Good morning, and welcome to Mercer International's Fourth Quarter and Fiscal Year-End 2011 Earnings Conference Call. On the call today is Jimmy Lee, President and Chief Executive Officer of Mercer International; and David Gandossi, Executive Vice President, Chief Financial Officer and Secretary. I will now hand the call over to David Gandossi.

Thank you, Stephanie, and good morning, everyone. As usual, we will begin with formal remarks, after which we will take your questions. Please note that in this morning’s conference call, we will make forward-looking statements similar to those that were made in the press release. According to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, I'd like to call your attention to the risks related to these statements, which are more fully described in the press release and with the company’s filings with the Securities and Exchange Commission. I will begin with some prepared comments on the key financial aspects of the quarter, and then I'll pass the call on to Jimmy, who will speak about the particulars of the markets, our operating performance, our recently filed NAFTA notice of intent and our recently announced strategic initiatives. As you've seen from our press release, our fourth quarter results were somewhat disappointing. NBSK pricing fell quite dramatically this quarter, and we had a number of items that negatively impacted EBITDA in the quarter totaling EUR 14.5 million. Due to a British Columbia Utilities Commission decision regarding energy rates, Celgar was required to make a onetime payment of approximately CAD $2.1 million, resulting in incremental energy costs in Q4. We had just over EUR 3 million of costs at Stendal as a result of reaching an agreement with a local municipality regarding the mill’s share of certain infrastructure costs associated with the construction of the industrial park that the mill resides in. And compounding the poor results was the fact that Stendal's shut was longer than usual due to extra work required on the recovery boiler, and we also had 11 days of unplanned turbine maintenance on Celgar's GG2 [ph]. Overall, these factors resulted in our lowest…

Thank you, David. Good morning, everyone. As David mentioned, we are somewhat disappointed with our fourth quarter results. However, we are pleased with our overall yearly performance. We significantly increased our liquidity this year, which was an important objective for us. I'm also pleased to report that our focus on reliability is beginning to pay dividends in the form of record production in 2011. We still have work to do in this area, but we're moving in the right direction. We also achieved our highest electricity revenue this year, though that is primarily due to Celgar's new turbine running for a full year. However, it is a good indicator of what our energy assets are capable of. Our total energy revenue of EUR 58 million almost completely covered our 2011 interest expense, and provided our mills continue to run well, we expect our energy revenues to exceed our interest expenses in 2012. In the fourth quarter, we watched NBSK list prices decreased significantly with average list prices in Europe falling USD $112 to USD $868 per tonne. In North America, they fell USD $73 to USD $920. While in China, the quarterly average list price fell USD $127 to USD $713 per tonne. I will talk more about recent price developments in a moment, but first, let me comment on the mills. All 3 mills ran at near-record levels in the quarter with Celgar achieving its highest quarterly pulp production since the start-up of the mill. After allowing for Stendal's shut in Q4, production was up 21,000 tonnes compared to Q3. It also worth noting that on top of the record-setting energy production this year, we also achieved record energy revenues in the fourth quarter, and that is despite 15 days of planned maintenance at Stendal and 11 days of…

[Operator Instructions] Your first question comes from Andrew Shapiro with Lawndale Capital Management.

You mentioned CAD $2.4 million of Canadian governmental grants were left. Once those are used up, what does that bring the total Canadian government grants up to?

It's CAD $58 million, Andy.

So you've done about CAD $55 million, CAD $56 million now?

That's correct.

And CAD $58 million will be it. And with respect to the German government grants, when they come in on the construction of this new project, will you be accounting for them similarly where there'll be an offset to your PP&E balances on the balance sheet?

Yes, that's correct. All government grants are recorded as a credit against fixed assets themselves.

Okay. Two other quick ones here. On your G&A, it had jumped up this quarter. Is the EUR 3.1 million Stendal infrastructure charge that was mentioned in the press release, is that included in the SG&A number? Or is that somewhere else in the income statement?

