Good morning. And welcome to Mercer International’s Third Quarter 2014 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, Steve. As usual, I will begin with formal remarks, after which I will take your questions. Please note that in this morning’s conference call, we will make forward-looking statements 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 our press release and with the company’s filings with the Securities and Exchange Commission. So I am going to cover some of the key financial aspects of the quarter and then I am going to pass the call over to Jimmy. In Q3, we achieved EBITDA of $67.6 million, compared to $41.9 million in Q2, an increase of $25.7 million. In Q3 pulp pricing was essentially flat in China and North America, while at the end of the quarter list prices in Europe were up slightly to $935 per ton. However relative to Q2, our Q3 results benefitted from the impact of the stronger US dollar on our Euro and Canadian dollar costs as well as lower German fiber costs. In addition, our major maintenance costs were down approximately $12.1 million compared to Q2 due to Rosenthal’s third quarter shut will be much smaller than the combination of Celgar’s and Stendal’s Q2 shuts. Despite the Rosenthal mill being down for 10 days for major maintenance in Q3, our mills achieved near record production this quarter. We also had strong sales volumes this quarter which resulted in a decrease in our finished goods inventory volumes relative to Q2. We reported net income of $88.3 million for the quarter or $1.38 per basic share compared to net income of $0.6 million or $0.01 per basic share in Q2. Our 3 net income includes a non-cash annualized gain…

Thanks, David. Good morning, everyone. Let me start by saying that overall we are very pleased with our third quarter results. As David noted, compared to Q2 our EBITDA is up approximately $26 million. Our mills ran well in Q2 and that of course has big effect of lowering operating cost in general, however, the more significant positive impact on EBITDA quarter-over-quarter with the stronger U.S. Dollar, lower major maintenance cost and lower fiber cost in Germany. In the third quarter, prices in all markets were essentially flat. The quarterly average NBSK prices in Europe and China were $932 and $728 per ton respectively. While in North America, the quarterly average list price was at $1030 per ton. September NBSK producer inventories were at 27 days, down two days from August. At these inventory levels, the NBSK market is considered to be below balance. In addition, September hardwood producer inventories are down six days from August at 40 days. NBSK list prices in October are $1,030 in North America, $935 in Europe and $730 in China. Looking forward we believe that low customer inventories in China will ensure steady demands for Q4 when the paper production traditionally increases. Similarly in Europe and North America, we believe these markets are in balance and expected to stay in balance through Q4. Overall, we expect pricing in all markets to be essentially flat through Q4. However, given the low customer inventories and market tightness, anything that’s against winter-related logistical challenges could create upward pricing momentum. We remain optimistic about the future supply demand fundamentals for NBSK pulp. We see demand growing in developing economies particularly China in a variety of grades including tissue specialties in board. Specifically, there are approximately 2.1 million tons of incremental tissue capacity coming online globally in 2014 with…

(Operator Instruction) Your first question comes from the line of Bill Hoffman with RBC Capital Markets. Your line is now open.

Yeah, good morning. Jimmy, can you talk a little bit about – we’re little surprised at the drop in inventories globally during September. I just want to get a sense on what you guys think it’s happening? Is there any inventory stocking going on sort of speciality grades just for preparation for the winter or anything else like that going on? - RBC Capital Markets: Yeah, good morning. Jimmy, can you talk a little bit about – we’re little surprised at the drop in inventories globally during September. I just want to get a sense on what you guys think it’s happening? Is there any inventory stocking going on sort of speciality grades just for preparation for the winter or anything else like that going on?

No. I think that basically there was some hesitancy on the buyers certainly in China initially because of course they all kind of had this feeling that hardwood price declines would of course have an impact in softwood. As they realized that this was not happening, then I think there was of course a general increase in purchasing which was then up and therefore we had a very big sales volume in shipments through these summer months which traditionally as you know is the weaker periods. So I think what we have seen really is more of a release of that negativity in the sense that now they believe that really the hardwood pricing scenario is really not coming to any reality.

Has there really any changed into your buying patterns even here after October? - RBC Capital Markets: Has there really any changed into your buying patterns even here after October?

No. What we’re generally seeing certainly in China is we know the buying pattern is more of a ‘n’ user buyer pattern rather than any real speculative component. And also we’re not seeing a lot of buying by the trading organizations which is logical and we’re seeing fairly steady regular type of demand coming in Europe as well as North America. So there is really more of a, as I say, a sale and ordering pattern which is more industry and consumer related rather than speculative related.

And then how about just with the additional tissue craft that’s just coming on China, any thoughts from customers over there trying to lock up capacity with you guys or any other with respect to that?

