Good morning and welcome to Mercer International’s third quarter 2012 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 turn the call over to David Gandossi.

Thank you Amanda and good morning everyone. As usual we will begin with formal remarks after which we will take your questions. Please not 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 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. So I’ll speak to some of the key financial aspects of the quarter and then I’ll pass the call to Jimmy who will speak about the particulars of the markets, our operating performance and some of our strategic initiatives. Considering our view that this quarter might be merged to the bottom of the cycle, we’re reasonably satisfied with our quarterly results. Relative to the second quarter of 2012, average NBSK pricing was down in all markets and was a main factor in the drop in our quarter over quarter results. After a very slow July, demand in August picked up sharply particularly in China. Operationally, our mills run well in the quarter with our consolidated production tons at near record levels. Strong demand from China allowed us to set a new quarterly pulp sales volume record. Sales were up approximately 55,000 tons relative to the second quarter and as a result we have seen our finished goods inventory fall relative to Q2. Pulp prices bottomed down the quarter but increased demand from Chinese paper producers and traders reentering the market in August when pricing was in the low $600 range allowed producers to secure a $20 price increase taking the Chinese list price to $640 in September. Since then…

Thanks David. Good morning everyone? As David mentioned, we are satisfied with our third quarter results given the challenging state of the third quarter market. We believe pricing reached bottom this quarter but I’m pleased to note that before factoring in Stendal’s scheduled debt repayment that we’re essentially flat from a cash perspective. Even after spending over €9 million on high return capital projects. I’m also pleased that our continuing focus on reliability has resulted in another solid production quarter. We achieved our third highest production total this quarter despite a slow start off at Celgar after the annual maintenance shut. We also begun to realize in the benefits from Rosenthal Q2 recovery boiler upgrade project this quarter, as Rosenthal experienced both increased pulp and energy production. Q3 strong production levels allowed us to maintain solid energy sales as we were only slightly behind last quarter’s record volume. Another way of looking at our energy and chemical revenue is that in Q3, it exceeded our (inaudible) payment by nearly €4 million which is significant given current pulp prices. In other words, our by-product sales compress our debt carrying charges by almost 30% while in the same period last year our by-product sales exceeded our debt carrying charges by nearly 18%. It is a simple measure but it highlights the value of our strategy of increasing our by-product sales. In the third quarter, average NBSK list prices fell approximately $60 per ton in all markets. With the European Q3 average list price falling to $777 and the quarterly average list price in China which fell to $630 per ton. I will talk more about recent price developments in a moment but first let me comment on the mills. All three mills run very well after just adjusting for Celgars annual maintenance…

(Operator Instructions) Our first question comes from Richard (inaudible) from Jeffrey’s. Your line is now open.

Hey and good morning guys. On the pulp price increases, how sustainable do you see these increases – I know you hadn’t mentioned about these favorable pulp statistics. But are you worried about the new marginal capacity coming online and in any capacity restart that we’ve seen lately?

Well you know the only restart that we’re seeing of course is the (inaudible) one. And you know the maintenance shut has had certainly in Canada as well as our experience in Celgar and some of the technical problems we’ve had at Stendal. Many of these maintenance shuts have been longer than originally forecast and lost production of course has been greater. Therefore I think that there is certainly an inventory level, both as the producers which are at historic levels and we know that based on the European consumer level inventories. They are at historic low levels as well. So I think the price increases of course had to be a much more gradual than the historic type of patterns and that where we’re really reflecting I think the uncertainties both from the European crisis as well as the general global economic weakness that we are seeing. What we really need is more of a catalyst and I think the catalyst isn’t quite yet there because people of course feel that there is sufficient pulp around considering that there is going to be the Terrace Bay restart which of course did start up in October. As well as the new capacity that will come online early part of next year. So there seems to be channel complacency in the market which of course is influencing the strength of the increase. But I think in general if you look at the new machines that have been installed in China especially in regards to the tissue sector. They have been very significant for this year as well as additional capacity that will start up early next year. And therefore we think that a lot of that, let’s say the incremental growth in supply will easily be picked up by the newer demand growth coming up. And I don’t see the demand side certainly in Europe falling significantly and therefore I think we have a case for a gradual increase with the possibility that it may actually be much faster if there is a catalyst.

Okay. And then as far as China is concerned, you know we hear a lot about economic conditions there slowing a little bit. Still growing but slowing. Have you guys felt that in the pulp market and then what are your expectations there?