Yes. That goes through cost of sales.

So it's in cost of sales. So that's where it would arbitrarily have been higher rather than -- and that's a single period run-through?

Yes.

Okay. And the inventories are up year-over-year. Are they where you'd like them to be or you think they ought to be? Or what is your kind of focus on your inventory levels?

Well, I would say they're slightly higher than where we would like to be but, certainly compared to Q3, it was a substantial improvement. We are, again, of course, focused on making sure that the inventory levels are at what we would call kind of normal. And of course, it's dependent also to a degree on the shipment schedules. So they do vary, but I would say that overall, the inventories were certainly comfortable.

Right. Okay, now if there's -- the large Stendal infrastructure charge went through COGS, what were the items or what can you call out in particular that went through and caused this jump in G&A this quarter and if there -- any of those are kind of like onetime in nature?

Yes, it is mostly onetime in nature. We had some accruals that bounced back and forth between the third and fourth quarter relating to the move of our office. There's a little bit of foreign exchange in there. And then there's the year-end accruals for performance, comp and that kind of stuff. So fourth quarter is just a -- it's a combination of onetime events, seen as the average of the prior quarter is just really what our run rate average would be. Nothing structurally has changed for us.

All right. And then with the Fibrek bid and such structured with your stock price at quite a bit higher level, are there provisions for which there's an adjustment to the ratio whereby additional shares of Mercer stock might end up getting issued here?

No, I mean, at this point I think the number of shares and the dollar component of the offer that is to be sent is, of course, fixed. There's been no discussion or any adjustments. Of course, there's still a lot of time between now and the mailing of the formal offer, as well as the close of the offer. So these type of movements in the meantime, even subsequent to the offer, of course, doesn't necessarily mean that there would be any adjustments.

Last question, I'll back out into the queue. Your -- I guess it's Resolute or Abitibi, I'm not sure what they go by now, they filed, I guess, the American equivalent of a preliminary injunction, a motion in the Canadian courts attempting to go after this warrant that Mercer has made an investment in. Is there an indication of when that hearing is going to take place and when a ruling on that matter would take place?

Well, the hearing, I believe, is scheduled for Friday and I think also Monday. Now as to when the decision will be rendered, of course, it's up to the commission, but the hearing schedule is scheduled for Friday and Monday, as I said.

Your next question comes from Bill Hoffman with RBC Capital Markets.

Jimmy, I wonder if we could talk a little bit about the Celgar. You talked about this onetime energy payment, and I just wanted to understand exactly what that had to do with it. And also maybe just give us a little more color on the power sales disputes and whether it's a pricing issue or some of that.

No, basically in terms of that onetime charge, it relates to standby fees that we had agreed to with our utility supplier in the past. And then they made a unilateral adjustment to that cost, which we felt was completely unreasonable. And this was also part and parcel of, I guess, the issues that surrounded the ability of our Celgar mill to sell the power that it produces. And so the original structure was that there was a contract with the utility which would've allowed us to resell pretty much all of the power being produced and allowed us to repurchase at what would be the normal heritage rates. Unfortunately, there was an intervention. And as a result, of course, we have been in the process at BCUC in that regard as to the fact that as far as existing policies, et cetera, that existed, our ability to sell certainly was very clear. They subsequently amended the policy, which clearly prejudiced us. And therefore, of course, we asked for hearings, and we went through the process and certain determinations have been rendered but still, of course, not completely. And unfortunately, the timing of these actions were such that we were, of course, hitting the deadline in terms of the NAFTA claim. And to preserve the NAFTA claim, to ensure that we would not have -- be further prejudiced by the procedures and to have an impartial hearing, if needed, that we filed this notice, and our intention clearly is if this matter is not resolved, then of course, we will go through the full arbitration that, of course, is available to us under the procedure.

So of the power produced out there today, are you able to sell all that you would like to?

