Timminco Limited
TSX : TIM

Timminco Limited

November 09, 2010 16:30 ET

Timminco Reports Continued Improvement for Financial Results for the Third Quarter of Fiscal 2010

- Quarter Highlighted by 121% Year-Over-Year Increase in Silicon Metal Sales and Positive EBITDA from Silicon Metal Product Line -

TORONTO, ONTARIO--(Marketwire - Nov. 9, 2010) - Timminco Limited ("Timminco" or the "Company")(TSX:TIM) today reported its financial results for the third quarter ended September 30, 2010 (all figures are in Canadian dollars unless otherwise stated).

Third Quarter Fiscal 2010 Summary (all figures are compared with Q3 2009):
  • Consolidated sales for Q3-10 increased 94% to $36.9 million from $19.1 million
  • Sales from silicon metal product lines increased 121% to $36.7 million from $16.6 million;
  • Recorded inventory net realizable value provisions related to solar by-product and solar grade silicon inventories of $25.0 million, and increased provision related to solar supplier claims by $1.9 million
  • Generated positive EBITDA from silicon metal product line;
  • Normalized EBITDA (excluding the solar grade silicon inventory net realizable value provisions, solar supplier equipment claims and costs related to the Dow Corning transaction) was $2.0 million compared with negative $7.7 million;
  • Net loss was $34.2 million, or $0.17 per share, compared with $18.5 million, or $0.15 per share.
  • Extended the maturity date of the revolving credit facility to November 30, 2010 and conditionally renegotiated repayment terms for the $25 million term loan from Investissement Quebec.
Developments Subsequent to Quarter End:
  • Completed majority-owned production partnership transaction with Dow Corning Corporation for net cash proceeds of US$40.3 million;
  • Fully repaid US$27.7 million Bank of America debt;

"Our silicon metal operations ran at full capacity for the third straight quarter, the result of continued strong demand from our traditional chemicals and aluminum industry customers," said Dr. Heinz Schimmelbusch, Chairman of the Board and Chief Executive Officer of Timminco. "As a result, we achieved year-over-year growth in revenue of 94% and positive EBITDA for our silicon metal product line. Moreover, the US$40.3 million in proceeds from our production partnership transaction with Dow Corning completed subsequent to quarter end allowed us to fully repay our existing bank debt and provides a significantly stronger financial position from which to build on our recent success."

Dr. Schimmelbusch added: "We continue to work toward developing new customer markets for our solar grade silicon product line and, to that end, shipped several metric tons of trial chunks and bricks to potential customers."

Financial Results

The consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the Company having sufficient liquidity to realize its assets and to discharge its liabilities in the normal course of business for the foreseeable future. The Company's ability to continue as a going concern is subject to achieving a level of sustained profitability and positive cash generation and to the renewal or replacement of its revolving credit facility with Bank of America, without which the Company may be unable to continue to realize its assets and discharge its liabilities in the normal course of business.

The Company's financial results for the third quarter ended September 30, 2010 consist of its silicon metal and solar grade silicon operations. The results from the third quarter ended September 30, 2009 also include a 22-day contribution from the Magnesium Group, which was divested on July 22, 2009.

($000's except per share amounts)        
         
  Three Months Ended (unaudited)   Nine Months Ended (unaudited)  
 
  Sep. 30, 2010   Sep. 30, 2009   Sep. 30, 2010   Sep. 30, 2009  
                 
Sales 36,916   19,063   102,022   79,100  
Gross loss (21,585 ) (5,425 ) (22,555 ) (23,772 )
Gross loss percentage (58.5 %) (28.5 %) (22.1 %) (30.1 %)
EBITDA (26,823 ) (7,692 ) (33,794 ) (33,499 )
Net loss (34,233 ) (18,522 ) (54,842 ) (64,819 )
Loss per common share, basic and diluted (0.17 ) (0.15 ) (0.30 ) (0.56 )
                 
Working capital (excluding available cash items and interest bearing debt) 9,544   4,099   9,544   4,099  
                 
Total assets 169,643   280,449   169,643   280,449  
                 
Cash, cash equivalents and short-term investments 4,497   5,335   4,497   5,335  
                 
Bank debt 28,506*   43,421   28,506*   43,421  
                 
Total long-term liabilities 31,781   70,529   31,781   70,529  
                 
Weighted average number of common shares outstanding, basic and diluted 195,734,769   122,924,569   180,269,265   116,606,669  
 
* Bank debt at the end of Q3-10 does not reflect repayment in full of the Company's Bank of America debt from proceeds of the production partnership transaction with Dow Corning completed on October 1, 2010.