Well I mean if you look at the demand of growth in pulp from China they have been significant over the last few years. We haven’t seen, certainly from the import statistics as well as the amounts of tons that we have been shipping into China any real indication of a weakness. And that’s really because of the amount of new capacity that of course has been installed as well as the programs from the government to shut down older and polluting capacities. I think you’re seeing a replacement of old machines by new ones which will of course underpin the demand for virgin pulp as a whole. I think that the weakness that we are seeing in terms of the statistics in China certainly are not (inaudible) being reflected in terms of the demand growth for pulp from China to date.

Okay. And then lastly, just as a housekeeping question. Can you guys give us production and sales volume by million?

Yeah I can do that, Richard. So production volumes or Q3 at Rosenthal, 90.8, Stendal, 169.2 and Celgar at 113.4. Sales volumes Rosenthal, 86.9, Stendal, 179.6 and Celgar, 137.8.

Great. Thanks a lot guys.

Our next question comes from Hemar Patel with RBC Capital. Your line is open. Hemar Patel – RBC Capital: I’m just wondering, with North America we have seen additional fluff capacity come on and from what I understand some of those mills are swing mills and they are selling at least some of their volumes into the paper grade marketer. Have you seen that and what impact do you think that will have in the near term?

Well I mean we’ve seen generally an increase in a lot more tons of (inaudible) coming from Finland as well as Sweden as well as a little bit more from the United States. Now the biggest growth in terms of those kind of de-integrator pulp has really come out of the Finnish market. And with the recent entry of Russia into the World Trade Organization, the traditional supply of hardwood which the British quality actually is quite appreciated in Europe certainly gives some indication that maybe some of those mills which has inessentially gone out of batch and gone into softwood may go back into batch based pulp production which of course would aid in rebalancing what would be the normal type of export patterns coming out of that area. To date, we haven’t seen that but clearly there is some indications that maybe you have reached the peak of this non-integrated or de-integrated pulp coming out of that area which has been the more significant rather than the US fluff grade. Hemar Patel – RBC Capital: Got to say yeah it’s helpful. And I was just wondering was there any updates on the NAFTA dispute?

We are just going through the procedural part of the NAFTA application. We’re basically picking the representatives and the President for that arbitration. Nothing really substantive has occurred. And as I mentioned in my prepared speech that really if assuming the normal time frame continues, we’ll probably won’t expect anything at least 2014. I’d miss the (inaudible) Hemar Patel – RBC Capital: That’s all I had, thanks.

Okay.

Our next question comes from Mark Kennedy with CIBC. Your line is open. Mark Kennedy – CIBC World Markets: Just two or three questions of clarification so far. So for Stendal production in Q3, should we be assuming down time in the range of about 28,000 tons then between the ten day shut and then the lost production on restart?

Yeah, exactly Mark. Mark Kennedy – CIBC World Markets: Jimmy will you talk about the two year payback on Blue Mill. Is that on the net investment of about €28 million or is that on the growth investment?

No it’s on the net. Mark Kennedy – CIBC World Markets: On the net okay, good. And then just with regards to your labor negotiations right now at Celgar, are there any sort of local issues or is it just a thing that you expect to be settled in due course?

Well you know it will be settled when it’s settled and all I can say basically is that there is the pattern agreement out there. Clearly there is local issues. There is certain items that clearly we feel is important in terms of our situation and we are in discussions to see if we can Iron out something that works for both sides. They have of course taken the vote. To date we have not had any formal notice that looks right. Therefore we are still engaged in the process of trying to come to an understanding and if there is such a time when they do give us formal notice then of course we will make the necessary announcements. Mark Kennedy – CIBC World Markets: Okay no that’s helpful thanks again.

Our next question comes from (inaudible). Your line is open.

Price realizations in – can you help us get a better understanding of how those work in the different pricing environments. If we look back last few years it had kind of been in the 84 – 85% range and now more recently they moved down to the low 80’s. And when we think about that, is there something fundamentally changing within the industry or is there something that’s changed within the company or is it a combination of both can you help us understand that?

I didn’t quite hear the questions. I think the first part of your question was unclear because we didn’t hear it. So maybe you could repeat?

Sorry. On the price, the mill, that pulp price realizations. There has been a change over the last two quarters in terms of where that percentage has been more recently in the low 80s and then beyond that two to three years I was in the 85% range. Is there something changing?

Yeah. Basically it’s more reflective of the change in the industry it’s not specific to us. What you are seeing is a trend again to the higher discounts from the list that we’ve been wrestling with over many, many years. So typically the industry has been increasingly seeing widening of the discounts list. And occasionally when the market there is (inaudible) and strong you do get some reversal of that but the trend generally over the last several years has been still a continued kind of an upward movement.

Okay thank you.

