Timminco tries to placate investors
ANDY HOFFMAN
00:00 EDT Wednesday, April 23, 2008
Under siege from skeptics and short sellers, Timminco Ltd. yesterday reassured investors about healthy shipments of solar-grade silicon to customers during the first quarter, but the update failed to buoy the company's battered stock, which skidded 17 per cent on unanswered questions about the economics of its "breakthrough" technology.
The Toronto company said its subsidiary, Becancour Silicon Inc., produced and shipped 100 tonnes of solar-grade silicon to customers during the three-month period at "average selling prices in excess of $60 per kilogram."
Timminco said "each shipment was tested by an independent laboratory and met specifications set by customers."
The news release did not provide information on Timminco's cost of production.
In the past, the company has said it is targeting between $10 and $12 per kilogram, less than half the cost of other solar silicon producers.
Robert Dietrich, Timminco's chief financial officer, declined to answer further questions.
In a voice-mail message, he said the company's news release provided "adequate information to understand the company's position."
René Boisvert, Becancour's Quebec-based president and chief executive officer, did not return calls.
Timminco was the top performer on the Toronto Stock Exchange last year, when its share price surged from roughly 40 cents to more than $20 after the once sleepy company stunned investors by saying it had developed a metallurgical process to purify commodity-grade silicon to levels high enough for use in solar cells, and won supply contracts with several unidentified makers of solar cells.
Last month, Timminco said it had signed a contract with Q-Cells AG, the world's largest solar cell manufacturer, to provide 410 tonnes of solar-grade silicon in 2008 and 3,000 tonnes in 2009 at "fixed prices."
Timminco's stock soon soared above $28, giving it a market value of more than $2.5-billion.
Timminco started up its new, 3,600-tonne-a-year solar silicon plant in the first quarter.
It has not provided earnings or revenue guidance for its new solar division.
However, in a recent report, CIBC World Markets analyst Michael Willemse estimated that once the company expands its solar silicon production to a projected 14,400 tonnes in 2010, the solar division could generate revenue of $652.3-million and post earnings before interest, taxes, depreciation and amortization (EBITDA) of $514-million.
For 2008, Mr. Willemse is estimating solar division revenue of $116-million and EBITDA of $84-million.
He rates the stock a buy with a $30 target price.
But short sellers and others are raising questions about Timminco's claims it has come up with a process to cheaply produce solar-grade silicon.
Timminco has said its process applies existing metallurgy techniques.
According to a patent application and information released by the company, Timminco heats commodity-grade silicon in a rotary oven powered by natural gas.
It uses chemical slag and stirring to remove impurities such as boron and phosphorous from the silicon.
A source who has done extensive research on Timminco's claims says the key issue is how many times the silicon must pass through the process to achieve the desired purity.
The company has not said what its energy costs are for each pass, how much slag is used or how much commodity-grade silicon is needed to produce one kilogram of solar-grade silicon.
"What's mystifying to me is why the company doesn't come out and say, 'This is going to all be water under the bridge in a couple of quarters, we're going to have fantastic earnings and we'll be vindicated,' " the source said.
Timminco's stock has lost 30 per cent in the past three days.
TIMMINCO (TIM)
Close: $18.23, down $3.92
Wednesday, April 23, 2008
Timminco tries to placate investors CIBC Says $30.00 Target
Tuesday, April 22, 2008
GMP Loads Up As Anonymous Dumps+Q-Cells backs challenged silicon supplier Timminco
GMP Loads Up As Anonymous Dumps
Q-Cells backs challenged silicon supplier Timminco
Tue Apr 22, 2008 4:02pm EDT
FRANKFURT, April 22 (Reuters) - Germany's Q-Cells (QCEG.DE: Quote, Profile, Research), the world's largest solar cell maker, stood behind its Canadian silicon supplier, Timminco (TIM.TO: Quote, Profile, Research), which has recently drawn criticism about its operations.
Q-Cells Chief Executive Anton Milner told Reuters in an interview on Tuesday: "I sat down personally with the management to find out how they are doing, what they are doing and I had a very intensive discussion. We have a very high regard (for) the company and its management and what they've been able to achieve."
Timminco's stock fell C$3.92, or 17.6 percent, to close at C$18.23 on the Toronto Stock Exchange. The shares are off nearly 29 percent since Wednesday as questions mounted about the firm's silicon-purifying process.
