Timminco Limited
TSX : TIM

Timminco Limited

November 08, 2011 17:00 ET

Timminco Reports Financial Results for Third Quarter 2011

TORONTO, ONTARIO--(Marketwire - Nov. 8, 2011) - Timminco Limited ("Timminco" and, together with its consolidated subsidiaries, the "Company")(TSX:TIM) today reported its financial results for the third quarter ended September 30, 2011 ("Q3-11"). All figures are in Canadian dollars unless otherwise stated.

Beginning with the first quarter of 2011, the Company is reporting its financial results in accordance with International Financial Reporting Standards ("IFRS"), as required for public companies in Canada. Previously, the Company reported its financial results under Canadian Generally Accepted Accounting Principles ("GAAP"). Financial results for the comparable periods in 2010 ("Q3-10" and "YTD-10") have been restated to reflect the adoption of IFRS. Under IFRS, the Company's 51% ownership in Québec Silicon Limited Partnership ("Québec Silicon"), the silicon metal production partnership established with Dow Corning Corporation in October 2010, is accounted for using the equity method, under which the Company's financial results reflect its proportionate ownership in Québec Silicon. Previously under Canadian GAAP, Québec Silicon's financial statements were consolidated with the Company's. As a result, the Company's financial results have been reduced by reason of the change in accounting methods, even though the scale of operations and ownership interests in Québec Silicon remain unchanged.

Third Quarter 2011 (Q3-11) Summary:

  • Consolidated sales were $28.6 million compared with $36.9 million for Q3-10, with the decrease reflecting the deconsolidation of Québec Silicon's results of operations on January 1, 2011;
  • Sales from silicon metal product lines were $20.5 million, reflecting shipments of 7,316 metric tons (mt), compared with $30.8 million, reflecting shipments of 11,501 mt, in Q3-10 when the Company owned 100% of the silicon metal production operations;
  • Sales of solar grade silicon were $5.9 million, reflecting shipments of 11 metric tons generating $0.4 million of revenue and the recognition of $5.4 million in previously deferred revenue in respect of the sale of 140 mt in 2009, compared with $0.2 million, reflecting shipments of 5 mt for Q3-10;
  • Gross margin was $0.1 million (0.2% of sales) compared with negative $25.4 million (negative 68.7% of sales) for Q3-10, with positive gross margin of $3.0 million related to the silicon metal product lines;
  • Consolidated EBITDA was negative $0.2 million compared with normalized EBITDA of positive $0.2 million for Q3-10 (negative $26.7 million including solar provisions taken in Q3-10); and
  • Consolidated net loss was $2.4 million, or $0.01 per share, compared with consolidated net loss of $34.0 million, or $0.17 per share, for Q3-10.

"Our financial results for the third quarter reflect continuous operation of the silicon metal production facility throughout the quarter and higher realized selling prices for our silicon metal product lines in the context of stable demand," said Douglas Fastuca, Chief Executive Officer of Timminco. "Looking ahead, we are pursuing a strategy that is responsive to changes in market conditions in each of our product lines. We are firmly focused on improving the profitability of our silicon metal operations and have undertaken multiple initiatives to both reduce cost and explore potential capacity expansion opportunities."

"At the same time, we are continuing to invest in our solar grade silicon technology at Timminco Solar," added Mr. Fastuca. "Global solar photovoltaic installations continue to grow and our solar grade silicon has the potential to be a cost effective and more energy efficient alternative to conventional polysilicon, as the industry looks to take costs out of the supply chain. We are progressing in our efforts to develop and optimize our processes and controls, leveraging valuable feedback from existing and potential new customers. We remain on track to initiate production-scale testing prior to year end, with the ultimate goal of re-launching commercial scale production activities in the first half of next year, subject to both the market environment and customer commitments."