Well, the new turbine project which, of course, was power that was in excess of our present mill requirements, that is contracted to BC Hydro under a long-term contract. So that part of the contract is not impacted whatsoever. Really what it involves is the power that we presently produce to operate the mill, which is greater than any other existing mill in British Columbia. No other mill in British Columbia has to generate all of its power needs before it's able to sell. So clearly, we're in a very unique situation where we have to supply all of our power needs before we are able to sell any power. And all of the other mills, whether sawmills or pulp mills, it is our clear understanding that, that is not a requirement for them, and therefore, they have enjoyed much higher prices for power that they supply to BC Hydro from their existing production. And they purchase whatever they need from BC Hydro at the heritage rates. And therefore, there is a pricing difference which is what -- of course, what we are looking for, the same. Nothing that is different. So all we are asking for is a level playing field. We just believe that we had been unfairly prejudiced because of the policies that have been adapted, clearly subsequently, not just existing policies, but policies that had been clearly imposed on us, subsequent to contracts that we had entered into.

Great. That's helpful. And then just shifting to the Chinese market at this point, now we're past the Chinese New Year, have you seen any change in order patterns? And I know the demand in December was actually quite strong.

Yes, actually the demand in volume going into the traditional slow season just before Chinese New Year was extremely strong, which surprised me. Traditionally, just before the January holidays, order and volume pick-up is, of course, reduced. But we did not see, in fact, any reduction, which clearly indicative of a much stronger type of market. I think a lot of that of course is positioning because they believe that the bottom has been reached, clearly demonstrated by the fact that there has been market-related shutdowns, mainly the Terrace Bay. And so I think that, generally, the market was under the impression that the bottom had been reached, and therefore, they're presented an opportunity for them to purchase at the lowest price and prepare for the upward move in pricing to come. So there was a lot of volume. And we haven't really seen any changes in terms of the market. There's no real weakness that we're seeing subsequent to the holidays. And so of course, the early part of the year traditionally is a strong kind of demand point. So we are still very optimistic that the markets will trend upwards.

Any sense of the inventory levels on the ground over there?

Well, for many of the producers, the inventory levels are low because of the credit situation. Of course, credit availability has been very tight, so their ability to order raw materials is being very limited. The other part, certain paper producers, of course, are sitting on a lot of finished goods inventory, and therefore, a lot of their liquidity is tied up. So their -- although their desires may be there to buy, their ability to buy has been impaired. And we think that with now the easing of the general kind of credit, hopefully this will allow more credit flow, and of course, they will start to rebuild inventories that have been clearly depleted. The ones that have taken the opportunity are the ones which have financial resources, clearly, either government-owned entities or highly well-connected or mainly the tissue guys, of course, which have better markets and less overcapacity, and therefore, they took the opportunity. So you really have a different kind of spectrum, some which are very much undersupplied and others which are probably in a good position.

Okay. And then just a question for Dave. As you look at 2012, the Restricted Group capital spending versus total?

Yes. For 2012 in the Restricted Group, Rosenthal's doing that recovery boiler upgrade, which is a project that offsets wastewater fees. And we'll spend about EUR 16 million, but we avoid the wastewater fee as part of that. So it's like a grant, and that's about 7. And it's accretive as well, about a 3-year payback on the project. So that's Rosenthal. For Celgar, it's about CAD $10 million in total, and about CAD $3 million of that will come back through government grant recoveries.

Your next question comes from Paul Quinn with RBC Capital Markets.

Could you, just on the NAFTA claim, speak to the timing of that? Is that something that you expect over in the next year? Or is that something that's 2 to 3 years out?

Well, Paul, I mean, it's very difficult to guesstimate because as you know, of course, there is the procedural schedules that are kind of in the agreement. But then there's, of course, attempts, hopefully, to resolve it before it goes through the full process because, of course, it is very expensive for both parties. The conclusion or the results aren't certain for both parties. So there's always probably a focus on trying to get a negotiated settlement before the full. But of course, if there's none, then we have to go through the full course, and this could take many years.

