Exhibit 10.5.1





Exhibit 10.5.1




PORTIONS OF THIS EXHIBIT DENOTED WITH THREE ASTERISKS (***) HAVE BEEN

OMITTED AND WILL BE SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT

WITH THE SECURITIES AND EXCHANGE COMMISSION.




TIMBER HARVESTING MANAGEMENT AGREEMENT AMENDMENT




THIS AGREEMENT made as of the 1st day of January, 2008.



BETWEEN:




CATALYST PAPER CORPORATION, 2nd Floor, 3600
Lysander Lane, Richmond, British Columbia, as managing partner for
and on behalf of CATALYST PAPER, a general partnership of
Catalyst Paper Corporation and Catalyst Pulp Operations Limited




(“Catalyst”)



AND:




TIMBERWEST FOREST CORP. and TIMBERWEST FOREST
COMPANY, a partnership of TimberWest Forest Corp. and
TimberWest Holdings Ltd., 2300 — 1055 West Georgia Street,
Vancouver, British Columbia




(collectively “TimberWest”)



WHEREAS:




	A.	 	TimberWest makes sawlogs and shingle logs available to Catalyst’s wood chip suppliers
pursuant to an agreement dated the 1st day of January, 1998 entitled “Amended and Restated
Timber Harvesting Management Agreement” (the “Existing Agreement”) now between Catalyst (as
successor to Fletcher Challenge Canada Limited) and TimberWest (as successor to TimberWest
Forest Limited); and







	B.	 	The parties have agreed to amend the Existing Agreement in consideration of certain changes
to other agreements between Catalyst and TimberWest;






THEREFORE in consideration of the premises and the mutual covenants hereafter set out and other
good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the
parties agree as follows:




	1.	 	Definitions.







In this Agreement:




	 	(a)	 	unless otherwise defined herein, terms used in this Agreement that are defined
in the Existing Agreement have corresponding meanings;







	 	(b)	 	“Chip and Pulplog Supply Agreement” means the amended and restated Chip and
Pulplog Supply Agreement made as of June 23, 1997 now between Catalyst (as successor to
3264891 Canada Limited and 3264912 Canada Limited) and TimberWest Forest Corporation
(as successor to TimberWest Forest Limited), as amended, restated or replaced from time
to time;





 


 









 











	 	(c)	 	“Chips” means Residual Chips and Whole Log Chips;

	 
	 	(d)	 	“Closure Date” means May 9, 2008;







	 	(e)	 	“Coast Chip Price” means, for a calendar quarter, a price equal to the most
common market price actually paid per Volumetric Unit of Residual Chips during that
quarter, on an F.O.B. scow (at seller’s mill located in the southern coastal region of
British Columbia) basis or equivalent, by pulp and/or paper mills located in the
southern coastal region of British Columbia for their own consumption under arm’s
length long term contracts (being contracts that have a term of not less than three
consecutive years and contracts having a term of not less than one year which are
renewable and which have been in force, in substantially the same form, for not less
than three consecutive years) for similar volumes, specifications, quality and species
of Chips calculated on a net to seller basis, including the deduction of any portion of
such price attributable to the transportation of such Chips to the buyer’s mill, which
price was, in the last calendar quarter of 2007:







	 	(i)	 	(***) per Volumetric Unit of hemlock or hemlock/balsam Chips;

	 
	 	(ii)	 	(***) per Volumetric Unit of sitka spruce Chips;

	 
	 	(iii)	 	(***) per Volumetric Unit of Douglas fir Chips;

	 
	 	(iv)	 	(***) per Volumetric Unit of red cedar Chips;

	 
	 	(v)	 	(***) per Volumetric Unit of yellow cedar Chips;







	 	(f)	 	“Elk Falls Sawmill” means the Elk Falls sawmill facility located at Campbell
River, British Columbia adjacent to Catalyst’s Elk Falls pulp and paper mill;







	 	(g)	 	“Log Supply Option Agreement” means the agreement between the parties dated the
date of this Agreement and entitled “Log Supply Option Agreement” as amended, restated
or replaced from time to time;







	 	(h)	 	“Residual Chips” means hemlock/balsam, coastal Douglas fir, sitka spruce, red
cedar or yellow cedar wood chips produced as a by-product of wood manufacturing,
including those produced from log yard debris, but excluding Whole Log Chips;