Financial Results

($000's, except per share amounts)
Three Months Ended (unaudited) Nine Months Ended (unaudited)
Sept. 30, 2011 Sept. 30, 2010 (2) Sept. 30, 2011 Sept. 30, 2010 (2)
Sales 28,645 36,916 73,609 102,022
Gross Profit (Loss) 59 (25,366) (1,961) (33,805)
Gross Loss Percentage 0.2% (68.7%) (2.7%) (33.1%)
Net Loss
Silicon (720) (28,306) (3,477) (37,771)
Corporate/Other (1,646) (5,731) (12,276) (16,587)
Total (2,366) (34,037) (15,753) (54,358)
EBITDA(1)
Silicon 296 (23,895) 646 (25,599)
Corporate/Other (528) (2,797) (4,978) (8,035)
Total (232) (26,692) (4,332) (33,634)
Adjusted Income (Loss) (1)
Silicon (1,204) (27,814) (3,862) (37,264)
Corporate/Other (996) (5,763) (9,493) (17,091)
Total (2,200) (33,577) (13,355) (54,355)
Working capital (excluding available cash items and interest bearing debt)
(5,411)

7,473

(5,411)

7,473
Total assets 125,975 235,463 125,975 235,463
Cash, cash equivalents and restricted cash 2,808 4,741 2,808 4,741
Bank debt - 28,506 - 28,506
Total long-term liabilities 63,834 43,243 63,834 43,243
Loss per common share, basic and diluted (0.01) (0.17) (0.08) (0.30)
Weighted average number of common shares outstanding, basic and diluted (000's)
198,545

195,735

196,692

180,269
(1) See "Non-GAAP Accounting Definitions".
(2) 2010 amounts have been re-stated based on the application of IFRS.

Silicon Group Results

The Silicon Group segment is operated through the Company's wholly-owned subsidiary, Bécancour Silicon Inc. ("Bécancour Silicon"). Until September 30, 2010, the Silicon Group segment consisted of the production and sale of silicon metal and solar grade silicon products. As of October 1, 2010, the production of silicon metal was transferred to Québec Silicon, and Bécancour Silicon became a purchaser of silicon metal from Québec Silicon and continued to sell silicon metal to its own customers. For the three months ended December 31, 2010, Québec Silicon's results of operations were consolidated with the Company under Canadian GAAP. However, starting January 1, 2011, Québec Silicon's results are not consolidated with the Company under IFRS. The Silicon Group segment continues to include all of the production and sale of solar grade silicon.

For Q3-11, Silicon Group sales were $28.6 million, compared with $36.9 million in Q3-10.

Analysis of Silicon Group Sales
Three Months Ended Three Months Ended
Sept. 30, 2011 Sept. 30, 2010
Metric tons $000's Metric tons $000's
Silicon metal 7,316 20,515 11,501 30,763
By-products 9,841 2,221 23,286 5,918
Silicon metal product lines 17,157 22,736 34,787 36,681
Solar grade silicon 151(3) 5,909(3) 5 235
Total Silicon Group sales 17,308 28,645 34,792 36,916
(3) Includes the recognition of $5.4 million in previously deferred revenue in respect of the sale of 140 mt in 2009 to AMG Conversion Ltd. ("AMG Conversion"), which was recognized as a result of developments during the quarter impacting the revenue recognition criteria for this sale.

Sales of silicon metal in Q3-11 were $20.5 million, compared with $30.8 million for Q3-10. As a result of transferring the silicon metal production assets to Québec Silicon and establishing the production and supply agreements with Dow Corning in Q4-10, quantities of silicon metal available for sale by Bécancour Silicon to its customers were reduced by 49%. This is reflected in the lower volumes and sales of silicon metal in Q3-11 compared with Q3-10. However, the Company has been able to realize higher unit selling prices for silicon metal in Q3-11 compared to Q3-10, reflecting higher realized prices under the supply contract with a long-standing customer. The volume of silicon metal sold by Bécancour Silicon in the nine months ended September 30, 2011 ("YTD-11") includes shipments from its existing silicon metal inventories and silicon metal purchased from Québec Silicon and other suppliers. The volume of silicon metal allocated to Bécancour Silicon in YTD-11 was greater than 51% of Québec Silicon's production during that period and, accordingly, Bécancour Silicon's allocation will be reduced in subsequent reporting periods.

