Consumables

FORTRESS PAPER CLOSES ACQUISITION OF OPTICAL SECURITY ASSETS FROM THE BANK OF CANADA AND COMPLETES REBUILD OF BANKNOTE AND SECURITY PAPER MACHINE

Thursday 06. January 2011 - Fortress Paper Ltd. ("Fortress Paper" or the "Corporation") (TSX:FTP) is pleased to announce the successful completion of its acquisition of the assets of the Bank of Canada's Optical Security Material (OSM) division (the "OSM Assets"), which produces the optically variable material for the security threads contained in various banknotes, including application in the Canadian banknotes.

Fortress Paper is also pleased to announce that the rebuild of Paper Machine No. 1 (“PMI”) at its Landqart Mill, previously announced in January 2010, has been completed on time, is expected to be materially on budget and is currently in the paper production testing phase.
Acquisition of OSM Assets
Chad Wasilenkoff, Chief Executive Officer of Fortress Paper, commented, “As well as finalizing the acquisition of the OSM Assets, we have secured the employment services of the key members of the OSM team, which should facilitate a smooth transition. We are confident that we will be able to maintain operational continuity and production quality while integrating the OSM Assets into our operations.”
The OSM Assets acquired by Fortress Paper include certain patent applications and intellectual property rights to optical security features, unique security applications and substantially all of the production equipment and machinery currently used at the OSM division.
Paper Machine No. 1 Rebuild
Commencing in the first quarter of 2010, Fortress undertook a significant capital program to rebuild PM1 into a banknote and security papers machine. Prior to the rebuild, PM1 was utilized to produce specialty papers and low to medium security papers. The rebuilt PM1 is expected to increase the Corporation’s aggregate banknote and high security papers production capacity from the current 2,500 tonnes per annum to approximately 10,000 tonnes per annum.
Alfonso Ciotola, President of Fortress Paper, commented, “Completing this project on time and materially on budget is a credit to the experienced and skilled team at our Landqart mill. We look forward to further growing our banknote and high security papers business with the additional capacity available on the rebuilt PM1.”
Having successfully completed preliminary paper production testing on the rebuilt PM1, the Corporation anticipates that PM1 will be ready for commercial banknote and high security papers production in January 2011.