May 27, 2011. /Lesprom Network/. Conifex Timber Inc. has reported a net loss of $3.6 million in its latest quarter. A year ago, Conifex reported a net loss of $1.6 million in the 1Q 2010. 1Q 2011 lumber shipments totalled 62.5 million board feet and sales revenues totalled $21.2 million, as ForestTalk reported. Sales revenues and shipments for the 1Q 2011 increased by approximately 16% over the previous quarter and by approximately 68% over the same quarter last year. The increase was largely attributable to the 4Q 2010 re-start and commencement of shipments from the Mackenzie Site II mill in December 2010. The advantage of the increase in higher average lumber prices in certain items, particularly the “headline” WSPF 2×4 #2 & Btr, during the 1Q 2011 was largely offset by the appreciation of the Canadian dollar and the failure of lumber prices for other grades and species to track the increase in the benchmark price. Sales to China and Japan accounted for 43% of total net lumber revenues in the 1Q 2011 compared to 54% during the previous quarter and 26% during the same quarter last year. Lumber production during the 1Q 2011 totalled 63.5 million board feet, an increase of approximately 29% over the previous quarter and 60% over the 1Q 2010 with the increase largely attributable to the November 2010 start-up of the Mackenzie Site II manufacturing facilities. Unit manufacturing costs during the last two quarters were adversely impacted by production inefficiencies related to the recently completed capital improvement project at the Fort St. James site, costs related to idle facilities and the start-up of one sawmill complex at Mackenzie, and low overall operating rates. Conifex added a second sawmill shift at Fort St. James and at Mackenzie in late March and expects overall operating rates to approach 70% of total estimated production capacity of 745 million board feet by the end of the 2Q 2011. Commenting on the results, Conifex CEO Ken Shields noted, “Given our low operating rates and the significant changes occurring at our sawmill complexes in the 1Q, we anticipated our EBITDA would be negative. However, unit costs in our lumber segment are expected to decline throughout the balance of the year, enabling us to produce positive EBITDA on the assumption 2011 lumber prices average out at the same level achieved in 2010.” With the realization of several key initiatives during the most recent quarter, including the completion of a major capital expenditure program, Conifex’s key priority in the short term continues to be to achieve positive EBITDA from its lumber operations. Management will be focused on improving margins by optimizing value from the fibre harvested and reducing cash conversion costs. Conifex Timber Inc. is a softwood forest products company operating in the Northern Interior region of British Columbia, Canada.