Sales for the third quarter of 2010 ("Q3-10") increased 94% to $36.9 million from $19.1 million for the third quarter of 2009 ("Q3-09"), which included $2.0 million in sales from the Magnesium Group. The increase is the result of higher sales from the Company's core silicon metal product lines.

EBITDA for Q3-10 was negative $26.8 million, compared to negative $7.7 million in Q3-09. The loss was primarily the result of net realizable value provisions of $25.0 million relating to solar grade silicon inventories, a $1.9 million provision with respect to solar equipment supplier claims and transaction costs of $1.8 million relating to the Dow Corning transaction, as well as the strength of the Canadian dollar versus the Euro and U.S. dollar and expenditures related to solar grade silicon product specification improvements. Excluding the net realizable value provisions, supplier claim provision and the Dow Corning transaction costs, normalized EBITDA for Q3-10 was $2.0 million. This performance reflects improved productivity at our Bécancour facility relative to the temporary shut down which occurred in 2009.

Net loss for Q3-10 was $34.2 million, or $0.17 per share, compared with a net loss of $18.5 million, or $0.15 per share, for Q3-09. The increase is primarily attributable to the solar grade silicon inventory net realizable value provisions of $25.0 million, a $1.9 million provision with respect to solar equipment supplier claims and Dow Corning transaction costs of $1.8 million, as well as the strength of the Canadian dollar versus the Euro and U.S. dollar and expenditures related to solar grade silicon specification improvements.

Cash, cash equivalents and short-term investments at September 30, 2010 were $4.5 million compared with $5.3 million at September 30, 2009. Subsequent to quarter end, the Company received $41.2 million (US$40.3 million) of cash on closing of the production partnership transaction with Dow Corning and immediately repaid in full the outstanding amount of US$27.7 million on its credit facility with Bank of America.

On September 30, 2010, the Company and Bank of America agreed to extend the term of the existing credit facility to November 30, 2010, to facilitate on-going negotiations regarding a new multi-year revolving credit facility for the Company. Also on September 30, 2010, the Company and Investissement Quebec agreed, subject to the Company's renewal of its revolving loan facility by December 1, 2010, on an amendment to the $25 million term loan that extends the repayment of that loan from August 2011 to a series of payments over the period August 2012 to August 2019. The Company is in discussions with lenders regarding a new revolving credit facility, but there is no assurance that any new facility will be completed before the foregoing deadlines on terms that are satisfactory to the Company, if at all.

Silicon Group

Silicon Group sales for Q3-10 increased by 117% to $36.9 million from $17.1 million for Q3-09. Q3-10 sales were composed substantially of silicon metal product lines and reflected shipments of 34,787 metric tons (mt) compared with 23,695 mt in Q3-09. Silicon metal product line sales increased 121% to $36.7 million from $16.6 million in Q3-09. The increase in silicon metal sales is due to improved demand for silicon metal from the Company's traditional chemical and aluminium industry customers. The strength of the Canadian dollar against the U.S. dollar and the Euro had an unfavourable impact on Q3-10 sales of $2.8 million and $0.9 million, respectively, compared with Q3-09, as the majority of Silicon Group sales are denominated in these currencies.

Solar grade silicon sales for Q3-10 were $0.2 million compared with $0.4 million for Q2-09 and reflected shipments of 5 mt of trial chunks and bricks to potential customers. The Company continues to pursue its market development and research and development efforts to meet prospective customer specifications for solar grade silicon, which during Q3-10 resulted in costs of approximately $0.8 million.

Gross profit for Q3-10 was negative $21.6 million (58.5% of sales) compared with negative $5.4 million (31.9% of sales) for Q3-09. Gross margin for Q3-10 was impacted by the solar grade silicon inventory net realizable value provisions of $25.0 million. Excluding the solar grade silicon inventory net realizable value provisions, normalized gross profit for Q3-10 was $3.4 million compared with negative $5.4 million in Q3-09. The increase in normalized gross profit is primarily the result of lower production costs per metric ton reflecting better furnace efficiency and lower labour costs, as well as higher selling prices.

