MARK DAVIS
President & CEO

Good morning ladies and gentlemen. Thank you for joining us on this conference call and webcast.

Joining me today is Vic Wells, Vice-President, Finance and Chief Financial Officer. Vic and I will answer any questions you may have following our remarks.

At the time of our IPO last year, we said our key objective was to deliver stable cash flow and reliable and sustainable distributions. We also said we would aggressively seek opportunities to grow sales and earnings to increase distributions to unitholders.

Before reviewing this acquisition, I would like to take a few moments to restate the strategies for growth we have been pursuing, and the criteria we look for in the various potential acquisitions or expansions we have considered.

Broadly, and as stated in our IPO Prospectus and on our last conference call, our growth strategies include:

• Expanding the group of producers to which we supply removal services.

• Increasing the sales value of our commercial by-products by upgrading them to higher value products.

• Expanding the products and services we supply to our end-use customers, and

• Leveraging our core competencies in service and infrastructure

• It must build off our existing core competencies.

• It must have stable, sustainable earnings either as a result of contracts, the nature of the industry, or product/service differentiation.

• It must have minimal sustenance/maintenance capital expenditure requirements.

• Ideally, it must have further growth potential; and

• Finally, it must be accretive to existing unitholders.

With that background, let's look at the Clariant transaction.

As you have seen in the news release, we're acquiring the North American sodium hydrosulphite business of Clariant International for US$62 million.

The business we are acquiring is the largest North American producer of SHS and one of the largest producers in the world.

SHS is used extensively in the pulp and paper and textile industries. Its major use in the paper industry is for bleaching mechanical pulps and for decolorizing recycled pulp used primarily in newsprint production.

In the textile industry its primary use is for bleaching indigo and vat dyes.

The SHS business is the clear market leader with a market share over 45%. Size helps in this business. Scale allows the SHS business to use its production capacity, broad product offering and multiple geographic locations to meet customer needs and preferences and, in many cases, achieve preferred supplier status.

Further, by virtue of its size relative to competitors, the business carries significant purchasing power enabling it to negotiate attractive purchase prices for raw materials, solidifying its low cost position.

Next is relationships. The business has serviced the pulp and paper and textile industries for decades. Over that time it has developed long term customer relationships based on the quality of its products and an experienced, technically trained work force.

For example, the SHS business has ongoing relationships with customers such as Abitibi, Kruger, SP Newsprint and Georgia Pacific for terms ranging from 15 to 25 years.

The majority of the business's production volume is covered under long term agreements, with approximately 50% of volume under contract into 2005.

The SHS business has strategically located its facilities near its customer base. The SHS business manufactures both powder and liquid SHS, providing customers with choice and flexibility. While powder can and is shipped long distances to customers with dissolving and delivery infrastructure, liquid SHS has a limited shelf life and is shipped ready-to-use for only short distances.. The locations of the SHS business let it readily access its customer base and facilitates shorter order lead time and minimizes inventory and freight costs.

We hope that you now have at least a high level understanding of the industry, business and its competitive strengths. Let me now move to the strategic benefits of the acquisition.

The acquisition clearly diversifies our product base by adding SHS, and it increases the number of products and services we can supply to the pulp and paper industry which is already one of Chemtrade's primary customers. But, as we indicated at the beginning, this particular acquisition does more.

As you recall, one of our strategies for growth is to increase the sales value of our commercial by-products by upgrading them to higher value products. Further, our producing customers want to increase the amount of higher value by-products they produce. The Clariant acquisition fulfills both of these goals.

The largest cost component, in the manufacture of SHS is liquid sulphur dioxide, or SO2.

The Clariant SHS business is the largest purchaser of SO2 in North America, Chemtrade is the largest North American supplier of SO2 and the SHS Business is Chemtrade's largest SO2 end-use customer.

SO2 is our second largest contributor to earnings , after sulphuric acid...

Strategically then, the acquisition will permit us to use the SO2 we obtain from our producer customers to produce a higher value sulphur product, namely SHS. As the SHS Business is already our largest end-use customer today, we will have a dedicated outlet for a large portion of our SO2.

This significant demand base for SO2 will also be good news for our existing principal suppliers of SO2 who would like to increase the volumes of SO2 they produce and sell. The simple fact is that SO2, being a higher value by-product than sulphuric acid, provides a better margin for our producer customers, and for Chemtrade.

In short, the acquisition permits Chemtrade to integrate up the value chain and provides new value Chemtrade can deliver through its removal services to its current key suppliers of by-products.

On the financial side, we believe that the SHS Business acquisition is a very positive transaction for Chemtrade and our unitholders.

The strength of the business is obvious in the nine months ended September 30, 2002. Revenue for this period was C$96 million, generating EBITDA of C$15.8 million. On a historic and going forward basis, maintenance capital has run and is expected to be about C$3 million per year.

On a pro forma basis the combined businesses, that is, Chemtrade and the SHS business, would have produced EBITDA of C$36.4 million, and distributable cash of $27.1 million, or $1.69 per unit, for the 9 months ended September 30, 2002. Or, on a fully diluted basis, distributable cash would have been $30.2 million, or a $1.60 per unit for this 9 month period.

In terms of financing for the acquisition, it will be paid for from the proceeds of a new issue of units, convertible debentures and increased bank debt. The total cost of the purchase, including costs, is estimated at $106 million. We have conservatively financed this transaction.

The balance of the purchase price, approximately $24 million will be financed by an increase in our bank facility. This is a non-amortizing term debt maturing on May 31, 2005.

We continue to focus on maintaining the conservative leverage ratios expected of an income trust. The strength of our balance sheet continues to provide sufficient room to pursue incremental growth opportunities.

We have also expanded our revolving credit line. While we are acquiring inventory as part of the SHS transaction, we are not acquiring the balance of the business's working capital. Although we do not envision an immediate draw on the line, we want to guarantee sufficient liquidity going forward so have taken this precaution. The line is currently undrawn.

As I said, on a pro forma basis with the conservative leverage, the consolidated business would have generated distributable cash per unit of $1.69 or an accretion of over 20% for the nine months ended September 30, 2002. Since our IPO, we have attempted to establish a conservative, stable and sustainable distribution policy. Accordingly, we intend to continue our policy of monthly distributions of approximately 75% of our intended aggregate quarterly distribution and declare quarterly supplemental payments.

Annualized, this means that our distribution rate has increased from $1.60 to $1.76, or an accretion of 10%.

We are pleased to announce our intention to increase the monthly distribution from $0.10 per unit to $0.11, or a 10% increase commencing with our January declaration. Note that the January declaration will be payable to unitholders of record on January 31 and paid February 28.

Consistent with our policy we expect to declare a $0.11 per unit supplemental distribution in April following the March quarter end.

Thanks Vic.

To summarize, we believe this is an excellent deal for Chemtrade.

The acquisition fits Chemtrade's growth strategy for a number of reasons:

• It is a business we know and is a clear fit with our existing product base.
  
  
• It increases the value of one of our key by-products, SO2, by upgrading it to a higher value product, SHS.
  
  
• It provides additional value for our key removal customers.
  
  
• It expands the products and services we supply to our end-use customers; and
  
  
• It leverages our core competencies in service, marketing and distribution.

• It has sustainable earnings.
  
  
• The business has recently been substantially repositioned and now requires only minimal maintenance capital expenditures; and
  
  
• It provides Chemtrade with further growth potential as we are supplying more products to the pulp and paper industry, a key industry for Chemtrade.

Most important of all, it is immediately accretive to our existing unitholders, based on conservative leverage and payout assumptions.

Thank you for your attention. We would now be pleased to answer any questions you may have.