In this study a forest biorefinery concept based on larch wood was technically and economically evaluated. Two slightly different cases of a larch-based biorefinery were compared to conventional kraft pulping. The wood chips of Larix sibirica (Lebed.) were pre-extracted (PE) and washed with water prior to pulping, in order to generate an additional sugar side-stream. The sugars were hydrolyzed into monosugars, which were then fermented by Bacillus coagulans into lactic acid. The lactic acid needs to be purified before sold to the market. By pulping the pre-extracted wood chips with anthraquinone (AQ) and polysulfide (PS),, the pulp yield loss was reduced. The pulp was then bleached (O-D0-Ep-D1-P). The products of this larch biorefinery are bleached softwood pulp and lactic acid. Three process cases were simulated: conventional kraft pulping, PE-PSAQ with 0.5% PS, and PE-PSAQ with 2% PS, in terms of mass and energy balances. Considering the availability of larch resources, this kind of a biorefinery could suitably be located in Siberia, Russia. Market prices were collected, and based on the simulation results, cash flows were determined. Sensitivity analysis was carried out, and investment costs were estimated. Based on the simulation with the addition of a lactic acid production line to an existing pulp mill, the payback time for the investment costs would be about 16 months.