EBITDA for Q3-10 was negative $24.0 million, including the net realizable value provisions related to solar grade silicon inventory of $25.0 million and solar equipment supplier claims of $1.9 million, compared with negative $9.9 million for Q3-09. Excluding the solar grade silicon inventory net realizable value provisions and solar equipment supplier claims provisions, normalized EBITDA for Q3-10 was positive $2.9 million compared with negative $9.9 million for Q3-09. The increase in normalized EBITDA is primarily the result of operating at historical production levels in Q3-10 relative to the temporary shut down of production for part of Q3-09.

Net loss for Q3-10 was $27.5 million, including the solar grade silicon inventory net realizable value provisions of $25.0 million and solar equipment supplier claims of $1.9 million, compared with a net loss of $13.5 million for Q3-09. Excluding the solar grade silicon inventory net realizable value provisions and solar equipment supplier claims, normalized net loss was $0.5 million. The decrease in normalized net loss is a result of operating at historical production levels in Q3-10 relative to the temporary shut down of production for part of Q3-09.

Summary of Operations  
   
($000's, except per share amounts, unaudited)  
                 
  Third Quarter   Nine Months  
  2010   2009   2010   2009  
Sales                
  Silicon 36,916   17,050   102,022   48,974  
  Magnesium / Other -   2,013   -   30,126  
  Total 36,916   19,063   102,022   79,100  
                 
Gross Profit (Loss)(1)                
  Silicon (21,585 ) (5,442 ) (22,555 ) (23,796 )
  Magnesium / Other -   17   -   24  
  Total (21,585 ) (5,425 ) (22,555 ) (23,772 )
                 
Gross Profit (Loss) Percentage(1)                
  Silicon (58.5 %) (31.9 %) (22.1 %) (48.6 %)
  Magnesium/Other -   0.8 % -   0.1 %
  Total (58.5 %) (28.5 %) (22.1 %) (30.1 %)
                 
Net Loss                
  Silicon (27,464 ) (13,473 ) (34,923 ) (41,973 )
  Magnesium -   (3,536 ) -   (9,909 )
  Corporate / Other (6,769 ) (1,513 ) (19,919 ) (12,937 )
  Total (34,233 ) (18,522 ) (54,842 ) (64,819 )
                 
EBITDA(1)                
Silicon (24,039 ) (9,929 ) (26,031 ) (29,490 )
Magnesium -   (1,118 ) -   (3,354 )
Corporate / Other (2,784 ) 3,355   (7,763 ) (655 )
Total (26,823 ) (7,692 ) (33,794 ) (33,499 )
                 
Adjusted Loss (1)                
Silicon (26,980 ) (13,473 ) (34,336 ) (40,749 )
Magnesium -   (1,167 ) -   (3,482 )
Corporate / Other (6,685 ) (1,513 ) (19,602 ) (11,739 )
Total (33,665 ) (16,153 ) (53,938 ) (55,970 )
                 
Loss per common share, basic and diluted (0.17 ) (0.15 ) (0.30 ) (0.56 )
                 
Weighted average number of common shares outstanding, basic and diluted 195,735   122,925   180,269   116,607  
                 
(1) See "Non-GAAP Accounting Definitions".  

Timminco will file its unaudited consolidated financial statements for the period ended September 30, 2010 and related management's discussion and analysis (MD&A) with securities regulatory authorities within the applicable timelines. Such financial statements, MD&A and related documents will be available through SEDAR at www.sedar.com as well as through Timminco's website, www.timminco.com.

Conference Call

Timminco will host a conference call today, November 9, 2010 at 5:00 pm ET to discuss its financial results for the third quarter ended September 30, 2010.

To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Tuesday, November 16, 2010 at midnight. To access the archived conference call, dial 416-849-0833 or 1-800-642-1687 and enter the reservation number 20886761#.

A live audio webcast of the conference call will also be available at www.timminco.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be available for replay at www.timminco.com following the live presentation.

About Timminco

Timminco produces silicon metal for the chemical (silicones), aluminum and electronics/solar industries, through its majority owned production partnership with Dow Corning, known as Québec Silicon. Timminco is also a producer of solar grade silicon, using its proprietary technology for purifying silicon metal, for the solar photovoltaic energy industry, through its wholly owned subsidiary Bécancour Silicon.

Cautionary Notes

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 Timminco's liquidity, market and research development efforts for solar grade silicon, demand for solar grade silicon, negotiations in respect of a new revolving credit facility, and the conditional extension of the maturity date and other amendments to the term loan with Investissement Québec.