A report in Barron's financial magazine questioned the company's claim that its technology can purify silicon for solar cells at a low cost, while the Globe and Mail newspaper reported that Wall Street investor Manuel Asensio, a short-seller with a reputation for bringing down companies, has also challenged Timminco's assertion.
Q-Cells signed a supply contract for directly purified metallurgical silicon with Timminco's subsidiary Becancour Silicon Inc (BSI) in March, which sees Q-Cells getting 410 metric tons this year and 3,000 tons in 2009, with prices fixed.
Q-Cells is negotiating a follow-up contract for up to 6,000 tons annually from 2010 to 2013, it said.
"The results that we have got on the Timminco product are with cell efficiency rates of well above 15 percent, which makes it a very interesting product, particularly given the cost of the alternative products," Milner said.
"The results on the sell side were positive and the product is very good and we are happy with the contract," he added.
Alternative products include polysilicon, whose prices have risen 20-fold in recent years as the solar sector began to compete with the semiconductor industry for the ingredient and supplies tightened.
Timminco has said it can purify metallurgical grade silicon at about half of what it costs its competitors. Last year, it shipped 89 tonnes of solar grade silicon to customers.
"With all technological developments there is risk. The largest risk is technology and they seem to have mastered that very well. There are normal ramp up risks beyond that, but those affect everybody," Milner said.
Q-Cells's Milner confirmed the company's outlook, which it raised in March after securing further silicon supplies.
Q-Cells expects sales to rise to 1.275 billion euros ($2.02 billion) this year and to more than 2 billion euros in 2009, while striving for a production volume at its core business of more than 1.5 gigawatt peak in 2010.
(Reporting by Eva Kuehnen, editing by Richard Chang)
(Additional reporting Jonathan Spicer in Toronto)
Tue Apr 22, 2008 4:02pm EDT
FRANKFURT, April 22 (Reuters) - Germany's Q-Cells (QCEG.DE: Quote, Profile, Research), the world's largest solar cell maker, stood behind its Canadian silicon supplier, Timminco (TIM.TO: Quote, Profile, Research), which has recently drawn criticism about its operations.
Q-Cells Chief Executive Anton Milner told Reuters in an interview on Tuesday: "I sat down personally with the management to find out how they are doing, what they are doing and I had a very intensive discussion. We have a very high regard (for) the company and its management and what they've been able to achieve."
Timminco's stock fell C$3.92, or 17.6 percent, to close at C$18.23 on the Toronto Stock Exchange. The shares are off nearly 29 percent since Wednesday as questions mounted about the firm's silicon-purifying process.
A report in Barron's financial magazine questioned the company's claim that its technology can purify silicon for solar cells at a low cost, while the Globe and Mail newspaper reported that Wall Street investor Manuel Asensio, a short-seller with a reputation for bringing down companies, has also challenged Timminco's assertion.
Q-Cells signed a supply contract for directly purified metallurgical silicon with Timminco's subsidiary Becancour Silicon Inc (BSI) in March, which sees Q-Cells getting 410 metric tons this year and 3,000 tons in 2009, with prices fixed.
Q-Cells is negotiating a follow-up contract for up to 6,000 tons annually from 2010 to 2013, it said.
"The results that we have got on the Timminco product are with cell efficiency rates of well above 15 percent, which makes it a very interesting product, particularly given the cost of the alternative products," Milner said.
"The results on the sell side were positive and the product is very good and we are happy with the contract," he added.
Alternative products include polysilicon, whose prices have risen 20-fold in recent years as the solar sector began to compete with the semiconductor industry for the ingredient and supplies tightened.
Timminco has said it can purify metallurgical grade silicon at about half of what it costs its competitors. Last year, it shipped 89 tonnes of solar grade silicon to customers.
"With all technological developments there is risk. The largest risk is technology and they seem to have mastered that very well. There are normal ramp up risks beyond that, but those affect everybody," Milner said.
Q-Cells's Milner confirmed the company's outlook, which it raised in March after securing further silicon supplies.
Q-Cells expects sales to rise to 1.275 billion euros ($2.02 billion) this year and to more than 2 billion euros in 2009, while striving for a production volume at its core business of more than 1.5 gigawatt peak in 2010.
(Reporting by Eva Kuehnen, editing by Richard Chang)
(Additional reporting Jonathan Spicer in Toronto)
Subscribe to:
Posts (Atom)
Posts