No. I don’t think that there is a general feeling that there is going to be a shortage. At this point, the buying pattern is certainly from the tissue guys because I think from a business perspective they of course have been doing much better than any of the other paper grades and therefore they are taking opportunity when they can to pick up supply at maybe slightly better pricing if they can. Therefore we are not seeing let’s say a significant purchasing on the part of the tissue guys because generally there is in that market weakness in terms of spot volume being available at a discount to prevailing markets.

Okay. Thank you. If I just ask one more. Looking forward in the 2015 you just talked about capital projects since you finished a number of major ones here. What are the plans for next year? - RBC Capital Markets: Okay. Thank you. If I just ask one more. Looking forward in the 2015 you just talked about capital projects since you finished a number of major ones here. What are the plans for next year?

I hope that –

Yeah. David, maybe you can cover that one.

Yeah. The guidance would be focusing on higher return projects, nothing really big on the pipeline, total capital in the plan for next year somewhere around $40 million, most of it high return, little bit of carryover from this year. So like the same situation as the year we’re just completing.

Okay. Thanks. Appreciate it. - RBC Capital Markets: Okay. Thanks. Appreciate it.

Your next question comes from the line of Richard Koos with Jefferies. Your line is now open. Richard Koos – Jefferies: Guys, good morning. So first with regards your cash and cash flow, with the restricted group you certainly have a nice reservoir and prices hang up you should be generating a lot of cash flow on a go-forward basis. What are your priorities for allocating that?

Richard, we have been talking about on several of our previous calls. We’re very interested at the right point in time to consider refinancing Mercer and make and create a more efficient balance sheet and an easier-to-understand capital structure. We’ve moved from Euro reporting to U.S. dollar that was sort of first step and the simplification process. Our net debt to EBITDA ratios are getting down into very attractive levels. So we’re continuing to focus on that opportunity and I think discussions of free cash flow will sort of follow that activity. You know what I’m saying. Richard Koos – Jefferies: Yeah. Understood. Okay. And then with regards to the transaction on the equity side for Stendal here, are all of your costs related to that behind you? You won’t have any more cash coming after that?

Well. We have a—are you referring to the purchase or the interest? Richard Koos – Jefferies: Yes. I don’t think you’re going to have—

Sorry. I would pick now outstanding that has a one year term on it. Richard Koos – Jefferies: Yes. Okay.

As I answer that, there is no other cost associated with the acquisitions.

Right. Richard Koos – Jefferies: Okay. Very good. And then I guess lastly from me, you guys ran really well in the third quarter, it seems. Do you believe you can run as well in the fourth quarter as far as production volume?

Yeah. I mean the third quarter was a good quarter, but it wasn’t really what I would call an exceptional quarter from a production perspective. I mean we did have some minor production problem within all of the mills as normal [ph] I think the Q4 certainly other than the plan, the shutdowns. So far we are running very well on all of these facilities and therefore we believe that the production volume should be comparable. Richard Koos – Jefferies: Alright. Great. Thank you very much.

Your next question comes from the line of Bruce Klein with Credit Suisse. Your line is now open.

Sorry. Hi, good morning.

Hi.

Jimmy, you started to touch on—I think that reset on the list price versus the small price which I know is widening the load over the years. I’m wondering, maybe I missed or maybe set up and maybe set up and maybe you can explain a little bit more if anything is going on there. Secondly, this energy has been strong which is great. What sort of driving that in your outlook there? I know you have long-term contract to set there but maybe just a little bit more on that.

Yeah. In terms of the energy side, it’s driven by of course overall production efficiency. So the more profit produced the more steam we can generate and of course more power. And therefore because last quarter was good, of course generally we produced a lot more power. We’re forecasting moving forward again similar type of situation and I felt that we know that there is a lot of steam that we are not capturing. So there will be further progress in really creating a lot more efficiencies and now steam captures so that we can generate more power from the present amount of black liquor that were already burning. In terms of what I meant in terms of spot price lists price, what I really meant to say was essentially because there is not lot loose tons being offered to the tissue buyers at the discounts of what they would get. Normally, you’re not seeing a lot of this type of loose volume essentially discounting the market. What we’re having really is a market condition which is driven by the buyers needing the supply and essentially the suppliers have not a lot of inventories so they are not overly anxious to essentially be discounting whatever they have just to fine buyers. So it seems like a very orderly market right now and you’re not getting a lot of that speculative part where you have in China these trading organizations as you know who potentially buy and then hold them then subsequently sell when prices are good. So you’re not having the large speculative component in the market.

I guess I was speaking. I understand what you’re saying but wouldn’t the discount widening argue for the opposite or am I missing something?

