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1 Bureau Veritas Certification North America, Inc. SFI Forest Management Audit Report Greenspoint Park Dr., Suite 300 S Houston, TX Phone (281) : Toll Free (800) Company Name Contact Person Address Phone / Fax PQC Code Contract Number KENAUK CANADA ULC Robert Vanier 421 St Paul St East, Suite # 200, Montréal, Québec H2Y 1H5 Phone: Fax: robert.vanier@taoco.com E01A CA Certification Audit: Re-Certification Audit: Surveillance Audit: 1 Scope extension audit: Audit Summary Introduction Bureau Veritas Certification undertook surveillance audit of Kenauk Canada ULCs forest in western Quebec on June 20-21, Brian Callaghan RPF EP(EMSLA) conducted the audit. Mr. Callaghan has been a professional forester for more than 30 years, he has specialties in forest planning, wood supply analysis, forest operations, and auditing. The objective of the audit was to determine if Kenauk Canada ULC was in continued conformance to the Sustainable Forest Initiative Forest Management Standard. The audit scope includes 17,004 hectares (42,000 acres) of forest in the Outaouias region of Quebec (Figure 1). The surveillance audit was conducted against the SFIS Forest Management Standard. The two objectives of the SFI audit were to: Audit Scope, Objectives and Process 1. Verify that the Program Participant s SFI Program is in conformance with the SFI Objectives, Performance Measures, and Indicators, and any additional indicators that the Program Participant chooses, and 2. Verify whether the Program Participant has effectively implemented its SFI Standard program requirements on the ground. Figure 1 Kenauk -1- Bureau Veritas Certification SFI Forest Management Audit Report Jan 2015

2 For this surveillance audit SFI Objectives 2, 4, 6, 8, 10, 14 and 15 as well as Indicator 1.2 were reviewed to assess whether sufficient documentation was available to address the standard and whether field performance met the standard. Standard Bureau Veritas Certification protocols and forms were applied throughout the audit as provided by the Bureau Veritas Certification SFI Auditor Handbook. Audit Plan An audit plan was prepared and provided to the client prior to the audit. The plan identifies the various activities and processes to be audited. A copy of the audit plan is on file with Bureau Veritas Certification North America Company Information Kenauk Canada ULC is a privately owned forestland management company located 100km west of the city of Montreal in the municipalities of Notre-Dame-de-la-Paix, Notre-Dame-de-Bonsecours, Harrington and Grenville-sur-la-Rouge. The property is 17,004 ha in size. Kenauk Canada operates solely within the 265 km 2 territory known as Kenauk, and works in close partnership with other stakeholders to maintain active sustainable forestry operations for the betterment of the overall forest. The territory has had active forestry operations since the 1930 s, representing a wide range of approaches to forestry management. The present owners bought the territory in 2013, and partnered with Lyme Timber Company operating as Lyme Kenauk Canada ULC. Lyme Timber actively forested the property in 2015 following SFI standards as a certified SFI forestry management company. Lyme Kenauk Canada ULC was purchased by the other partners of the territory in September 2015, and the company name was changed to Kenauk Canada ULC. In building a sustainable forestry model that will allow for responsible stewardship of the land in keeping with the long term conservation objectives of the territory, Kenauk Canada is committed to using local forestry contractors as a means to develop long term business relationships that support its sustainable harvesting operations.(kenauk Forest Management System Manual) The forests of Kenauk are reflective of the Great Lakes St. Lawrence forest region. More than two thirds of the area is in stands of Hard Maple and Yellow Birch, with the remainder being a mix of hardwoods with a minor component of White Pine and Hemlock. There is a very small amount of balsam fir forest on the property. Audit Results During the field audit five sites were inspected, which included the four harvest compartments operated in 2016/2017. The majority of the harvesting was undertaken using the single-tree selection system, though inclusions of pine and semi-shade intolerant species (e.g. oak, charry and yellow birch) are harvested using the shelterwood system. Four water crossings were inspected along with one site where the crossing had been removed. Several landings were inspected, two of which had excessive amounts of sash and debris remaining on site. A CERFO research trial was visited along with a University of Quebec permanent sample plot. Most operations were found to have been undertaken with care and efficiency. Overall Kenauk Canada was found to conform extremely well to SFI Forest Management Standard. Objective 1-Forest Management Planning: A ten-year forest management plan was developed and approved by government agencies in based on the overall conservation and business objectives of the forest. Kenauk Canada -2- Bureau Veritas Certification SFI Forest Management Audit Report Jan 2015