Okay. In terms of just mill net realizations, I noticed that yours, quarter-over-quarter, dropped more than, say, some of your competitors. Is that a function of your higher percentage of sales into Asia where we saw prices drop more?

Yes. Basically it's the impact of the China sales. We have a larger percentage of market -- of our production being sold into China and Asia.

And you basically saw that market bottom in December and expected that to come up in Q1 here, right?

Yes.

Okay. And just in terms of fiber costs, you've outlined that you expect prices to come down in '12 in Europe and mentioned Russia joining the WTO and what that could affect on wood cost. Maybe if you could just sort of quantify what you expect that cost drop to be for Rosenthal and Stendal, sort of ballpark number in buck per metric tonne of pulp?

Yes, we think it could be -- it's not just the Russian thing that which kind of relieves the pressure on Europe, generally in the Baltic regions and so on. But there's just more availability, and the board side, there's been quite a few closures, and the pellet guys are off the market because it's been -- up until recently it's been a warm winter. So we're expecting about a EUR 30 drop in wood costs for Rosenthal and maybe just a little bit lighter, maybe 20 to 25, for Stendal.

Your next question comes from Michal Marczak with UBS.

Just a question on the demand side out of Europe. What kind of order patterns have you seen kind of beginning of the year? Are you seeing any improvement in your order patterns from your customers?

I would say that the European side continues to be weak. It's certainly not getting weaker, but there's -- it doesn't seem to be a marked improvement.

Got it. And I'm sorry I missed it, the $20 per tonne increase in prices, was it just for your Chinese customers?

That's correct.

Great. And then just to get back on the -- just on the fiber cost again, I apologize, I’m just coming in and out, if I take out the onetime costs out of your cost of goods sold, your kind of costs per tonne went up year-over-year. Was that mostly Q2 fiber costs? Were there other things that impacted it in the quarter?

It's mainly fiber.

Your next question comes from DeForest Hinman with Walthausen & Co.

Can you give us the tonnage numbers for the different mills on sales and then production?

Okay. I’ll do production first. For Rosenthal in the quarter, 86.6; for Stendal, it was 143.6; and for Celgar, 134.7, for a total of 364,900. And sales volumes for Rosenthal were 84.3; for Stendal were 167.3; Celgar was 148.4, for a total of 400,000 tonnes.

Okay. And I don't know if you can comment on this or not, but looking at the assets that are contained within Fibrek, I think the NBSK assets clearly make sense, but then they also have the 2 recycled plants. Can you kind of tell us your thought process regarding those assets and how they fit into Mercer as a whole?

Well, I mean, from our perspective, clearly Fibrek's attractiveness to us is based on their SFK or the NBSK mill in Quebec. And there's a lot of complementary parts and also very similar -- a lot of similarities in terms of how they operate, nonintegrated, et cetera. In terms of the recycled pulp markets, of course, we're not familiar really with that business. Traditionally of course, we as a company have avoided that mainly because of the uncertainty in regards to the raw material pricing and also the belief that these products don't get any real premium for the environmental touch. And so -- but of course, these assets are well invested in the sense that a significant amount of money has been put in, in terms of the actual operating equipment, and clearly, the quality of the finished goods is very high as a result. We're going to have to further study, of course, the attributes of this business. But let's say going in clearly is not a core asset and not a clear focus for us.

Okay. And also on the Fibrek acquisition, I know you've made a tender offer or you've made this agreement with them, but is the structure of the purchase, is that actually being bought by the Restricted Group? Or is it being bought by the unrestricted group? Or are you going to make a new holding subsidiary to actually buy that entity?

Yes, I mean the structure, of course, is through the Restricted Group. And that was the design and intent. Through the unrestricted group, it would be pretty much impossible.

Your next question comes from Gary Madia with Gleacher & Company.