As a result of the transfer of the silicon metal production assets to Québec Silicon in Q4-10, all by-products produced by Québec Silicon are sold by Bécancour Silicon as agent on behalf of Québec Silicon. Consequently, these by-product sales are no longer included in the Silicon Group's sales. However, Bécancour Silicon still owns a silica fumes disposal site and extracts silica fumes (a form of by-product) from that site. Silica fumes extraction operations are conducted mainly in the summer months. During Q3-11, $2.2 million of silica fumes were extracted and sold.

Solar grade silicon net revenues in Q3-11 were $5.9 million, reflecting $0.4 million of revenue relating to shipments of 11 mt and the recognition of $5.4 million in previously deferred revenue in respect of the sale of 140 mt in 2009 to AMG Conversion Ltd. ("AMG Conversion"), which was recognized as a result of developments during the quarter impacting the revenue recognition criteria for this sale. This compares with $0.2 million in Q3-10, reflecting shipments of 5 mt. None of the Q3-11 reported sales of solar grade silicon represents any new inventories produced using the enhanced purification and solidification processes that are currently under development and testing. The Company continues to test its purification and solidification processes and develop prospective customers to enable the restart of commercial scale production operations, as market conditions warrant.

Gross margin for Q3-11 was $0.1 million (0.2% of sales) compared with a gross margin of negative $25.4 million (negative 68.7% of sales) for Q3-10.

Gross margin related to silicon metal sales for Q3-11 was $3.0 million compared with $2.8 million for Q3-10. The increase in gross margin related to silicon metal sales was the result of higher realized selling prices, compared to Q3-10.

Gross margin related to solar grade silicon sales for Q3-11 was negative $2.9 million, which included a $1.3 million positive contribution from the recognition of previously deferred revenue as noted above, compared with gross margin for Q3-10 of negative $28.2 million, which included solar grade silicon inventory net realizable value provisions of $25.0 million and solar equipment supplier claims provisions of $1.9 million, totalling $26.9 million. The negative gross margin for Q3-11 was the result of development costs and other overhead costs related to the solar grade silicon facilities, depreciation and amortization.

EBITDA for the Silicon Group in Q3-11 was $0.3 million, compared with negative $23.9 million for Q3-10, which included solar grade silicon inventory net realizable value provisions of $25.0 million and solar equipment supplier claims provisions of $1.9 million, totalling $26.9 million. Excluding these items, normalized EBITDA for Q3-10 was positive $3.0 million. The decrease in Q3-11 EBITDA compared to Q3-10 normalized EBITDA is the result of the higher production costs for silicon metal due to (i) the use of a new transfer price calculation from Québec Silicon, which includes expenses not reflected in EBITDA in 2010 such as depreciation and amortization, interest, and a transfer price margin, after the Company entered into the Québec Silicon production partnership, and (ii) the unabsorbed costs relating to the operation of the ingoting facility for inventory production, development costs and other overhead costs relating to the solar grade silicon production facilities and costs relating to continuous process improvements. These higher costs were offset by positive gross margin earned from sales of solar grade silicon, the recognition of deferred revenue and increased silicon metal selling prices.

Net loss for the Silicon Group in Q3-11 was $0.7 million, compared with $28.3 million for Q3- 10.

Consolidated Results

EBITDA for the Company on a consolidated basis in Q3-11 was negative $0.2 million, compared with negative $26.7 million for Q3-10, which included the aforementioned provisions of $26.9 million. Excluding these items, normalized EBITDA for Q3-10 was positive $0.2 million. Consolidated Q3-11 EBITDA was unfavourably impacted by termination benefit provisions of $3.0 million relating to the resignation of former officers and favourably impacted by the currency translation effect of the Canadian dollar against the Euro and the US dollar.

Net loss for the Company on a consolidated basis in Q3-11 was $2.4 million, or $0.01 per share, compared with $34.0 million, or $0.17 per share, for Q3-10.

