Vaagen Brothers Lumber named new operator at the Midway Mill
Vaagen Brothers Lumber Inc. from Colville, WA has signed an agreement to operate the Midway sawmill as the first offering of shares to the public was rolled out this week. Boundary Sawmills Inc. (BSI) board members and city officials were on hand at a series of meetings in Midway, Rock Creek and Greenwood to present the offering memorandum for shares and to answer questions about the plans for reopening the Midway mill. “We have chosen Vaagen Brothers Lumber from Colville and we are excited about this opportunity. Vaagen’s are a proven family business which intends to invest millions of dollars of their own money in the Midway Mill,” said Stephen Hill, promoter of the project. “They are small town, not corporate Howe Street or Bay Street; they share the same small town values that we do, here in the Boundary area we call home.” Investments through BSI will initially be put towards the purchase of the sawmill from Fox Lumber Inc. and that deal is set to close at the end of the month, said Hill. The cost of the mill and land is approximately $2.8 million with over $500,000 that will be returned to the Village to cover taxes owed for the past three years. Once the mill has been covered, investments will be used to secure long-term fiber supply for the mill operator. “We want to purchase fiber for $25 – 30 per cubic meter and sell it for a net yield of $3 per cubic meter per year in perpetuity,” explained Hill. “In order to minimize your risk and ensure the long-term success of the mill, BSI is not going to operate the mill ourselves. This lease is intended to create a high level of success…We anticipate a minimum lease agreement of $5,000 per month. A royalty agreement could drive this as high as $38,000 per month based on volumes.” Vaagen has advised BSI that they have primarily Australian markets and have orders that they are not able to fill, Hill added. They are purchasing a specialty saw from Finland to allow them to cut trees with as small as two inch tops. Hill indicated that Vaagen may have met with Interfor to discuss possible overlaps with their timber supply, and are meeting with the local woodlot owners in January. Questions from the over 50 people at the meeting clarified share owners responsibilities, environmental considerations, and timelines for the mill to be up and running. Hill explained that the environmental assessments were completed in 2008 and once Vaagen takes over there will be another snapshot taken of the site. Vaagen will be expected to return the site to the current condition if they leave. Vaagen hopes to be on site in January, running experimental lines in the spring, with shifts running for operations by the fall of next year. BSI’s founding board of directors includes: Doug McMynn, president; Rick Hanson, director; Manroop Padda, director; Reid Hedlund, vice-president woods; and George Delisle, vice-president forests. With a lead investor from Manitoba, Donald Hudson, putting $150,000 up front and holding 300,000 shares, Septen Marketing Ltd. holding 250 shares, Sanderson and Company Business Services Ltd. Holding another 250 shares, and the Village of Midway holding 250,000 shares for their investment, the offering is now open to anyone interested in buying stock. Up to $5 million can be purchased in the non-voting category of shares as well as options to purchase voting shares. An additional $3 million is earmarked for a possible agreement with Okanagan First Nations groups in exchange for fiber or cash.
“If people in Manitoba can believe in the mill, people of our community can. Investing in this mill is an investment back to your community,” said Hill.