No. I mean the list price widening thing is just basically—it’s always been widening. It’s related to the buyers wanted to keep at certain price and of course the discounts imply a certain pricing regime, but the discount really is not reflecting the market, if you know what I’m saying because you’re not seeing further discounting from the price that we got right now. We’re not increasing that discount just to generate buy.

Okay. Okay. I’m good. Okay. Thank you very much guys.

Your next question comes from the line of Sean Steuart with TD Securities. Your line is now open.

Thanks. Good morning. Jimmy, I’m wondering if you can talk a little bit more about fiber in Germany and I guess more on your longer term outlook and a couple of questions, I guess what path you’re taking to I guess mitigate the list there over the long run as it just yield optimisation at the mills? And then I guess it’s more generally what you’re expecting for price trends over the long run.

Yeah. We just came out two years ago from a very harsh winter condition as well as flooding conditions which of course had a huge impact in terms of wood pricing and availability. Therefore, what we have done is essentially put a strategy together to minimize those potential type of impacts and the combination of that of course is to have better logistics operations having more volume of wood closer to the mill rather than having in an area that may not be as accessible increasing the amount of in-house storey rather than outside, so that again we’re not going to be impacted by winter conditions. We also have decided to essentially go into some marketing of palates because we believe that this of course will counter some of that sudden increase in demand coming from the heat market through a lack of availability of palates. It’s not a big area but we do believe this helps in moderating pricing in various severe winter type of conditions. Also, we have imported a lot more wood from different areas that traditionally we have not really focused too much on and we intend to stay within these import areas so that we have precisely understand the market pricing and can readily access wood in the event that we see certain shortages in the other sourcing areas and therefore I think the plan moving forward will certainly mitigate a lot of that weather-related problems we had seen in the past hopefully. We’re seeing certainly in Germany pricing which historically has been high. They have come down but still remain high and we don’t expect that to really change much and so we’re really relying on also to some degree cheap imports. And therefore our pricing scenario moving forward is still moderately lower prices than we are today for German as well as European fiber but not a material change from where we are. Sean Steuart – TD Securities: Okay. And then have you guys said your maintenance is scheduled for 2015 yet and if so, can you give us an idea of how that will unfold quarter to quarter?

The schedule for next year, Sean, is Celgar is going to have their plant shut in Q1 and Stendal will be Q2 and Rosenthal will be Q3. Sean Steuart – TD Securities: Okay. That’s all I had. Thanks guys.

Okay.

Your next question comes from the line of Andrew Kuske with Credit Suisse. Your line is now open.

Thank you. Good morning. I guess the question ties into a number of other questions that had been asked previously, but maybe a bit more specifically, just on cash development plans when we look at the future I mean obviously you have generated lot of cash this year and it’s been a huge swing versus past years. So when you think about just the steps ahead from using those case and redeploying it, is it really in the order of doing at the refinancing maybe collapsing the structure and effectively de-leveraging? And then how do you think about incremental capital plans of new capital equipment? Whether they be just extensions or minor extensions of existing versus outright brand new things versus things with special dividends? I guess it’s more of a macro capital allocation question.

Yeah. I mean in terms of the whole refinancing and restructuring of our, I guess, a structure for unrestricted—of course that is the high priority item because I think that certainly simplifies our structure. It also allows us to de-leverage at the same time and hopefully the combined impacts will also reduce our cost of the debt and after that in terms of the cash usage we really don’t have any major projects that we require in any of the mills. So we don’t envision that all of the sudden just because we have cash or have access available that we will all of a sudden go out and do a major expansion. That’s not the plan. They will be continued ongoing of course reinvestment in all of the mills, but that would be probably at the levels that we presently have today. In terms of generally our philosophy, once we have better balance sheet of course it is to look at distribution program because we think that of course that would allow our shareholders who now get also some of the benefits aside from the seer appreciation.

:

Yeah. I mean clearly we would look further in terms of the best structuring for text purposes, but at the end of the day I think it is the philosophy that we would be looking towards some form of regular dividend policy, of course keeping in mind the fact that we are a very psychical [ph] commodity. So of course whatever distribution or use of cash would have of course reflect that, but I think that certainly is one of the topics for sure.

Okay. That’s very helpful. Thank you.

Your next question comes from the line of Andrew Shapiro with Lawndale Capital Management. Your line is now open.