	 
	 	(i)	 	“Specifications” means the specifications for Chips set out in Schedule A;







	 	(j)	 	“Timber Harvesting Management Fee” means the fee payable by Catalyst to
TimberWest pursuant to Section 4.1 of the Existing Agreement;







	 	(k)	 	“Timber Harvesting Management Agreement” means the Existing Agreement as
amended by this Agreement and as further amended, replaced or restated from time to
time;





 


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	 	(l)	 	“Volumetric Unit” means 200 cubic feet of Chips as compacted in a scow when
fully loaded or 2.039 m3 of solid wood equivalent of Chips where “fully
loaded” means that the scow has been loaded:







	 	(i)	 	by gravity to its capacity with Chips in a manner that will
minimize voids and air spaces and as well achieve the maximum degree of density
of Chips for such scow as is usually achieved by proper loading of Chips;

	 
	 	(ii)	 	following the limitations that a prudent person exercising
reasonable care would observe; and







trimmed in such a manner as will render it to remain in a seaworthy condition
throughout its voyage to its destination in the judgment of the master of the vessel
of the towing agent;




	 	(m)	 	“Whole-Log Chips” means hemlock/balsam or coastal Douglas fir wood chips
produced from whole-log chipping.







	2.	 	Reduction in Timber Harvesting Management Fee







	2.1.	 	Reduction. The Timber Harvesting Management Fee is hereby reduced by (***) per year effective
January 1, 2008.







	2.2.	 	Payment of Reduction in Fee. TimberWest will pay the reduction in the Timber Harvesting
Management Fee to Catalyst by way of 4 equal quarterly instalments on or before the last day
of each calendar quarter while the Timber Harvesting Management Agreement is in effect.







	2.3.	 	Transition for 2008. In 2008, the (***) reduction in the timber harvesting management fee
will be reduced by an amount determined by multiplying (***) by the fraction (***), where
(***) is the volume of Residual Chips delivered to Catalyst from the Elk Falls Sawmill from
January 1, 2008 up to June 15, 2008 to a maximum of (***). The reduction in the Timber
Harvesting Management Fee for 2008 will be paid to Catalyst by the following payments:







	 	(a)	 	on June 30, 2008, the sum of (***); and

	 
	 	(b)	 	on September 30, 2008, the sum of (***); and

	 
	 	(c)	 	on December 31, the sum of (***).







Calculation: The Elk Falls Sawmill (other than the planar mill) closed on May 9, 2008. (***)
of Chips were supplied to Catalyst from the Elk Falls Sawmill during the period January 1,
2008 to June 15, 2008. The Timber Harvesting Management Fee reduction for 2008 will be
(***)


 


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	2.4.	 	Mitigation of Reduction in Fee. TimberWest can mitigate the reduction in the Timber
Harvesting Management Fee after July 1, 2010 on the following basis:







	 	(a)	 	If TimberWest directs an alternative supply of Residual Chips or Whole Log
Chips to Catalyst pursuant to one or more commitments or agreements for a period of
more than one year that meet the requirements in this Section 2.4, then the (***)
reduction would be reduced each year by an amount calculated by multiplying (***) by
the fraction (***), where V is the volume of chips delivered to Catalyst under such
commitments in the year to a maximum of (***) (except that if V is not at
least 50% hemlock/balsam Chips then V will be adjusted downwards to the point where the
volume of delivered hemlock/balsam Chips represents 50% of V);







	 	(b)	 	the price of Chips used to mitigate cannot exceed the Coast Chip Price for
Residual Chips regardless of whether the Chips used to mitigate are Residual Chips or
Whole Log Chips;

	 
	 	(c)	 	Sourcing of Chips used to
mitigate is subject to the following restrictions:






	 	(i)	 	while the Log Supply Option
Agreement remains in effect, (***)







	 	(ii)	 	after expiration of the Log
Supply Option Agreement, (***)







	 	(d)	 	any Chips directed to Catalyst must meet the following requirements:







	 	(i)	 	the Chips must meet the Specifications; and







	 	(ii)	 	Chips produced from different species cannot be mixed except
that hemlock and balsam Chips can be mixed and coastal Douglas fir and coastal
pine Chips can be mixed; and





 


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	 	(e)	 	the following Chips will not be considered as mitigating the reduction in the
Timber Harvesting Management Fee pursuant to this Section 2.4:







	 	(i)	 	Chips acquired by Catalyst using logs under the Log Supply
Option Agreement;







	 	(ii)	 	Chips acquired by Catalyst under the Chip and Residual Fibre
Delivery Agreement between TimberWest (then TFL Forest Ltd.) and the Teal Jones
Group dated May 5, 2004, as amended, restated or replaced from time to time;







	 	(iii)	 	Chips acquired by Catalyst through its own arrangements with
Chip suppliers.







