Globe says Timminco shares rebound

Globe says Timminco shares rebound

2008-04-24 07:44 ET - In the News

The Globe and Mail reports in its Thursday edition the shares of Timminco rebounded sharply in a volatile trading session Wednesday. The Globe's Andy Hoffman writes Timminco shares closed at $21.60 up $3.37 on the Toronto Stock Exchange after the company said there were no material developments to explain the wild movements in its stock.

The shares were battered by short sellers and questions about the economics of its process to purify silicon over the past week. Volume topped 12 million shares, making it the most heavily traded TSX issue.

The company said "it is not aware of any corporate developments to account for the recent trading activity." Timminco has not permitted analysts or independent experts to view its "breakthrough" process to produce silicon pure enough for use in solar cells. Executives from leading German cell maker Q-Cells AG, with which Timminco has won a supply contract, have visited Timminco's facilities. A Q-Cells spokesman said the material delivered by the company has been "very good." Heinz Schimmelbusch, Timminco's chief executive officer, told Dow Jones he could not say whether customers had witnessed the production process.

Oil prices, gasoline costs to double: CIBC report

The close: Commodities beaten, Microsoft beats

RTGAM

Everything that was cold turned hot (and vice-versa) on Thursday after investors bet that the worst of the U.S. economic decline could be over. The new attitude could have to do with reports that the U.S. Federal Reserve is nearly done with its rate-cutting campaign, which is giving investors the feeling that the economy is nearing a turn - and, indeed, the previous rate cuts could be taking effect.

This sudden switch was bad news for the S[amp]amp;P/TSX composite index, among the best-performing indexes in the world this year and one of just a few that is above water. It closed at 13,966.33, down 103.47 points or 0.7 per cent.Investors ran away from what the benchmark index does best - provide exposure to commodities - and into the arms of previously beaten up stocks as they embraced riskier parts of the market.

The materials sub-index fell 3.5 per cent, partly a response to the fact that gold fell below $900 (U.S.) an ounce, well off its $1,000 level last month. The energy sub-index fell 2.9 per cent, with crude oil falling more than $2 a barrel, to $116.Potash Corp. of Saskatchewan Inc. fell 4.7 per cent, marking its second consecutive day of steep losses as it tumbles from a record high. EnCana Corp. fell 3.8 per cent, Canadian Natural Resources Ltd. fell 4.5 per cent and Goldcorp. Inc. fell 5.7 per cent.

Together, these four stocks alone accounted for 87 points of the index's 103-point dip.In the United States, the Dow Jones industrial average closed at 12,848.95, up 85.73 points or 0.7 per cent. Here, commodity producers, too, were thrown out the window as investors bought stocks that should benefit from a stronger - or at least more stable, economy. American International Group Inc. rose 7.1 per cent, General Motors Corp. rose 5.6 per cent and Citigroup Inc. rose 4.6 per cent.The broader S[amp]amp;P 500 closed at 1388.82, up 8.89 points or 0.6 per cent.

There, Ford Motor Co. surged 11.8 per cent, bond insurer MBIA Inc. rose 11.5 per cent and Apple Inc. rose 3.7 per cent.Microsoft Corp., which reported first-quarter results after trading ended, rose 1.1 per cent. It reported earnings, though down 11 per cent, that beat analyst expectations and also forecast higher than expected sales for the rest of the year.[amp]nbsp;Copyright 2001 The Globe and Mail

Oil prices, gasoline costs to double: CIBC report

SHAWN MCCARTHY
Thursday, April 24, 2008

OTTAWA — Crude oil prices will soar to more than $200 (U.S.) per barrel over the next five year – driving Canadian pump prices to $2.25 a litre and forcing a fundamental transformation in the North American economy, says Jeff Rubin, chief economist with CIBC World Markets Inc.
In a new report, Mr. Rubin forecast a continued run-up in crude prices, despite a slowing world economy and slumping petroleum demand in United States, the world's leading oil consumer.

He said he expects crude prices – now trading at above $116 (U.S.) a barrel - to average $150 by 2010, and more than $200 by 2012. That would translate into pump prices of $7 (U.S.) per gallon in the United States, and $2.25 per litre in Canada, double the current levels.

“Whether we are already at the peak of world oil production remains to be seen, but it increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity,” the economist said.

World oil production has essentially stagnated at about 85-million barrels per day over the last two years, with growing demand met by increases in natural gas liquids, a fuel source that is used by the petrochemical industry but is of little use for transportation.

Mr. Rubin said he expects crude oil production to grow by about 1-million barrels per day over the next several years.
Meanwhile, growing demand in China, India, Russia and the Middle East will more than offset declines in the industrialized world.

“Millions of new households will suddenly have straws to start sucking at the world's rapidly shrinking oil reserves,” he wrote.

He said the sharply higher oil prices will prove devastating for the North America's industrial base, particularly the auto industry. But Canadians will benefit from the spinoffs, in terms of jobs, tax revenues and procurement, from the country's oil-rich provinces.

© Copyright The Globe and Mail

Timminco tries to placate investors CIBC Says $30.00 Target

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

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)