I just wanted to kind of dive in a little bit deeper on the sequential performance versus 3Q. If we look at the EBITDA number and we add back all of the one-times for maintenance downtime, the Stendal cost of 3.1 and the energy issue at Celgar. Pro forma of approximately 35 million versus 49 million or so in the third quarter, is there something else in that cost number? Or is it -- am I to assume it's a fiber cost issue? But there appears to be something else kind of weighing on operating results sequentially. Can you speak to that a little bit?

Yes, I'll try to bridge it for you a little bit, Gary. So from going -- moving from 49 to 17, I think it's the bridge you're looking for. So pulp pricing, as Jimmy said in his comments, and mix had an impact of around EUR 33 million. The impact of the shuts is a negative about 7. I mentioned that in my comments. There was some insurance proceeds in the previous quarter of 2.6 that aren't in the fourth, so that's a negative. There’s the Stendal infrastructure cost of 3, which are negative, I mentioned. And then a combination of just jumble bumble in chemical costs, freight costs and other. And you can bridge down to the 17. But those are the main components. On the positive side, we had 79,000 tonnes more pulp sales, so that was a positive 9. Foreign exchange was about a positive 5. We had higher energy sales volume. We had an extra 20,000-megawatt hours, which was a positive EUR 2 million. And just generally higher productivity. We mentioned we had 21,000 tonnes more production. That was a positive 1.5, so…

Okay. Great. I appreciate that color. And also, David, can you speak a little bit to the drop in cash primarily at the Restricted Group? Can you kind of help sketch out CapEx working capital there? Is that -- kind of driving that down pretty hard sequentially.

I might ask you to go back to my comments. I think I spoke every component of working capital shift in the quarter. So maybe if you could go back to the transcript and if you have more questions, give me a call later.

Okay. Did you break it down Restricted Group versus unrestricted?

No. And I can't do that for everybody on the call here today.

Okay. But that's pretty much what you're telling me is the large drop at the Restricted Group from a cash level had to do with the working capital, pretty much.

It's just a combination of all 3. We purchased some bonds, had [ph] some CapEx, had some working capital movements and [indiscernible]

Okay. Final question. I know you mentioned that you saw pulp prices bottom in 4Q. I'm assuming that's going to work its way through the operating results in the first quarter. Can you help quantify for us how we should be thinking about average realized price realizations as we work through the first quarter? Is it going to be similar to what we saw 4Q, 3Q? A little bit better? Can you speak to that a little?

Well, I mean, Q3 average prices were significantly higher, the list price. But of course, if you look at the currency, of course today's exchange rates are more favorable, certainly from a euro perspective, not so much from a Canadian. So that's going to have an impact. Our freight, because of certain logistical efforts that we made moving forward this year, we will have much better freight rates into China mainly because we, of course, will be shipping a lot of our volume via charter, bulk carriers. This also will assist us in terms of the more credit-restricted customers because we, of course, will have available tonnes possibly depending on the actual volume of sales. But freight certainly will improve. We improved a -- we also see a gradual improvement in terms of the wood costs. We know that the scheduled shuts because there's really no shuts in the first quarter. As you know, Rosenthal had its scheduled shut in Q3. So another improvement. Overall mill reliability, certainly based on what I've seen so far, I would say that the mills are running better than they ever have. Of course, weather conditions certainly helped us in Germany. Unfortunately, in the last couple of weeks, the extremely cold weather has impacted a little. But still overall, I would say that the reliability and uptime is certainly very strong, which means that electricity generation is very strong. So all in all, I mean, things are moving very much positively in our direction. As to whether -- how we compare Q3 and Q1, those numbers are heavily impacted by average price and average currency. So it's very early for me to really speculate exactly how we're going to compare.

Okay. But your overall commentary just then seems to speak to that -- like on a pro forma basis, if we adjust 4Q for all the onetime noise that right now that you're cautiously optimistic that you're going to obviously perform better in first Q?

Yes.

[Operator Instructions] Your next question comes from Andrew Shapiro with Lawndale Capital Management.