	2.5.	 	Notice of Mitigation. TimberWest will provide notice to Catalyst by October 31 of each year
as to volumes of Residual Chips and Whole Logs Chips that TimberWest will use to mitigate the
reduction in the Timber Harvesting Management Fee under Section 2.4 for the following year,
including type, source, species, volume and commitment period.







	2.6.	 	Termination of Timber Harvesting Management Agreement. Without limiting the generality of
Section 3.1, if the Timber Harvesting Management Agreement is terminated pursuant to Section
2.2 thereof, expires or otherwise ceases to be in effect for any reason, the obligations of
TimberWest pursuant to this Agreement will cease effective as at the termination of the Timber
Harvesting Management Agreement.







	3.	 	General







	3.1.	 	Existing Agreement. This Agreement forms part of and is to be read together with the
Existing Agreement and the Existing Agreement as amended by this Agreement remains in full
force and effect.







	3.2.	 	Set-off. Any amount which TimberWest fails to pay when due to Catalyst under the Timber
Harvesting Management Agreement may be set-off against amounts owing to TimberWest by Catalyst
under the Log Supply Option Agreement, Timber Harvesting Management Agreement or Chip and
Pulplog Supply Agreement.







	3.3.	 	Binding Effect. This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.






IN WITNESS WHEREOF the parties have executed this Agreement.



CATALYST PAPER CORPORATION

as managing partner for and on behalf of

CATALYST PAPER




	 	 	 	 	 
	Per:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Per:
	 	 	 	 
	 

	 	 

	 	 






 


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TIMBERWEST FOREST CORP. on its own behalf

and as managing partner for and on behalf of

TIMBERWEST FOREST COMPANY




	 	 	 	 	 
	Per:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Per:
	 	 	 	 
	 

	 	 

	 	 







 


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SCHEDULE A




Chip Specifications





	1.	 	Chips will be produced from sound, bark-free wastewood such as logs, log-trim, sawmill
wastewood. Chips produced from green veneer will not be included.







	2.	 	Chips will be clean, of approximately uniform length and thickness, clean-cut, and free from
objectionable material of any kind that may adversely affect either the pulp quality or the
pulping process and equipment, including, rocks, sand, silt, coal, coal dust, hog fuel, rot or
bark in excess of the amount permitted, plastic or related materials, creosote or other
treated wood, burned material, soot, char, dried veneer or glue, or tramp metal, any toxic or
hazardous chemical including polychlorobiphenyls (PCB’s), pentachlorophenols (PCP’s) or any
material linked to the formation of any dioxin or furan compound, or any material that is
likely to pose a health or safety risk.







	3.	 	All Chips will be screened before delivery unless specifically agreed to in writing by the
Purchaser.







	4.	 	Chips will be cut to a nominal length of 19 mm in order to meet the following standards:







	 	(a)	 	not more than 3% true oversize consisting of Chips exceeding 45 mm in length or
an unfractured thickness of 10 mm in thickness or both (“true overs”);







	 	(b)	 	a minimum of 89% of Chips retained on a 7 mm round hole screen (not including
true overs);







	 	(c)	 	a maximum of 7% Chips, pin chips, fines and sawdust passing through a 7 mm
round hole screen and retained on a 3 mm round hole screen;







	 	(d)	 	a maximum of 0.5% Chips, pin chips, fines and sawdust passing through a 3 mm
round hole screen;

	 
	 	(e)	 	a maximum of 0.5% bark; and

	 
	 	(f)	 	a maximum of 0.5% rot.






Samples taken from any one truck load or barge load of Chips will meet the foregoing standards.



The above definition will be reviewed from time to time, but not more often than annually, and
revised to meet generally accepted industry practices for coastal British Columbia in place at that
time of the review.


 


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