Our next question comes from Andrew Shapiro with Lawndale Capital Management. Your line is open. Andrew Shapiro – Lawndale Capital Management: You mentioned outside of project Blue Mill there is about 7 million of CapEx for higher return projects. Is there any detail that you can produce on this?

Well they range into many different projects that of course are very assuasive mainly they are related to energy savings and more or less say efficiencies and reduction of wood losses. So these would primarily be the focus. They range. We also have ongoing plans in terms of future years and this is all related to the EBITDA 30 type of project work. You will see a lot more in terms of efficiency gains continuing. Andrew Shapiro – Lawndale Capital Management: Okay, just two more quick ones here. The apparent North American housing bumps that we’ve seen. Have you seen any meaningful impact on fiber supply prices?

Well I mean, you’re seeing it more in terms of the North American market and of course from southern perspective what we are saying is more plentiful supply of chips. And we expect that probably that will continue which means that of course the pricing for those chips will be much more favorable as the saw mills increase their overall production. In terms of the European situation, nothing really has changed. We remain at much lower levels but there is no indications of the saw mill industry weakening much further than these extremely low levels. Andrew Shapiro – Lawndale Capital Management: Okay and finally. Grants have obviously been very helpful to you guys over the last few years. Is there any expectation of kind of a new incremental programs that we might see come online that haven’t been formally announced or aren’t formally in the process?

No nothing concrete other than, I think the federal government in Canada still talks about extending some of their programs like the (inaudible) program for example. These little pockets of money around for certain types of innovative investments but nothing in the scale of the Green Pulp and Paper Transformation Program for example. In Germany there still is capital available for the right types of projects. And as you know we’re taking advantage of that as part of our Blue Mill financing. But of course your subsidies gradually get reduced. There is discussions among the former East German States in regard to additional potential support because of the fact that the former East German States are of course experiencing weaker kind of economic conditions than the West. So there is ongoing discussions as to what could be possible once this subsidization period is over. It’s too early to say, of course there is a lot of limiting factors as to what can and cannot be done because of the EU regulations as well as the fact that there is even more weaker States generally within the European Union. Andrew Shapiro – Lawndale Capital Management: Okay, thank you.

Yeah.

Our next question comes from Bill Horn with First Angel Capital. Your line is open. Bill Horn – First Angel Capital: My question relates to a comment that you made in your disclosure saying that sales in China were significantly higher this quarter. Typically throughout 2011, you had about 29% of your sales in China. Can you give us a sense as to what percentage of sales this quarter we’re into China?

It’s about – I think it’s 80% of Celgar’s volume went into China in the quarter. Bill Horn – First Angel Capital: Okay. In hearing everything about this increase into China and you had indicated increased demand coming out of China late in August into September. Were you seeing that from existing customers, your existing contracts or was that sales that you saw going into the stock market?

No I make the combination. Many of our customers are tissue manufacturers and of course they have ongoing expansion so we’re seeing growth and demand coming out of our regularly existing customers. There is also additional demand coming out of, more the speculative part which is the traders which particularly come in when they see that they feel that the market is (inaudible). It’s a combination of these two. The tissues clearly are in a much better position financially so they take the opportunity during periods of weakness to buy as much inventory as well as to trade on anticipating future price increases. So those would be the primary big buyers during periods of weakness. Bill Horn – First Angel Capital: Okay, thank you. And just a follow up question in regards to this labor agreement, labor dispute. I don’t know if it’s possible but are you able to give us a sense as to what the differences or disparities between what the Union workers are asking for and what you’re offering right now?

Well I think you know right now we’re really not in the position to comment on these negotiations. Of course we are helpful that these will be resolved without a strike. And I would say that negotiations and discussions are ongoing. Bill Horn – First Angel Capital: Okay great. Thanks very much I’ll get back in the queue. Thanks.

Our next question comes from George Berman with J.P. Turner & Company. Your line is now open. George Berman – J.P. Turner & Company: Good morning gentlemen and thanks for your time. I’ve got just a quick question. Can you explain to me the operating costs for the September quarter jumping by about €40 million? It would seem to me if you have record production that your per unit costs or your overall costs will come down some.

You see George I’m just not sure how you’re just handling your Math there but the cost of sales jump really because of the additional sales volume. We pull a lot of inventory at average cost based on the volume of sales. So you’re right. production costs per ton go down because you get better fixed cost coverage but your cost of sales number will jump a big chunk because we sold 404,000 ¼ If you want to go any deeper than that maybe we could talk off line and I could try to help you with your math. George Berman – J.P. Turner & Company: Okay. And then did you take any additional bonds out of the market?