Few follow-ups. In the Fibrek acquisition, part of the deal is going to get funded with some debt. Is that debt going to be an obligation of the full restricted group on Celgar and Rosenthal? Or will it have its own project financing fence in?

It will be all of the Restricted Group.

Okay. And the last time there was a drop in pulp prices, kind of in the heart of the recession, down to cash costs, you had many less efficient competitors temporarily shutter or some permanently shutter, but what also happened was there was an influx of Chinese buyers that picked up some assets on the cheap and then have now used that as their source of supply, somewhat competing with you into China so to speak. Are you seeing that again? And does that have any broader-term implications to your market?

Well, I mean, I don't see really a big impact because I know that they've been trying to integrate the production with their needs, but because of the logistic costs involved, clearly these mills are not the best located to serve their markets. And therefore, they have not been able to really send a lot of supply into China. In fact, they are pretty much supplying what they traditionally supply because otherwise you'd be losing a lot more. So I don't think it's integrated in terms of their production. They're acting pretty much like market pulp suppliers. I think what their focus is that with their view that fiber will become more and more tight and with the tissue capacity expansions, which calls for a lot of reinforcement grade type of pulp, they see that they may be vulnerable for a spike in prices. And therefore, they would like to be in the position to offset the higher income on the pulp side with higher costs on the paper side. So this is, I think, more of a financial hedge rather than a supply integration.

Okay. So you don't find Mercer and other nonintegrated owned facilities being kind of shoved more to the side to be kind of the spot suppliers only then?

Well, there's a logical supplier based on the logistics costs because freight and other costs to get the finished goods to the end market represents a very big component of the mill net realizations. And therefore, unless you're prepared to suffer clearly less margins, which is clearly not in the interest of anybody, these markets typically will find the natural end users based on quality and distances involved.

Now with this being a friendly negotiated deal between you and Fibrek, there's a few people who had been covering the industry and Mercer who’ve gone restricted. During this period of the transaction and all, are your Investor Relations activities, the various conferences you attend and go off to, are you restricted in doing that? Or what is your current forward calendar of particular presentation events and dates?

Yes, so the company will be at the Crédit Suisse Global Paper and Packaging Conference in New York next week. We'll be going to Barclays a couple of weeks following. We're going to Goldman Sachs in Montréal. That's the next 3 coming up in the next 5 or 6 weeks.

Okay. So unlike those advisers whose -- they have to kind of pull coverage, you guys don't have to go into a quiet period?

No. But there will be certain, let's say, restrictions because, of course, as you know, the offer that we're proposing is also part shares and so we do have to file a prospectus. So as you know, there are certain requirements under the SEC policies so as to what we can and cannot say, et cetera. And so although we will be attending, we have to clearly be mindful of the policies in place, as well as the fact that we will be filing a prospectus pursuant to the offer. And so there is no fundamental change in terms of what our schedule is, but of course, there is certain limitations imposed as a result of the requirements.

Okay. And lastly, I think in the Journal this morning, I got a note from someone that said there was like an article about U.S. mills starting up again maybe and getting grants to shift to tissue production. Are you familiar with that and more of the details of the thesis of the author's report? And is this a trend that you're also seeing and pose an opportunity or a competitive threat?

Well, I believe it's in reference to a very small pulp mill in the eastern part of the United States. And I think -- predominantly, I think it was hardwood production or was a hardwood mill. And of course, it had not been able to compete with the very cheap supply from the southern players. So of course, every country and state will look towards shoring up [ph] employment. So I cannot really comment on specifics or generally but...

No, I didn't know if it was a bigger deal. It sounds like it's a small deal that some local...

Yes, it's a very small project.

Okay. Now in the past, you guys have avoided Eastern Canadian pulp, due to the -- I don't know if it was high-cost fiber basket or if it was in part due to energy costs or solely due to energy costs, but obviously the proposed deal is throwing you back into the eastern part of North America. Can you comment a little bit about what your concerns were in the past and why this proposed deal does not have those concerns?

