Mark Davis, President & CEO

Good afternoon, ladies and gentlemen.

I'm pleased to review with our unitholders Chemtrade's achievements of 2003, our second full year of operations.

Chemtrade was a significantly different organization in 2003 than it was for its first 18 months of existence.

2003 saw us integrate both the Performance Chemicals assets, which we acquired at the very end of 2002 and the Pulp Chemicals business that was acquired in August.

Before Vic reviews the financial results for 2003 and the first quarter of this year, I want to comment on our achievements since the IPO, the four strategic themes that led to those results, and outline our expanded business and how it fits with those themes.

Since Chemtrade's IPO in 2001, we have steadily increased our annual distribution rate from an IPO rate of $1.47 per unit to the current rate of $1.80, or an increase of over 20%.

At the end of 2003, the units closed at $18.05 on the TSX, which means that a unitholder who invested at the time of the IPO would have enjoyed a total return, that is, the capital appreciation plus the cash distributions, of 120%.

Our key financial objective is to deliver reliable, sustainable and growing distributions. To that end we have focused on four strategic themes.

1. Financial prudence - specifically, a conservative distribution policy and leverage position. Under our distribution policy, we plan to meet our indicated distributions despite holding back some distributable cash to provide stable distributions even in the event of unforeseen interruptions to the normal course of business, which indeed happened in 2003. Vic will comment on leverage later.

2. Business model - our business model seeks to mitigate the effect that changes in commodity prices and volume could have on our earnings. I'll illustrate this a little later when I'm reviewing our operating segments.

3. Sustainable earnings - our strong focus on operational excellence, including integration of our acquisitions, attention to cost control, relationship management and incremental growth, are key elements in delivering long-term sustainable earnings from our businesses.

4. Growing distributions - the increased scale and diversity of our earnings, which was clearly evident in 2003 with our acquisitions, results in lower overall business risk.

With that as background, I would now like to briefly review our 2003 achievements and relate those achievements to the strategic themes I just outlined.

Let me start by saying that 2003 was a great year for Chemtrade. The year started with the addition of the Performance Chemicals operations, which we acquired at the end of 2002. Then, in August, we completed the acquisition of the Pulp Chemicals business. Both operations were successfully integrated into Chemtrade during the year.

The addition of these businesses expanded and diversified our sources of earnings and distributable cash, thus enhancing the reliability and sustainability of our distributions. Of course, it also enabled us to increase distributions to unitholders, from $1.59 per unit in 2002 to an annualized rate of $1.80 per unit by the end of 2003.

In addition to integrating these new businesses, 2003 also contained a number of challenges. Chemtrade endured a three-month labour dispute at our largest sulphur products supplier; raw material cost increases that impacted our Performance Chemicals business; and of course, the negative effects of a stronger Canadian dollar. Despite these challenges, our financial performance for the year came in close to our expectations.

With the increased array of income trusts now in existence, and the great variety of businesses they cover, I think it's important for unitholders to understand Chemtrade's business, and the changes that have taken place over the past year. Some of you have no doubt heard parts of this before, but I hope you will bear with us for a few minutes.

Chemtrade provides industrial chemicals and services to customers in North America and around the world. In North America we operate two business segments – Sulphur Products & Performance Chemicals, or SPPC, and Pulp Chemicals. SPPC encompasses our original North American sulphur products operations, and sodium hydrosulphite, or SHS, operations. Pulp Chemicals, as I said, was acquired in August last year. BCT Chemtrade conducts our international business.

Through marketing services agreements and our own production facilities we are one of the world's largest suppliers of sulphuric acid, liquid sulphur dioxide and SHS. We are also a leading regional supplier of sulphur and sodium chlorate.

Our business model is intended to mitigate the effect that changes in commodity prices and volumes could have on our earnings. As a general statement we seek to mitigate the effect that commodity fluctuations could have on distributions by;

Outside of our Pulp Chemicals business, we have primarily focused on sulphur-based chemicals. We obtain sulphuric acid, SO2 and sulphur primarily from base metal smelters and oil refineries. These products are produced as a result of environmental laws requiring industries to capture sulphur emissions resulting from the production of their core products.