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: liquidity risks; foreign currency exchange rates; equipment failures, downtime or inefficiencies; dependence upon power supply for silicon metal production; pricing and availability of raw materials; global economic conditions; credit risk exposure; selling price of silicon metal; customer concentration; transportation delays and disruptions; class action lawsuits; contract termination claims; interest rates; future growth plans and strategic objectives; environmental, health and safety laws and liabilities; conflicts of interest; limited history with the solar grade silicon business; selling price of solar grade silicon; customer commitments; production cost targets; achieving and maintaining quality of solar grade silicon; customer capabilities in producing ingots; protection of intellectual property rights; production capacity expansion at the Bécancour facilities; closure of the magnesium facilities; investment in Applied Magnesium; insurance costs; government and economic incentives; dependence upon key executives and employees; completion and integration of potential acquisitions, partnerships or joint ventures; intellectual property infringement claims; and climate change. These factors are discussed in greater detail in Timminco's Annual Information Form for the year ended December 31, 2009, and in Timminco's most recent Management's Discussion and Analysis, each of 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.

Non-GAAP Accounting Definitions

  1. EBITDA is not a recognized measure under Canadian generally accepted accounting principles ("GAAP"). Management believes that, in addition to net income (loss), EBITDA is a useful supplemental measure as it provides investors with an indication of cash available for distribution prior to debt service, past pension service obligations, capital expenditures, income taxes and restructuring cash payments. Investors should be cautioned, however, that EBITDA should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Company's method of calculating EBITDA may differ from other companies and, accordingly, EBITDA may not be comparable to measures used by other companies. EBITDA is calculated as follows:
($000's) Three Months Ended
(unaudited)
  Nine Months Ended
(unaudited)
 
  Sept 30, 2010   Sept 30, 2009   Sept 30, 2010   Sept 30, 2009  
                 
Net loss (34,233 ) (18,522 ) (54,842 ) (64,819 )
Add back (subtract):                
Income taxes 19   17   19   1,794  
Impairment of Fundo -   -   -   698  
Loss on disposal of Magnesium Division -   2,180   -   2,180  
Loss (gain) on the sale of property, plant and equipment (78 ) 40   (64 ) 29  
Interest 1,800   2,372   5,591   5,136  
Amortization of intangible assets 706   1,085   2,120   1,755  
Amortization of property, plant and equipment 2,241   3,008   6,202   9,632  
Reorganization costs -   -   -   3,751  
Environmental remediation costs 627   132   949   397  
                 
Stock-based compensation 2,095   1,996   6,231   5,948  
                 
EBITDA (26,823 ) (7,692 ) (33,794 ) (33,499 )
  1. Adjusted income (loss) is not a recognized measure under GAAP. However, management believes that, in addition to net income (loss), adjusted income (loss) is a useful supplemental measure as it provides investors with an indication of the ongoing profits generated on products sold to customers after corporate overhead expenses. Management defines adjusted net income as net income (loss) before income taxes, impairment of Fundo, loss on disposal of magnesium group, gain (loss) on the sale of property, plant and equipment, reorganization costs and environmental remediation costs. Adjusted income (loss) is calculated as follows:
($000's) Three Months Ended
(unaudited)
  Nine Months Ended
 (unaudited)
 
  Sept 30,2010   Sept 30,2009   Sept 30,2010   Sept 30,2009  
                 
Net loss (34,233 ) (18,522 ) (54,842 ) (64,819 )
Add back (subtract):                
Income taxes 19   17   19   1,794  
Impairment of Fundo -   -   -   698  
Loss on disposal of Magnesium Group -   2,180   -   2,180  
Loss (gain) on the sale of property, plant and equipment (78 ) 40   (64 ) 29  
Reorganization costs -   -   -   3,751  
Environmental remediation costs 627   132   949   397  
Adjusted Loss (33,665 ) (16,153 ) (53,938 ) (55,970 )
  1. Gross profit is not a recognized measure under GAAP. Management believes that in addition to net income (loss), gross profit is a useful supplemental measure as it provides investors with an indication of the profits generated on products sold to customers before corporate overhead expenses. Investors should be cautioned, however, that gross profit should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of the Company's profitability. The Company's method of calculating gross profit may differ from other companies and accordingly, gross profit may not be comparable to measures used by other companies. Gross profit is calculated as follows:
($000's) Three Months Ended
(unaudited)
  Nine Months Ended
(unaudited)
 
