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The Paper Mill is a building used to produce Paper from Wood. Paper is, along with Indigo, used in the production of Books. Available @ 1000 merchants. Also, once placed, the Paper Mill cannot be moved.
The Haunted Paper Mill was introduced with the 2013 Halloween Event. It's buyable in the shop for 4450 Rubies and it produces Paper 50% faster than the normal Paper Mill, with only half the upkeep costs.