Hi. On the last conference call you discussed the logistical issue that began in the middle of the quarter and was continuing to year and half regarding sufficient railcar supply which gave you at the point, I guess a backlog of inventory. Your inventory seems to be moving out, but what’s occurred with respect to this logistical issue? Does it continue? How are you dealing with it and how does it impact us? - Lawndale Capital: Hi. On the last conference call you discussed the logistical issue that began in the middle of the quarter and was continuing to year and half regarding sufficient railcar supply which gave you at the point, I guess a backlog of inventory. Your inventory seems to be moving out, but what’s occurred with respect to this logistical issue? Does it continue? How are you dealing with it and how does it impact us?

Hi, Andrew. I think what you’re referring to real congestion was CP [ph] primarily and that’s—

Basically this is competition, I think with sale or everything else.

Yeah and the [indiscernible]. So if that continues, we did manage to move of times in the quarter as you saw. So we’ve worked around it and strategically we’re focused on cost-sufficient alternatives. So, we are putting a little bit of money we call it a high return project in a reload with another railcar that gets us to the cost for roughly the same cost and provides us with an option to move on CP or move on BN are our choice. So who was making more optionality for sales? We’re not overly optimistic that the situation is going to improve with CP or CN.

And with respect— - Lawndale Capital: And with respect—

We have some offering [ph].

Sorry. Go ahead. - Lawndale Capital: Sorry. Go ahead.

We have good options going forward.

And with respect to the Rosenthal Mills tall oil capital project you have previously discussed, is the project done when it’s to to be done and generating revenues and what will be the total cost of that project? - Lawndale Capital: And with respect to the Rosenthal Mills tall oil capital project you have previously discussed, is the project done when it’s to to be done and generating revenues and what will be the total cost of that project?

Yeah. It’s nearing completion. It’s coming in on budget which we have guided before somewhere around $4 million. It will be up and riding and delivering tall oil by the end of the year.

Okay. And we planned road shows and conferences now that the—we called that the financial restructuring process is somewhat beginning. What’s the upcoming plans for the coming two quarters. - Lawndale Capital: Okay. And we planned road shows and conferences now that the—we called that the financial restructuring process is somewhat beginning. What’s the upcoming plans for the coming two quarters.

Well. We’re hoping to be seeing quite a few of our investors as part of our refinancing at some point in time and the next couple of quarters and we’ll continue the bank conferences and so on in the meantime.

Your next question comes from the line of [indiscernible] & Company. Your line is now open.

Hello. Couple of questions. Just on the application, I don’t know if you can answer this. I think the last quarter we pushed it out from our previous expectation that will be a late 2014 event and in our saying it’s mid 2015 event. Is there any trial date we can be looking towards or any update you can give on that regard?

Well. It’s a long process according to the company management schedule that testified in Washington D.C.and July of 2015. We have filled our paperwork what we called [indiscernible] Canadian’s file there to reply are more real. We are in a process of answering a serious of questions from them and they will do the same dose [ph] and then there is a sort of hiatus on the spring over and then it will be individuals testifying during the summer. We believe the panel will require two or three months to deliberate and we’re hopeful to have a decision by the end of 2015. So those are the general milestones if you like, but I guessed from the last call we’ve now seen candidates case convince there’s ever that we need to continue with this activity.

Okay. I had a number of questions on the call on the refinancing but looking at the governance that you have with the senior notes, you have call provision that you can use on December 1st at 104.75. The cash flow numbers are then very good. The outlook is pretty good. In terms of timing, is it possible to refinancing? Is it a 2014 event or are we looking at something more in 2015?

It’s certainly a higher priority for us and we are working hard to be in the market when the markets are suitable. So I don’t want to lead too far on this, but we are moving to be ready as soon as possible.

Okay. Thank you.

(Operator Instruction) Your next question comes from the line of Amir Patel with RBC Capital Markets. Your line is now open.

Hi. Good morning, guys. Jimmy, I know who touched on spots [indiscernible] being pretty stable, but it’s just a clarify. So is it your view that contract discounts will be steady in 2015 compared to 2014.

Yeah, certainly. I think in China the discounts projected this year versus next year is pretty much the same for the contract volume. What we have done in China market is really don’t have long-term contracts because we felt that gave us a better pricing and so far it has. We felt that this gone for long-term commitments and justified. I terms of North America, of course there is this continued push to widen the discount. This is of course due to more supply availability in North America versus the demand side. In Europe, the discounts are pretty much the same. Of course there is a push to try to move that too, but we’re not expecting that [indiscernible] further.

Interesting. And just more of a longer term question. I guess in terms of speciality dissolving [indiscernible] is that something that you may have some capabilities to eventually produce and doing any R&D work on that front.