                 
  Sept 30, 2010   Sept 30, 2009   Sept 30, 2010   Sept 30, 2009  
                 
Sales 36,916   19,063   102,022   79,100  
Cost of goods sold 58,501   24,488   124,577   102,872  
Gross profit (loss) (21,585 ) (5,425 ) (22,555 ) (23,772 )
 
Timminco Limited      
Consolidated Balance Sheets As at  
(unaudited) September 30,2010     December 31, 2009  
(in thousands of Canadian dollars)
               
ASSETS              
Current Assets              
Cash $ 4,497     $ 1,170  
Restricted cash   244       -  
Accounts receivable   12,905       11,007  
Due from related companies   4       209  
Inventories   29,421       39,797  
Finished goods consigned to related company   4,359       8,090  
Prepaid expenses and deposits   1,404       1,494  
    52,834       61,767  
               
Long term receivables   1,277       1,282  
Long term inventories   2,979       26,769  
Property, plant and equipment   86,411       91,396  
Investment in Applied Magnesium   222       222  
Employee future benefits   939       939  
Future income taxes   2,399       2,831  
Intangible assets   5,755       7,875  
Goodwill   16,827       16,827  
  $ 169,643     $ 209,908  
               
LIABILITIES              
Current Liabilities              
Bank indebtedness $ 28,506     $ 40,315  
Accounts payable and accrued liabilities   22,249       19,627  
Deferred revenue   10,860       9,605  
Due to related companies   6,208       5,991  
Future income taxes   311       455  
Current portion of long term liabilities   27,856       39,158  
Current portion of long term provisions   4,174       5,132  
    100,164       120,283  
               
Long term liabilities   34       128  
Employee future benefits   20,655       20,118  
Future income taxes   2,088       2,376  
Long term provisions   9,004       6,266  
    131,945       149,171  
SHAREHOLDERS' EQUITY              
Capital stock   311,523       285,951  
Equity component of convertible notes   217       217  
Contributed surplus   19,227       12,996  
Deficit   (293,269 )     (238,427 )
    37,698       60,737  
  $ 169,643     $ 209,908  
   
Timminco Limited  
Consolidated Statements of Operations and Comprehensive Loss  
               
(unaudited)   Three months ended
September 30
    Nine months ended
September 30
 
        2010       2009       2010       2009  
(in thousands of Canadian dollars, except for loss per share information)                                
                                 
Sales   $ 36,916     $ 19,063     $ 102,022     $ 79,100  
                                 
Expenses                                
  Cost of goods sold     58,501       24,488       124,577       102,872  
  Selling and administrative     8,418       8,034       18,573       21,766  
  Amortization of property, plant and equipment     2,241       3,008       6,202       9,632  
  Amortization of intangible assets     706       1,085       2,120       1,755  
  Interest     1,800       2,372       5,591       5,136  
  Foreign exchange gain     (1,163 )     (3,771 )     (1,167 )     (6,091 )
                                 
Loss before the undernoted     (33,587 )     (16,153 )     (53,874 )     (55,970 )
                                 
  Loss on sale of property, plant and equipment     -       (40 )     -       (29 )
  Environmental remediation costs     (627 )     (132 )     (949 )     (397 )
  Reorganization costs     -       -       -       (3,751 )
  Loss on disposal of Magnesium Division     -       (2,180 )     -       (2,180 )
  Realized foreign exchange loss on Fundo investment bankruptcy     -       -       -       (698 )
                                 
Loss before income taxes     (34,214 )     (18,505 )     (54,823 )     (63,025 )
                                 
Income tax expense                                
  Current     19       17       19       70  
  Future     -               -       1,724  
      19       17       19       1,794  
Net loss   $ (34,233 )   $ (18,522 )   $ (54,842 )   $ (64,819 )
                                 
Other comprehensive loss, net of income taxes                                
  Realized foreign exchange loss on Fundo bankruptcy     -       -       -       698  
                                 
Comprehensive loss   $ (34,233 )   $ (18,522 )   $ (54,842 )   $ (64,121 )
   
Loss per common share - basic and diluted   $ (0.17 )   $ (0.15 )   $ (0.30 )   $ (0.56 )
   
Weighted average number of common shares outstanding - basic and diluted     195,734,769       122,924,569       180,269,265       116,606,669  
   
