an effort to encourage landowners to embark on a woodlot management program, which would entail sustainable harvest and renewal practices; and
      
   2. declare the hardwood timber harvested from private land and utilized by the Licencee against the cumulative volume allocated to the Licencee on an annual basis by the Louisiana-Pacific Canada Ltd. Forest Management Licence Agreement.

4. The Licencee shall, on a permanent basis, employ, or contract the services of, a field biologist, with expertise in forest ecosystem studies, to oversee the collection of flora and fauna information in the course of pre-harvest surveys, road construction planning and forest ecosystem monitoring and research.

5. The Licencee shall establish a Stakeholders' Advisory Committee, having representation from a cross-section of forest users and interest groups. The purpose of the Committee shall be to:
   
   1. identify resources or land uses that may be impacted by proposed activities and to recommend alternative harvest and renewal plans to minimize those impacts; and
      
   2. assist in the development of Standard Operating Procedures to minimize potential impacts.

6. The Licencee shall ensure that growth and yield data, pertinent pre-harvest survey information, and harvest and renewal records, are made available to Manitoba Natural Resources, to assist in the completion of the forest inventory and the Annual Allowable Cut calculations for FMUs 10, 11, and 13.
   SPECIFICATIONS, LIMITS, TERMS AND CONDITIONS
   Respecting Harvest Restrictions

   The timber harvesting proposed in the Louisiana-Pacific Canada Ltd. Forest Management Licence #3, Ten Year Forest Management Plan, is approved except for the following:

7. The Licencee shall not harvest hardwoods within the boundaries of Duck Mountain Provincial Park. Timber harvesting by quota holders or third party operators which are the subject of existing commitments and allocations, may continue. If, to benefit regeneration, quota holders or third party operators are directed by the I.R.M.T. to harvest incidental hardwood volumes when harvesting softwoods from mixed wood stands, the hardwood timber shall be utilized and declared in accordance with the Louisiana-Pacific Canada Ltd. Forest Management License Agreement.

8. The Licencee, quota holders (excepting those with current commitments), or third party operators, shall not harvest hardwood or softwood within:
   
   1. the proposed addition to the west of Duck Mountain Provincial Park which includes a glacial spillway landscape feature and portions of the Shell and Roaring River Valleys, and the proposed addition to the east of Duck Mountain Provincial Park which includes a portion of the escarpment landscape feature and Pine River, as identified on the map attached as Appendix A to this Licence; and
      
   2. portions of the Shell and Roaring River valleys and their associated buffers, as determined by the I.R.M.T. To ensure the ecological integrity of these valleys, harvesting in their immediately adjacent uplands will only be permitted where approved by the I.R.M.T.

   Note: It is understood that the boundaries of Duck Mountain Provincial Park may undergo refinement in the course of the development of the Park System Plan. The harvest restrictions specified in subsections 7 and 8.(i) of this Licence, will be re-evaluated once the park boundaries and the Park System Plan is finalized in 1996.

9. The Licencee, quota holders, or third party operators, shall not harvest timber within the boundaries of Asessippi Provincial Park, Kettle Stones Provincial Park, and the Cowan Bog Ecological Reserve.

10. The Licencee shall not harvest oak, ash, maple or elm stands and shall leave standing any groups of trees or stands of those species encountered when harvesting other species. Quota holders or special allocation holders may harvest oak, ash, maple or elm if approved by the I.R.M.T.

11. The Licencee shall minimize the harvest of hardwoods during May, June and July of each year, but, in any event, shall not harvest a cumulative volume of more than 100,000 cubic metres of hardwoods from FMUs 10, 11, and 13, during May, June and July in any year.

    Respecting Pre-Harvest Surveys, Monitoring and Research

12. The Licencee shall:
    
    1. conduct pre-harvest surveys for all proposed timber harvest blocks according to the procedures outlined in the Standard Operating Procedures (Section 9 of the Forest Management Plan), or in revised Standard Operating Procedures, that may be developed in consultation with the Stakeholders Advisory Committee, and approved by the Director and the I.R.M.T.;
       
    2. determine, in consideration of the parameters being monitored in the pre-harvest surveys, and in consultation with the Director and the I.R.M.T., the level of training to be provided to pre-harvest survey staff, and ensure the required training occurs; and
       
    3. use the information collected by the pre-harvest surveys, to determine the harvest and renewal prescription for each harvest site.

13. The Licencee shall:
    
    1. within twelve months of the date of this Licence, conduct consultations, as approved by The Director, with representatives of Manitoba Environment, Manitoba Natural Resources, Environment Canada, Natural Resources Canada, Fisheries and Oceans Canada, Canadian Heritage, and other stakeholders, to establish priorities for baseline monitoring and forest ecosystem research, and to determine what, if any, additional areas for representative research and monitoring control sites (supplementary to designated no-harvest areas) may require protection from future harvesting activities;
       
    2. participate in the data collection and funding of monitoring and research selected for implementation in the course of the consultations described in subsection 13.(i) of this Licence, and as approved by The Director;
       
    3. co-operate in the establishment of permanent monitoring and research sites within the no-harvest areas of the F.M.L. Area and in long-term ecological monitoring on those sites;
       
    4. conduct monitoring in water bodies adjacent to harvest blocks located on high erosion risk areas (as determined by the Manitoba Land Resource Unit and shown in Figure 3.5 of the Forest Management Plan) to quantify whether there is any effect on suspended sediments. Initial sampling shall begin within one week after the initiation of harvesting on each qualifying cutblock, and shall be repeated bi-weekly during the first open water season or in accordance with an alternate sampling schedule that may be approved by the Director. The Director may approve revisions to the sampling frequency in the second and subsequent years, based on an evaluation of the data collected in the first year; and
       
    5. ensure that the data collected in the course of monitoring or research activities pursuant to this Licence, is made available to the Governments of Manitoba and Canada, within one year of its collection.