Well, I mean, I don't think we ever said that we are, let's say, not going to look at an Eastern Canadian mill. I mean, clearly it's based on the specifics of the mills involved. I mean, I think it's very clear that SFK historically from an operating perspective certainly was attractive type of candidate for us, and I don't think that was ever precluded. As I think it's really more mill-specific rather than a general negative aspect of operating in the eastern part. Clearly, fiber cost is slightly higher because of a lot of the things entailed in regards to access to the wood, et cetera. But at the same time, the fiber situation is improving because, of course, a lot of the mechanical base type of end users are closing because news print and other mechanical grades, of course, demand is dropping. So fiber situation certainly is much better and will probably likely continue to improve, so that's a positive. And the energy policies of certain provinces certainly are supportive of that, and it depends on whether the mill has the capability of partaking in those type of policies. So it really depends, as I said, on the specifics.

Your next question comes from Joe Licursi with BMO Capital Markets.

I just had a question on Renewable Energy Resources Act, which Germany adopted early this year. Could you comment on the effect that's going to have on the wood supply or cost to Mercer?

Well, in terms of the programs, whether it's in Germany or Europe as a whole, of course, the focus has been on trying to produce as much power as possible from easily accessible raw materials. Biomass was always considered in excess of the present demand, and so there was a lot of focus there. But I think governments clearly have realized that there's other end users for that raw materials. So there's a lot of policies which had been amended, which essentially, improves what we thought could be the adverse impact. So I don't think the changes that are occurring presently will have a negative impact. In fact, in Germany, there's, let's say, very little support in terms of particle -- or pellets with coal as an example, unlike U.K. where of course, there's a lot of blending with coal and biomass. But Germany has been very resistant in terms of supporting that type of program because, clearly, they see the negative impacts to the wood-producing industries that presently exist. So we think that the overall impact in a nutshell is not going to be negative. In fact, we think that renewable power rates will be increasing in demand because of the nuclear power issue.

Okay. So like your $30 reduction in Rosenthal and $25 in Stendal, that takes this into account, right?

Well, it's really more influenced by the fact that, generally, you have less competition for the existing wood. Because of course, the overall housing market is depressed globally, and therefore, there's less competition from the board, as well as from the energy side, the pellets, because of course, the pricing for their pellets are not adequate.

Okay. I just had a clarification. I'm sorry if I missed it. Dave, could you tell us what we should expect in capital expenditures for 2012 net of grants?

Well, yes, Rosenthal's 16 with 7 of wastewater fees against it. Celgar's 10 with 3 of government grants against it. And Stendal is the Blue Mill, which is 21. And over the course of that project, a total of 40 spend, there's 12 of government grants coming in. And the timing of those grants is a little bit fuzzy for me at the moment. So an element of the 12 will be against the 21 in this year.

So these seem to be all projects, but like do you have a maintenance component as well?

Well, our maintenance is expensed as incurred, and because our mills are modern, it really is all about discretionary capital. It's all very high return. Our thresholds are a 3-year payback or better. And usually, it's better. So that's -- and we let the club out or pull it in, depending on how we feel about our liquidity. So the mills have sort of a -- apart from the projects, it would just be average spending for the year.

Okay. Just one final question. Don’t want to abuse your good nature. Could you guide us -- not guide us, but what you're seeing, like up to today, like you have almost half of the quarter gone, should we be expecting the same level of shipments as in Q4 with most of it going to China again? Or do you see some shift in order patterns?

No, I mean, clearly the order -- I mean, volume of sales is not going to be as robust as the fourth quarter because, of course, there was a lot of shipments into China. And of course, there was higher, let's say, inventory levels that we had in Q3, and so we had to make sure that we would, of course, bring them in more in line with what our objectives were. So the volume is going to be lower, no question. And they will be more in line with the type of volumes that we've seen quarter-by-quarter.

There are no further questions at this time.

Okay. Thank you very much. And we thank you for today's call. Goodbye.

Thank you. This concludes today's conference call. You may now disconnect.