   
Consolidated Statements of Deficit                              
                               
  Three months ended September 30       Nine months ended September 30  
    2010       2009       2010       2009  
(in thousands of Canadian dollars)                              
Deficit, beginning of period $ (259,036 )   $ (150,502 )   $ (238,427 )   $ (104,205 )
Net loss   (34,233 )     (18,522 )     (54,842 )     (64,819 )
Deficit, end of period $ (293,269 )   $ (169,024 )   $ (293,269 )   $ (169,024 )
   
Timminco Limited  
Consolidated Statements of Cash Flows  
                                 
(unaudited)   Three months ended September 30     Nine months ended September 30  
      2010       2009       2010       2009  
(in thousands of Canadian dollars)                                
                                 
Cash flows from (used in) operating activities                                
Net loss   $ (34,233 )   $ (18,522 )   $ (54,842 )   $ (64,819 )
Adjustments for items not requiring cash                                
  Amortization of property, plant and equipment     2,241       3,008       6,202       9,632  
  Amortization of intangible assets     706       1,085       2,120       1,755  
  Net realizable value provision for inventories     25,360       -       26,986       -  
  Interest expense     168       -       1,804       -  
  Accretion of convertible debt     51       214       149       627  
  Stock-based compensation     2,095       1,996       6,231       5,948  
  Financing costs expensed     -       250       -       250  
  Reorganization costs     -       -       -       3,751  
  Provision for contract termination claims     2,126       -       2,126       -  
  Provision for environmental remediation     467       -       467       -  
  Accretion of environmental remediation costs     160       132       482       397  
  Benefits plan expense     969       588       2,907       2,840  
  Unrealized foreign exchange (gain) loss     87       (1,083 )     (858 )     (1,864 )
  Future income taxes     -       -       -       1,724  
  Loss on disposal of Magnesium Division     -       2,180       -       2,180  
  Realized foreign exchange loss on Fundo investment bankruptcy     -       -       -       698  
  Loss on disposal of property, plant and equipment     -       40       -       29  
Accrued employee future benefits paid     (795 )     (880 )     (2,370 )     (2,397 )
Expenditures charged against provision for reorganization     (136 )     (1,293 )     (739 )     (1,893 )
                                 
Expenditures charged against long term provisions     (275 )     (470 )     (556 )     (878 )
Change in non-cash working capital items                                
  Decrease (increase) in restricted cash     227       -       (244 )     -  
  Decrease (increase) in accounts receivable     34       6,325       (1,898 )     20,057  
  Decrease (increase) in inventories     917       (6,185 )     10,911       (3,091 )
  Decrease (increase) in prepaid expenses and deposits     (12 )     (280 )     90       (286 )
  Increase (decrease) in accounts payable and accrued liabilities     7,186       (7,673 )     3,348       (6,149 )
  Increase (decrease) in deferred revenue     (985 )     3,129       1,255       13,559  
  Decrease in deposits     -               -       (206 )
      6,358       (17,439 )     3,571       (18,136 )
Cash flows from (used in) investing activities                                
Capital expenditures     (595 )     (5,605 )     (1,501 )     (37,653 )
Development costs capitalized     -       -       -       (5,656 )
Decrease in short term investments     -       116       -       116  
Proceeds on disposal of property, plant and equipment     -       -       -       4,821  
Other     -       (55 )     -       (52 )
      (595 )     (5,544 )     (1,501 )     (38,424 )
Cash flows from (used in) financing activities                                
Issuance of common shares     -       -       12,434       38,856  
Issuance of convertible bond     -       -       1,043       -  
Decrease in bank indebtedness     (2,707 )     1,758       (11,809 )     (8,018 )
Term loan, net     -       24,750       -       24,750  
Decrease in long term liabilities     (186 )     158       (554 )     110  
Increase in loans from related company     146       535       143       2,052  
      (2,747 )     27,201       1,257       57,750  
Increase (decrease) in cash during the period     3,016       4,218       3,327       1,190  
                                 
Cash and cash equivalents assumed by Applied Magnesium     -       (367 )     -       (367 )
Cash, beginning of period     1,481       1,484       1,170       4,512  
Cash, end of period   $ 4,497     $ 5,335     $ 4,497     $ 5,335  
                                 
Supplemental cash flow information                                
  Cash paid during the period:                                
    Interest   $ 1,173     $ 1,193     $ 2,745     $ 2,323  
    Income taxes   $ 19     $ 5     $ 9     $ 63  
                                     

Sedar File Profile #00000838

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