3 practices adaptive management which is used to continually refine and improve their management practices. Forest conversions do not typically occur on Kenauk with one exception. In the central area of the property there was a planted jack pine stand which is not native to the area. This area has been clear cut and is regenerating naturally to native hardwoods. No other conversions are occurring on this landbase. Objective 2-Forest Health and Productivity: The forests of Kenauk are generally tolerant and semi-tolerant stands of maple, yellow birch, oak, and American beech. Silvicultural prescriptions generally call for either selection or shelterwood harvesting to promotes natural regeneration (Figure 2). The regeneration policy identifies standards for determining the success of both natural and artificial regeneration. During the field audit vigorous regeneration was observed on all sites. By employing partial harvesting systems and retaining well stocked stands the losses from wind and ice events can be minimized. Where a species is being impacted by a serious pest such as Emerald Ash Borer sanitation cuts are used to remove susceptible trees. Through continuous monitoring of the property invasive pests will be detected early when treatments can be most effective. The effects of the current outbreaks of both Forest Tent Caterpillar and Eastern Tent Caterpillar were evident throughout Kenauk with heavy defoliation in the aspens, cherries and oaks. Kenauk staff are monitoring the situation. Objective 3-Protection and Maintenance of Water Resources: This objective was not directly audited, but field sampling undertaken by the auditor found very good water crossings. and no situations where water quality was a concern (Figure 2) Figure 2. A rock barrier installed on a repaired crossing to prevent chronic Beaver Damage -3- Bureau Veritas Certification SFI Forest Management Audit Report Jan 2015

4 Objective 4-Conservation of Biological Diversity: Part of Kenauk s mandate is related to conservation of native biodiversity. The focus is on maintaining and restoring native ecosystems, protecting riparian and habitat values. The management plan provides criteria for retaining stand level values. As the forest is management primarily with selection harvesting systems there is no lack of snag, mast trees, and den trees. Field observations verified the presence of ample stand level retention of valuable habitat trees and plenty of downed woody debris. The forest management plan provides a complete description of the forest, including age class and forest types Kenauk is a conservation oriented organisation which participates with numerous partners. They are currently working with the Quebec government and the Nature Conservancy of Canada to permanently protect the Black Maple stands in the southern portion of the forest. Objective 5-Management of Visual Quality and Recreational Benefits: This objective was not directly audited, but field sampling undertaken by the auditor found that recreational buffer are being maintained (Figure 3). Kenauk has an aesthetics policy which has been well implemented for the most part. Two landings were observed where excessive slash and debris were found. The situation had been uncovered by the forestry staff and they are working with the contractor on corrective actions. Objective 6-Protection of Special Sites: Figure 3. During the audit a historic road between Montebello and Mont Tremblant was inspected, and found to be well protected. The forest has been extensively inventoried for forest values and special sites in a cooperative project with the Nature Conservancy of Canada. There are currently three special site identified for protection on the forest: 1) A Black Maple (Acer nigrum) stand. Black maple is quite rare in the region. This site is in the -4- Bureau Veritas Certification SFI Forest Management Audit Report Jan 2015

5 process of being sold to the Province of Quebec to ensure its permanent protection. 2) A wildlife corridor bisecting the property, and 3) A historic portage Objective 7-Efficient Use of Fiber Resources: This objective was not audited. Objective 8: Recognize and Respect Indigenous People s Rights: Kenauk has adopted a written policy to recognize and respect the rights of Indigenous Peoples of the region. There are four first nations in the area, though none has as yet expressed an interest in Kenauk. A historic portage across part of the property is being protected as a special site. Objective 9-Legal and Regulatory Compliance: This objective was not audited. Objective 10-Forestry Research, Science and Technology: Forestry research is central to the mission of Kenauk Canada and the Kenauk Institute. They have implemented a Forest Partnerships Policy which has brought the resources of several outside agencies to the property to undertake research. Current projects include: 1. Le Centre d'enseignement et de Recherche en Foresterie (CERFO) - LIDAR and Vernal Pool identification Project 2. CERFO - Integrate Resource Management Project 3. Nature Conservancy of Canada - Biodiversity Inventory 4. McGill University - Black Maple Project 5. Natural Sciences and Engineering Research Council of Canada (NSERC)/ - Biodiversity project 6. NSERC - Hydrology and Vernal pool project 7. NSERC - Tree Growth and productivity Project 8. NSERC - Forest resilience project 9. CERFO - LIDAR/WORLDVIEW3 multi-spectral analysis initiative to identify tree species and invasive elements. 10. CERFO - In-field training of operators/contractors initiative (including SFI standards). During the audit a number of research trials were visited including the CERFO selection harvest trials (10) and the NSERC permanent sample plot (5,7,8). Objective 11-Training and Education: This objective was not audited. Objective 12-Community Involvement and Landowner Outreach: This objective was not audited. Objective 13: Public Land Management Responsibilities: -5- Bureau Veritas Certification SFI Forest Management Audit Report Jan 2015

