Timminco Limited
TSX : TIM

Timminco Limited

June 06, 2008 08:30 ET

Timminco Completes Next Phase of Magnesium Business Strategy With Closure of Facility in Haley, Ontario

TORONTO, ONTARIO--(Marketwire - June 6, 2008) - Timminco Limited ("Timminco")(TSX:TIM) today announced that, consistent with its strategy to restore its magnesium extrusion and related specialty metals business to profitability, Timminco will close its manufacturing facility in Haley, Ontario, located about 100 km west of Ottawa, Ontario. The closure is expected to result in annual cost savings of approximately $5 million for Timminco.

"Our magnesium business has significant long-term potential, but current economic conditions require that we further reduce our operating costs significantly," said John Fenger, President - Light Metals of Timminco. "The closure, although difficult, provides us with a path to profitability and potential divestiture or other strategic alternative for the rest of our magnesium business."

The Haley facility supplied the cast magnesium billet used in Timminco's magnesium extrusion operations in Aurora, Colorado. All of these supplies will now be provided by outsource partners. This facility also produced specialty magnesium granules and turnings which will now be produced in Timminco's Nuevo Laredo, Mexico facility.

The closure of the Haley facility is expected to result in a charge to earnings in the second quarter of 2008 of approximately $15 to $17 million before taxes. This charge is comprised of $10 million related to the acceleration of the recognition of future pension plan expenses and $5 to $7 million of severance, site closure and remediation costs, asset relocation costs and asset write-downs. The Haley facility currently has 24 hourly unionized employees. The assets located at the Haley facility were deemed to be impaired as of December 31, 2006 and were written down to $1.25 million at that time.

The cash impact of the closure is expected to be lower than the charge against earnings by approximately $2 to $4 million. The lower cash cost is related primarily to the pension liability for which funding of the wind up of the defined benefit pension plan for the hourly employees at the Haley facility, in accordance with pension regulations, is expected to be lower than the charge against earnings. Timminco expects the cash impact to be approximately $3.5 to $5.0 million during the balance of 2008. Cash will be disbursed over a period of 2 to 5 years for the pension plan funding and up to 10 years in the case of site remediation.

"We would like to publicly acknowledge and thank our dedicated employees for their many contributions to our magnesium business," Mr. Fenger said. "It is unfortunate that the economics of our industry have led to the closure of our Haley operations."

ABOUT TIMMINCO

Timminco is a leader in the production and marketing of lightweight metals, specializing in solar grade silicon for the rapidly growing solar photovoltaic energy industry. Using its proprietary technology, Timminco processes metallurgical grade silicon into low cost solar grade silicon for use in the manufacture of solar cells. Timminco also produces silicon metal, magnesium extrusions and other specialty metals for use in a broad range of industrial applications serving the aluminum, chemical, pharmaceutical, electronics and automotive industries.

CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION

This news release contains "forward-looking information", as such term is defined in applicable Canadian securities legislation, concerning Timminco's future financial or operating performance and other statements that express management's expectations or estimates of future developments, circumstances or results. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "expects", "believes", "anticipates", "budget", "scheduled", "estimates", "forecasts", "intends", "plans" and variations of such words and phrases, or by statements that certain actions, events or results "may", "will", "could", "would" or "might" "be taken", "occur" or "be achieved". In this news release, such information includes statements regarding the amount and timing of future cost savings, charges to earnings and cash flow impacts of the closure of the Haley facility. Forward-looking information is based on a number of assumptions and estimates that, while considered reasonable by management based on the business and markets in which Timminco operates, are inherently subject to significant operational, economic and competitive uncertainties and contingencies.
Timminco cautions that forward-looking information involves known and unknown risks, uncertainties and other factors that may cause Timminco's actual results, performance or achievements to be materially different from those expressed or implied by such information, including, but not limited to: limited history with solar grade silicon production; expansion of solar grade silicon production and sales; production capacity expansion at the Becancour facilities; protection of intellectual property rights; increasing and maintaining the purity of solar grade silicon; long-term contracts for supplying solar grade silicon; selling prices for solar grade silicon; price volatility for silicon metal; pricing and availability of raw materials for silicon metal and solar grade silicon production; dependence upon power supply for silicon metal production; cost of solar grade silicon production; price volatility for magnesium metal; magnesium supply chain interruptions; dependence upon key customers of magnesium extruded and fabricated products; manufacturing cost reduction initiatives; financing requirements for capital expenditures; limitations under existing credit facilities; foreign currency exchange; dependence upon key executives and employees; customer concentration; completion and integration of potential acquisitions, partnerships or joint ventures; risks with foreign operations and suppliers; environmental, health and safety laws and liabilities; equipment failures; transportation disruptions; conflicts of interest; intellectual property infringement claims; new regulatory requirements; labour disputes; and changes in tax laws. These factors are discussed in greater detail in Timminco's Annual Information Form for the year ended December 31, 2007, which is available via the SEDAR website at www.sedar.com. Although Timminco has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in forward-looking information, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information in this news release is made as of the date of this news release and Timminco disclaims any intention or obligation to update or revise such information, except as required by applicable law.

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Contact Information

  • Timminco Limited
    Robert J. Dietrich
    Executive Vice President - Finance and CFO
    (416) 364-5171
    (416) 364-3451 (FAX)
    Email: rdietrich@timminco.com