BRITISH COLUMBIA --  Despite a 3 percent drop in lumber production, Interfor Corporation earned $11 million in the third quarter on sales revenue of $373 million, a $100 million gain over the $273 million in the third quarter last year.

Lumber production of 567 million board feet during the third quarter was down 15 million board feet from the second quarter. However, adjusting for the Beaver-Forks operation, which was closed permanently at the end of the second quarter, production was up 7 million board feet compared with the second quarter and up 143 million board feet relative to the third quarter of 2013.

The company said North American commodity lumber prices should continue to reflect the slow but steady increase in U.S. housing demand during the fourth quarter. Demand and prices in China are expected to remain stable in the fourth quarter, while Japan is expected to remain soft.

The company approved a $50 million project to upgrade the company's sawmill in Castlegar, B.C. The mill will be converted to a two-ling operation with state-of-the-art technology and optimization. Rated capacity of the mill calculated on a full two shift basis will be in the range of 210 million board feet per year compared with the current level of 185 million board feet. The Castlegar project will be similar to other mill upgrades undertaken by Interfor, including the company's sawmills at Port Angeles, Adams Lake and Grand Forks.

The Castlegar project is scheduled for completion in the fourth quarter of 2015.