Removal of these products is critical to producers, as they could not operate without Chemtrade's removal services. Chemtrade provides guaranteed removal services for approximately 40 key producers, and in its 70 year history has never caused unscheduled downtime for a producer. The products we remove are valued core ingredients for other industries. So Chemtrade markets and distributes the products it removes to a number of different industries and over 300 customers.

Most of these products are commodities. Therefore, it is important to minimize our exposure to commodity price and volume fluctuations. Our business model follows the general premise that the less you can differentiate your product in the market place the more the commodity risks should be allocated to the producer of the product.

Following the acquisition of the Performance Chemicals assets, Chemtrade became the largest North American producer of SHS and one of the largest producers in the world. This is a great fit with our original business since one of the key raw materials is liquid SO2 . The SHS operations are the largest purchaser of SO2 in North America and Chemtrade is North America's largest supplier. Our SHS operations allow us to use the SO2 we obtain from our producers to produce SHS, a higher valued sulphur product.

The majority of our SHS sales are to the pulp and paper industry, where it is used primarily for bleaching mechanical and recycled pulps used in newsprint production. Most of the remainder is sold to the textile industry for bleaching indigo and vat dyes. We are the sole supplier to most of our customers and have excellent long-term customer relationships.

We are the clear market leader in North America, with a market share more than double that of our nearest competitor. Finally, Chemtrade is the only North American producer of powder SHS and, accordingly, is the only producer able to offer product in either powder or liquid form.

From a business model perspective,

•  SHS is a product that can be differentiated in the market based on form (powder or liquid), formulations and performance;

•  As the market leader, Chemtrade has a strong competitive position; and

•  Due to the SO2 linkage and steps we are taking to restructure other raw material contracts, we believe that we can add further stability to the cost of the commodity inputs.

Finally, let me describe our newest business, Pulp Chemicals in more detail.

In August last year, we acquired the operations and assets of BC Chemicals, a wholly owned division of Canfor for a total cost of $119.4 million.

Based in Prince George, British Columbia, Pulp Chemicals produces sodium chlorate and crude tall oil, or CTO, both of which are chemicals used by the pulp and paper industry. Sodium chlorate is used to bleach pulp, and crude tall oil is used as a less expensive alternative energy source to natural gas. The bulk of Pulp Chemical's earnings are generated from sales of sodium chlorate.

The sodium chlorate facility consists of two cell lines having total capacity of about 78,000 tonnes per year. In basic terms, the cell lines undertake a very simple process of combining salt and water, and then passing electricity through the solution to produce sodium chlorate.

Both the sodium chlorate and CTO plants are efficient state-of-the-art facilities that have been well maintained and upgraded. Excluding the major anode project (which will not be required again for at least 10 years) annual maintenance capital expenditures have averaged about $500,000 over the last 5 years.

The Pulp Chemicals business diversifies Chemtrade's contractually based cash flow among a broader group of customers, products and geographies, reducing the risk associated with any one factor.

From a business model perspective we have contractually mitigated a significant portion of the commodity price and volume risks as follows:

•  The acquisition was structured to include 10-year exclusive contracts with Canfor, expanding Chemtrade's existing long term contract base by providing new long-term, stable, contractual earnings streams. We expect to earn approximately 65% of the pro forma Pulp Chemicals EBITDA from the Canfor long-term contracts.

•  Canfor will continue to purchase about 70% of the sodium chlorate capacity at a price that will be adjusted to reflect changes in approximately 95% of the variable manufacturing costs; further, another 15% of the sodium chlorate capacity is sold to other customers under long-term contracts.

•  Chemtrade will toll process Canfor's soap skimmings into CTO and Canfor will pay a fee to Chemtrade to compensate for a complete recovery of the processing costs plus a fixed dollar profit margin.

Victor Wells, VP Finance & CFO

Thank you, Mark and good afternoon ladies and gentlemen.

As you know, the Performance Chemicals acquisition at the end of 2002, and the Pulp Chemicals acquisition in August 2003, substantially changed Chemtrade financially as well as operationally.

Year over year numbers are not directly comparable; however, they do illustrate the point Mark made about the scale and scope of our operations, and how they have benefited unitholders.

These overall results for the year were close to our expectations, despite the challenges of the three-month labour dispute at our largest sulphur products supplier, raw material cost increases that impacted Performance Chemicals, and the rapid and significant increase in the value of the Canadian dollar.