6 Not applicable to Kenauk Objective 14-Communications and Public Reporting: Transparency and public communications are core values at Kenauk. They publish a quarterly Forestry Report which describes the variety of activities on the forest. Additionally, the Kenauk Institute provides an annual report on all research activities on Kenauk. Kenauk submitted its annual report data to SFI on time in Their initial audit report can be found on the SFI Inc. website. Objective 15-Management Review: Kenauk Canada ULC management met August of 2016 to perform an internal audit of the SFI Forest Management Standards. This audit included a review of the management review system itself, a review of progress in implementing the SFI standards, a review of findings with the company owners, and a final update of the Forest Management System Manual to ensure that audit recommendations were addressed. Findings Previous non-conformances: Not Applicable Non-conformances: None Opportunities for Improvement: 1) On two large landings there was excess amounts of debris left on site in violation aesthetics guidelines. Kenauk staff have identified the issue and are working with the contractor to improve the situation and create landings free of debris. Future audits will concentrate on this aspect. (PM 5.1 Ind. 20) Notable Practices: 1) Kenauk s forestry staff are testing the use of marking the trees to retain in selection harvests instead of the trees to remove. This reversal of tradition appears to reduce residual stand damage, as the loggers are more aware of the trees that are to form the next crop rather than the current crop and hence they receive better protection (PM 10.2 Ind. 1). Logo/label use: Procedures are in place for the proper use of the SFI trademark. It is anticipated that they will use the trademark promotionally. SFI reporting: Kenauk submitted its annual report data to SFI on time in Their initial audit report can be found on the SFI Inc. website. Conclusions A closing meeting was held on June with the client. Based upon the evidence presented and observations from the field inspections it is evident that Kenauk Canada is in continued conformance with the SFI Forest Management Standard. They are recommended for continued certification. -6- Bureau Veritas Certification SFI Forest Management Audit Report Jan 2015

7 SEE SF61 FOR AUDIT NOTES Summary of Audit Findings: Audit Date(s): From: June To: June Number of SF02 s Raised: Major: 0 Minor: 0 Is a follow up visit required: Yes No X Date(s) of follow up visit: Follow-up visit remarks: Team Leader Recommendation: Corrective Action Plan(s) Accepted Yes No N/A X Date: Proceed to/continue Certification Yes X No N/A Date: Aug All NCR s Closed Yes No N/A X Date: Standard audit conducted against: 1) SFI 2015 FM 3) 2) 4) Team Leader (1): Team Members (2,3,4 ) Brian Callaghan 2) 3) 4) 5) Scope of Supply: (scope statement must be verified and appear in the space below) Forest Management Accreditation's ANAB Number of Certificates 1-7- Bureau Veritas Certification SFI Forest Management Audit Report Jan 2015

8 Proposed Date for Next Audit Event Date June Audit Report Distribution Rober Vanier Missy Valdez Clause Opening Meeting June 20 AM Closing Meeting June 21 PM Participants: Discussions: Participants: Discussions: Audit Report Robert Vanier, Pascal Audet Introductions Scope of the audit Audit schedule/plan Nonconformance types Major / Minor Review of previous nonconformances - 0. Process approach to auditing and audit sampling Confidentiality agreement Termination of the audit Appeals process Closing meeting timing Robert Vanier, Pascal Audet Introductions and appreciation for selecting Bureau Veritas Certification. Review of audit process - process approach and sampling. Review of OFIs and System Strengths 1 on landing debris Nonconformances - 0 Date for next audit. Reporting protocol and timing -8- Bureau Veritas Certification SFI Forest Management Audit Report Jan 2015

9 -9- Bureau Veritas Certification SFI Forest Management Audit Report Jan 2015

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