Not in the quarter. They are trading at quite a premium as you may know. George Berman – J.P. Turner & Company: Yeah. Okay thanks very much.

(Operator Instructions) Our next question comes from Daryl Swetlishoff from Raymond James. Your line is open. Daryl Swetlishoff – Raymond James: Thank you. Wondering if you guys wouldn’t mind just commenting sort of from a broader perspective how you see your energy business evolving beyond the Blue Mill project. What do you think the endgame is for that and what’s the long term sort of potential?

Well I mean we do have additional capacity at Celgar in the sense that we have a 48 Megawatt turbine installed. So we still have capacity that would be available. As would mean an expansion in terms of probably our power boiler or some other source of incremental steam and that is why of course the focus is in terms of reducing energy and using – and reducing steam consumption as a whole within the plant which would make more available steam to turn into electricity. The Blue Mill project again. This is about a 40 Megawatt turbine. We will have significant amount of capacity available on that one and therefore we will be looking towards further steam generation from some source to increase the overall power generation. And we do have room in terms of Rosenthal because of the fact that (inaudible) project certainly has increased the amount of incremental tons coming out of there. In fact it is producing a little bit better than what we originally projected and this would mean that we do now have a fair amount of steam that we are not using in terms of our power generation and therefore there is opportunity to install maybe an additional turbine or in combination with other steam production type of facility. We are going to continue to see incremental growth in the power generation. We are not going to get a significant increase clearly until we make some major investments but you are going to see continued incremental growth still coming gradually based on size and type of operation. Daryl Swetlishoff – Raymond James: That’s great. So I guess just to summarize you can sort of say that Stendal are Celgar you have extra turbine capacity and not enough opportunities to add steam and then at Rosenthal you have extra steam and opportunity to add a turbine?

That would summarize it.

Our next question comes from Adam (inaudible). Your line is open.

Yeah, taking the questions. Two quick ones, just Jimmy on the improvement projects you said you are expecting a two year payback on the €20 million into project Blue Mill. The rest of the CapEx, do the projects have similar type economics?

Yeah we are focused on projects which have payback between around a two to three year max. So the three years would be kind of like the outer limit but really focusing on that two year type of payback type of project.

Got it. And David I’d like to just revisit the cost question if I can and ask a follow up. Which is, the volumes are up 26%, the costs on a dollar basis are up 26% as well. We know that fiber is a 9% tailwind. So was there something moving in the opposite direction?

If things are really stable, the only thing you have to maybe factor in addition to all that is the timing of the maintenance shuts and the size of them.

Oh right, that’s what I figure.

Because those are expensed in the quarters that they incur so there is a few additional moving parts that might cause it to look that way.

I know it’s a very difficult exercise but is it possible to quantify the impact of the Celgar shut in the quarter?

Yeah and compared to Q2 it would have increased a pre-unit manufactured cost per ton by about €70.

€70 a ton? So if you were to take that number and multiply it through the volume that would give you sort of the aggregate cost number?

Incremental over Q2, that’s right.

And you pick up the revenue from the additional – oh no I guess that would be the apples to apples (inaudible) that’s right. Alright perfect thanks David I appreciate it.

You’re welcome.

(Operator Instructions) Our last question comes from Joe (inaudible) with BMO Capital. Your line is open.

Good morning gentlemen. I was wondering if you can share with us your Q4 CapEx for the balance of the year David or Jim.

Yeah I can do that for you Joe. Rosenthal’s, almost €4 million. Stendal will be about 11 ½ and that’s predominantly Blue Mill spending and Celgar is very light at about well less than €500,000 remaining to go in the year.

Okay and for 2013 would you have that as well?

Absolutely this far up for forecasting at this stage (inaudible) so. I don’t think we are going to have anything large or significant to talk about. Maybe we are going to fit back into more of a €4 million – €5 million per mill type of strategy for the next year.

Okay and how much would you have for Blue Mills? Like would you have a net of €17 million left or?

Yeah we’ll be about – by the end of the year I think we’re less than €20 million into it. Maybe about €18 million. So probably about €22 million till completion.

And one last question. Do you know your maintenance schedule, being 2013? When they will occur?

That we do. So the 2013 for Celgar is going to happen in the second quarter, Rosenthal will be in third quarter and Stendal in the fourth quarter.

Okay and this is regular maintenance or like nothing extraordinary or?

Now we’re planning the standard 10 day shuts of the states.

Ten day sets. Okay, thank you very much.

Thank you, welcome Joe.

You have no additional question in queue.

Well I appreciate everyone coming to today’s conference call and I would like to conclude. Thank you.