    Respecting Guidelines

14. The Licencee shall carry out harvest and associated activities in accordance with practices set out in "Forest Management Guidelines for Wildlife in Manitoba", "Recommended Buffer Zones for Protecting Fish Resources in Lakes and Streams in Forest Cutting Areas", and "Recommended Fish Protection Procedures for Stream Crossings in Manitoba", and any other provincial guidelines which may be adopted for forest management activities.

    Respecting Operating Procedures

15. The Licencee shall conduct forest management activities according to the procedures described in the Standard Operating Procedures (Section 9 of the Louisiana-Pacific Canada Ltd. Ten Year Forest Management Plan 1996 - 2005), or in revised Standard Operating Procedures, that may be developed in consultation with the Stakeholders Advisory Committee, and approved by Manitoba Environment and Manitoba Natural Resources;

16. The Licencee shall, in consultation with the I.R.M.T., design and/or modify cutting block layouts and road plans in order to mitigate land use and access impacts that may be identified through government and public review of proposed activities. Resources and land uses which may be impacted, include but are not limited to:
    
    1. wildlife and fish resources;
       
    2. sensitive, threatened or unique wildlife or fish habitat;
       
    3. rare, threatened or endangered flora and fauna;
       
    4. provincial parks and ecological reserves;
       
    5. heritage resources;
       
    6. traplines;
       
    7. local communities;
       
    8. remote lodge and outfitter operations;
       
    9. recreational areas and aesthetic values;
       
    10. cultural, spiritual, or burial sites; and
        
    11. First Nations treaty lands.

17. The Licencee shall:
    
    1. consult with Fisheries and Oceans Canada, Manitoba Natural Resources, Manitoba Environment, and other organizations or individuals that may have expertise in watershed analyses, to determine what percent of a forested watershed may be harvested without affecting streamflows, and what level of regeneration is needed on harvested blocks before additional harvesting may occur in that watershed; and
       
    2. limit the area in a watershed which is in a harvested and not sufficiently regenerated state, as determined by subsection 17.(i) of this Licence.

18. The Licencee shall minimize soil disturbance to sensitive areas such as dry upland ridges and wet soils, by scheduling harvesting to avoid times when the sites are sensitive to surface disturbance, and by using harvest methods which will reduce surface disturbance impacts.

19. The Licencee shall not harvest timber from areas which have a severe erosion risk as defined by the Manitoba Land Resource Unit, or in areas which may have a severe risk of erosion as determined from the terrain and soils data collected in the course of the pre-harvest surveys.

20. The Licencee shall dispose of slash and harvesting debris according to the Manitoba Natural Resources Policy and Procedures Manual.

21. The Licencee shall locate all log storage areas to ensure that any leachate that may be generated, does not directly enter any watercourse or waterbody.

    Respecting Buffers

22. The Licencee shall:
    
    1. establish buffers in accordance with "Recommended Buffer Zones for Protecting Fish Resources in Lakes and Streams in Forest Cutting Areas", "Forest Management Guidelines for Wildlife in Manitoba" and any other buffer requirements that may be approved by the I.R.M.T.; and
       
    2. design and/or modify buffers, in consultation with the I.R.M.T., to ensure post-harvest runoff does not negatively affect sediment loads in local waterbodies.

23. The Licencee shall not conduct forest management activities in any established buffer, except where approved by specific work permit conditions which will maintain habitat critical to the maintenance of biodiversity and protect the function of the buffer, as determined by the I.R.M.T.

24. The Licencee shall ensure sufficient buffers are maintained between harvest areas or borrow pits, and Provincial Trunk Highways or municipal roads, according to requirements of Provincial Government departments such as Manitoba Highways and Transportation.

    Respecting Stream Crossings

25. The Licencee shall ensure:
    
    1. materials such as organic soil, silt or clay, are not used in temporary winter crossings of streams; and
       
    2. all materials used in the construction of ice bridges (other than ice or snow), are removed from the water courses or water bodies prior to spring break-up.

26. The Licencee shall provide to the responsible Federal Government Departments administering the Fisheries Act or the Navigable Waters Act, detailed information with respect to the characteristics of the stream, including fish habitat information or navigability, at the proposed point of crossing, and the design of the proposed crossing structure.