The key measurement of our performance is cash distributions, and in 2003 unitholders enjoyed a steady increase in the distribution rate. At the time of the Performance Chemicals acquisition, we established a monthly distribution of 11 cents per unit, effective January 2003, and a quarterly supplemental distribution of 11 cents per unit, effective for the first quarter of 2003.

Before moving on to a review of our renewed financing arrangements and the matter of foreign exchange, let me briefly summarize our first quarter results.

For the three months ended March 31, 2004, cash available for distribution was $12.3 million, or 54 cents per unit, generated from revenue of $80.9 million and EBITDA of $15.1 million. In the first quarter last year, distributable cash was $7.6 million, or 47 cents per unit, revenue was $67.4 million, and EBITDA was $9.7 million.

The principal reason for the increase over last year is the acquisition of Pulp Chemicals at the end of August 2003.

Looking at the segmented results, SPPC generated EBITDA of $11.6 million in the first quarter compared with $10.8 million last year. These results exceeded our expectations for the quarter, with all major product areas of SPPC achieving higher earnings than the same period in 2003.

Pulp Chemicals reported EBITDA of $5.1 million for the quarter, which was its second full reporting period as part of Chemtrade. While there is no comparison with the same period last year, Pulp Chemical's results were approximately half a million dollars ahead of the fourth quarter of 2003. Although this was slightly below expectations due largely to weather issues affecting Canfor's mills in January, we were pleased with the performance of this business and the fact that it is smoothly integrating into Chemtrade.

BCT Chemtrade's results were essentially level with last year, reporting EBITDA of $1.4 million compared with $1.3 million last year.

This year we have added a fourth, non-operating, segment – Corporate, which provides centralized services such as treasury, finance, information systems, human resources and risk management. For the first quarter, corporate costs were
$3 million compared with
$2.3 million last year. These costs reflect the larger scope of the business including such things as increased IT and risk management costs.

Let me turn for a minute to our capital structure. In early March, we finalized a new bank deal, which ensures that the earliest maturity date of our term bank debt is now March 2008. Our previous bank deal required a repayment of principal in May 2005.

One of the factors that adversely affected our 2003 results was the stronger Canadian dollar, and I would like to comment briefly on the impact of foreign exchange on Chemtrade and actions we have taken to manage it. The Fund's U.S. operating subsidiaries and BCT Chemtrade report in U.S. dollars. Prior to the Pulp Chemicals acquisition, approximately 60% of the Fund's EBITDA was generated in U.S. dollars. With the inclusion of Pulp Chemicals, this has declined to approximately 50%.

We do have some natural hedges such as US dollar bank interest, certain capital expenditures and transportation costs that mitigate the impact.

After reviewing our 2004 cash flow budgets, we decided to hedge our U.S. dollar cash flows and entered in to a number of contracts that lock in an exchange rate for a portion of the U.S. dollar cash flow we receive. We have now locked in 100% of our expected cross-border flows for 2004 at a rate essentially equal to the exchange rate assumed in our Plan.

I'll now hand the podium back to Mark.

Mark Davis, President & CEO

Thank you, Vic.

While we were pleased with our performance in 2003 and our start to 2004, we believe that further improvements can be made to our existing businesses.

As I mentioned at the outset, to ensure sustainable earnings we are focusing on operational excellence, relationship management and incremental growth.

As an example, in January we implemented certain organizational changes at SPPC. These changes are designed to broaden our customer programs, improve integration of production and marketing activities, and generally realize synergies and improve efficiencies from our broader business. The changes, which include some new hires, have gone smoothly and we believe they will further strengthen the long term sustainability of our earnings.

Looking ahead, we remain confident we will meet our commitments to unitholders.

The outlook for demand for our products remains favourable, and we will continue searching for ways to improve our operations and enhance our business and distributable cash.

•  The benefits of the broadened earnings base and increased scale were clearly evident in 2003 as we were able to increase distributions to unitholders despite unexpected operational interruptions, cost pressures, and the strengthening Canadian dollar that affected distributable cash.

•  Finally, we could not have reached our goals in 2003 without our experienced and dedicated team at Chemtrade. Their ability to deal with challenges and change were a critical factor in our success, and I thank them for their valuable contribution.

We continue to measure our performance in relation to our key financial objective of delivering reliable and sustainable distributions to our unitholders. We met our objective in 2003 and are confident of succeeding again in 2004.