Well. From my ability we undertook the study. We felt that basically because of the size of our mills. We didn’t really make a lot of sense for us to be comfortable into dissolving at the time. Shortly, there is technologies available for us to implement if needed, but we don’t think that market generally is attractive and of course there has been a lot of conversions in the last few years. So surely the landscape is way different than a few years ago. And therefore we believe that we’re certainly are very efficient NBSK producers and we’ll continue to focus on that monthly.

Right. I guess I was referring more to sort of the more speciality grades that people like [indiscernible].

Yeah. I mean Renee are basically produces dissolving as well as very special dissolving grades and we don’t produce any dissolving at this point . The speciality dissolving market is a very steep, even a smaller market than the commodity end and it requires a lot more effort than kind before you actually can enter into that. And from my perspective, we really don’t feel that our mills really are in a position to [indiscernible] benefit and therefore it is not in our plan.

Final question for David. Even with all those MLP discussion, is that maybe changed how you look at potential acquisitions and maybe made U.S. assets [indiscernible] more attractive?

Yeah. Well, it’s certainly an interesting discussion. It is fascinating to watch as it all develops and so we were very away of it, but there is nothing [indiscernible] at the moment. It is everywhere talking about from Mercer’s perspective.

Okay. That’s great. Thanks. That’s all I had.

Your next question comes from the line of George Berman with J.P. Turner & Company. Your line is now open. George Berman - J.P. Turner & Company: Good morning, gentlemen. Thanks for taking my call.

You’re welcome.

Hello, George. George Berman - J.P. Turner & Company: First of all, let me say congratulations, a very nice quarter, a very good timing on the buying of the minority interest in Germany. The tax benefits that we received this quarter, I think that’s a one time item?

Yes it is, George. George Berman - J.P. Turner & Company: Could you comment on how the strong U.S. dollar versus Canadian dollar affects your results going forward?

Well, of course the strong US dollar generally is a very – has a very positive impact in terms of our earnings and overall performance. So far what we have seen of course is the euro has been weakening, the full impact of that weakening, well, it was not shown in the prior quarter because we have this exchange rate averaging. So the prior month average essentially determines the pricing for the following month and therefore there is a lag. We will see through the Q4 some of those benefits which already have occurred now actually go through and with the further weakening of the euro this will continue through the subsequent quarters. So you don't take the recent weakness in terms of the euro already being reflected in our earnings. In fact, most of that has not been reflected in terms of our earnings. So moving forward clearly we feel very positive about the currency developments because it makes it much easier for us to compete globally with a very strong euro over the last few years, it has been of course very difficult. But now with euro at 1.256 levels then you're really looking at a very competitive situation for our German mills, and of course it helps Celgar as well, the weak Canadian dollar, but the impact really isn't as big as the impact in our German mills. George Berman - J.P. Turner & Company: And it's good to owe a bunch of Euros when the Euro goes to parity with the dollar, huh?

We basically generate our income based on US dollar list prices and therefore if the euro is at parity then of course their pricing regime with all things remaining the same means that in euro terms the price is very very attractive.

Your next question comes from the line of Sean Sauler with Redwood.

Hey guys, just one quick question, or actually two questions, I guess. The first one is, have you quantified -- I think you have in the past -- the effect of every move in the euro, by a penny on your net income or EBITDA, and then secondly related to that, what percentage of mills in the world are in euro-denominated countries? And then the next, and with that, what percentage of mills, NBSK mills in the world, are in dollar denominated areas?

I will certainly take a shot at the first one. So in our 8-K last year, we had some sensitivity [indiscernible] and we referred to costs in that circumstance. There was one cent moves caused by about $5 million on the European side, and a $0.01 move relative to Canada was 3 million, so a total sensitivity of 8.

So in terms of the percentage of the mills, I mean historically there has been like the 40 to 45% within the euro or Scandinavian zone, of course, the Swedish kronor is not part of the yield. In fact, of course there is – we’re even further then the euro but if you look at the kronor and the euro zone it may represent between 40% to 45%. The Canadian dollar zone somewhere around 40%, 45% and then the balance within the US kind of currency zone for NBSK.

Great, and David, is that -- the $5 million, is that an annual number or a quarterly?

That’s annual, yes.

There are no further questions at this time. I would now like to turn the call back over to David Gandossi and Jimmy Lee.

David and I thank everyone for again coming to today’s conference call. And as I indicated that clearly we are having a very strong tailwinds of the weakening currency, especially the euro against the dollar. And as I earlier indicated the third quarter doesn’t really capture all of that movement and of course with the euro we believe that the pricing regime considering the weakness of the euro has remained reasonable firm and therefore we are very optimistic about this year and we will continue to be very optimistic of next year as well based on the supply and demand. So on that note, I thank everyone again.