MERCER INTERNATIONAL INC. PP&E Disclosure

Property, plant and equipment, net as of December 31, 2025 and December 31, 2024, was comprised of the following:

In late 2025, a revised forecast reflecting sustained weakness in hardwood pulp prices led the Company to perform a recoverability test on the long-lived assets of its Peace River mill, referred to as the “asset group”. Based on this assessment, the Company determined that the asset group’s carrying value was not recoverable through forecasted undiscounted future cash flows. Consequently, an impairment charge of $203,435 was recognized, representing the excess of the asset group’s carrying value of $328,720 over its estimated fair value of $125,285. Of the total impairment, the Company charged $176,944 and $26,491 against property, plant, and equipment and intangible assets, respectively. The remaining assets within the asset group are reported under the pulp segment. The asset group’s fair value is a Level 3 measurement derived from a discounted cash flow model. This valuation relies on significant unobservable inputs, including estimated periods of operation, future production and sales volumes, selling prices, fiber costs, and long-term growth and discount rates. The model utilizes a 2% long-term growth rate and an 11.5% discount rate. Estimated selling prices were derived from forecasts provided by an independent third-party pricing service.

In 2025, the Company recognized an impairment loss of $12,247 related to certain non-core equipment identified as obsolete. Based on the results of a recoverability test, the Company determined these assets had no future service potential and were written down to their estimated fair value of approximately $1,144. The fair value measurement of the non-core equipment was determined using Level 3 unobservable inputs, reflecting management's assessment of nominal salvage value and the absence of an active secondary market.