** Shares of U.S. forest products company Weyerhaeuser WY.N rise ~1% to $25.42 in extended trading

** Company to sell its lumber mill in Princeton, British Columbia, to wood products manufacturer Gorman Group for nearly C$120 million ($86.58 million)

** WY expects to recognize a gain on the sale and incur a tax liability of about C$15 million

** Company says that other operations in Canada will not be affected by this transaction

** Adds that it will continue to operate the Princeton mill independently of the Gorman Group until the transaction closes

** Transaction is subject to regulatory review and is expected to be completed in Q3

** Up till last close, stock down ~10% YTD

($1 = 1.3860 Canadian dollars)

(Reporting by Pooja Menon in Bengaluru)

((Pooja.Menon@thomsonreuters.com))