    Respecting Non-timber Resources

27. The Licencee shall:
    
    1. report, to the I.R.M.T., rare, threatened or endangered species or ecosystems, as listed by the I.R.M.T., that are identified during the course of pre-harvest and pre-road construction surveys; and
       
    2. apply measures to protect rare, threatened or endangered species or ecosystems and threatened or sensitive habitats, as determined by the I.R.M.T.

28. The Licencee shall:
    
    1. evaluate the potential for the occurrence of heritage resources on areas where forest management activities will occur, and the potential for forest management activities to impact heritage resources, in consultation with the Historic Resources Branch of Manitoba Culture, Heritage and Citizenship; and
       
    2. apply measures to protect heritage resources, as directed by the Historic Resources Branch of Manitoba Culture, Heritage and Citizenship.

    Respecting Roads, Camps, etc.

29. The Licencee shall ensure all-weather or chance roads are constructed:
    
    1. to minimize impacts on surface or subsurface drainage; and
       
    2. only to the extent required, as approved by the I.R.M.T.

30. The Licencee shall ensure that road construction is done in a manner which will prevent or minimize environmental impacts. This shall include, but is not limited to:
    
    1. reducing the slope on the side banks of borrow pits, ditches and road shoulders; and
       
    2. minimizing gradients and/or using erosion control devices in roadside ditches.

31. The Licencee shall:
    
    1. close and/or rehabilitate all-weather roads, as directed by the I.R.M.T.;
       
    2. close and/or rehabilitate all chance and winter roads following the completion of harvest and silvicultural activities at each cutting block, as directed by the I.R.M.T.; and
       
    3. reforest all chance and winter roads, as directed by the I.R.M.T.

    Respecting Waste Disposal/Spill Response

32. The Licencee shall:
    
    1. site, operate and rehabilitate borrow pits, camp sites, landing sites and garage sites, as required by The Province of Manitoba;
       
    2. ensure adequate containment protection is implemented for all sites when conducting vehicle or equipment maintenance activities;
       
    3. adopt environmentally sensitive servicing techniques including the collection and recycling, or disposal by a means acceptable to The Director, of waste oil and anti-freeze;
       
    4. report and clean up spills of fuel, oil, or antifreeze in excess of 50 litres, as directed by Manitoba Environment's Emergency Response Team;
       
    5. prepare a spill response and cleanup plan for the Director's approval, within 90 days of the date of this licence, and adhere to the policies and procedures therein; and
       
    6. dispose of domestic and industrial waste as required by The Director.

33. The Licencee shall comply with Manitoba Regulation 97/88 R, "Storage And Handling Of Gasoline And Associated Products Regulation" and Manitoba Regulation 172/85, "Regulation Respecting The Handling, Offering For Transport And Transporting Of Dangerous Goods".

    Respecting Herbicides

34. The Licencee shall:
    
    1. adhere to the policies and procedures for pesticide applications, as set out in Manitoba Regulation 94/88 R "Pesticides Regulation" so as to minimize the exposure of its employees and the public, as well as non-target biota, to herbicides;
       
    2. establish buffers for spraying herbicides as approved by the I.R.M.T.;
       
    3. not spray herbicides using aerial application methods, if thermal convection currents have developed in the air above the site, or during the occurrence of a temperature inversion;
       
    4. limit the use of herbicides in Provincial Parks, to the extent possible, as determined by the I.R.M.T.; and
       
    5. not apply herbicides by aerial spraying within Provincial Parks.

    Respecting Reforestation

35. The Licencee shall implement reforestation practices to achieve the appropriate reforestation standards, as determined by the Forestry Branch, Manitoba Natural Resources.

36. The Licencee shall:
    
    1. ensure that timber harvesting sites on Crown Land, are returned to productive forest with a similar composition to the pre-harvest stand, in accordance with the forest renewal standards of the Forestry Branch, Manitoba Natural Resources;
       
    2. implement measures to maintain structure on the harvested sites similar to that which would have resulted from natural disturbances, as determined by the I.R.M.T., and in consultation with the Forestry Branch, Manitoba Natural Resources; and
       
    3. within five years of date of this licence, consult with the Forestry Branch, Manitoba Natural Resources, with respect to the establishment of age class distribution targets, to meet the goals of ecosystem based management.

    LICENCE TERM

37. This Licence shall be in effect until January 1, 2006.

1. Should any changes to government policy occur, that could affect the harvesting plans of the Licencee as detailed in the "Louisiana-Pacific Canada Ltd. Forest Management Licence #3 Ten Year Forest Management Plan 1996 - 2005", a Licence review will be conducted, and revisions or amendments to the specifications, limits, terms and conditions of this Licence may be made.

2. If in the opinion of the Director, new evidence warrants a change in the specifications, limits, terms, or conditions of this Licence, the Director may require the Licencee to file a new proposal pursuant to Section 11 of the Environment Act.

3. Harvest restrictions specified in this Licence may be revised on the basis of future decisions with respect to protected lands, lands that may be set aside as representative control areas, or other land use changes.

4. If, in the opinion of the Director, the Licencee has exceeded or is exceeding or has or is failing to meet the specifications, limits, terms or conditions set out in this Licence, the Director may, temporarily or permanently, revoke this Licence.

Client File No.: 3893.00