Cash, cash equivalents and restricted cash at September 30, 2011 were $2.8 million compared with $7.6 million at December 31, 2010 and $0.4 million at June 30, 2011.

During Q3-11, the Company used cash of $1.4 million from operations, before changes in non- cash working capital, compared to cash from operations in Q3-10 of $0.7 million. The use of cash in Q3-11 was largely attributable to EBITDA loss of $0.2 million, interest payments of $1.0 million, cash expenditures for employee future benefits in excess of amounts expensed of approximately $0.5 million, and long term provision payments of approximately $0.3 million. These uses of cash were offset with cash recovered from the investment in Applied Magnesium in Q3-11 of $0.7 million. Cash from financing activities in Q3-11 of $4.7 million included a net prepayment of $4.8 million received from Sudamin, a related party, on account of future silicon metal production. The net increase in cash in Q3-11 was $2.4 million. This compares to cash from operating activities in Q3-10 of $6.3 million reflecting timing of trade payables generating net increases in cash in Q3-10 of $3.0 million.

The Company had no amounts drawn and $2.9 million of availability under its $20.0 million senior credit facility with Bank of America as at September 30, 2011. The Company and Bank of America have agreed to a revised minimum EBITDA level for the year-to-date period ending September 30, 2011, resulting in the Company's continued compliance with the financial covenants under the senior credit facility as at Q3-11.

Silicon Metal Supply Commitments

Bécancour Silicon has a long-term silicon metal supply contract with one of its long-standing silicon metal customers for the years 2011 to 2015. The base quantity under the contract is 17,500 metric tons per year from 2011 through 2015, plus an additional quantity of approximately 8,000 metric tons to be delivered by the end of 2013, for an aggregate total volume of approximately 95,500 metric tons over the five-year term. The prices under the contract are fixed for 2011, and are subject to negotiation within a defined price range for each of the remaining four years. Subsequent to the end of the quarter, Bécancour Silicon concluded pricing negotiations for 2012, resulting in a commitment to supply the contracted quantities of silicon metal at the upper limit of the price range for negotiations for 2012, which is lower than the current fixed price, and without any volume adjustment options for the customer. All pricing is in Euros and, for the years 2011 to 2014, is subject to a currency adjustment clause that effectively reduces by half the parties' exposure to fluctuations in excess of 5% in the average quarterly USD-Euro exchange rate relative to the rate in effect in October 2009.

Financial Statements and MD&A

Timminco will file its unaudited consolidated financial statements for the period ended September 30, 2011 and related management's discussion and analysis ("MD&A") prepared in accordance with IFRS 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.

About Timminco

Timminco produces silicon metal for the chemical (silicones), aluminum and electronics/solar industries, through its 51%-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 Timminco Solar, a division of 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 silicon metal and solar grade silicon operations. 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 risk; global economic uncertainty; credit risk; pricing and availability of raw materials; silicon metal selling prices; customer concentration; power supply and electricity prices; production interruptions; transportation disruptions; limited history with solar grade silicon; solar grade silicon selling prices; customer commitments for solar grade silicon; solar grade silicon production costs; quality of solar grade silicon; producing ingots with Timminco's solar grade silicon; protection of intellectual property rights; expansion of solar grade silicon production capacity; class action lawsuits; closure of former magnesium facilities; foreign exchange; investment in Applied Magnesium; interest rate risk; financing for capital expenditures; environmental liabilities; relationships with AMG; dependence upon key executives and employees; completion and integration of potential acquisitions, partnerships or joint ventures; risks with foreign operations and suppliers; environmental, health and safety laws and liabilities; 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, 2010, 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. The Company defines EBITDA as net income (loss) excluding impairment of Applied Magnesium, interest, amortization of intangible assets, amortization of property, plant and equipment, reorganization costs, environmental remediation costs, stock-based compensation, fair value loss (gain) on financial instruments at fair value and share of net (income) loss of a jointly controlled entity. 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 profitability. Also, EBITDA should not be construed as an alternative 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:
($000s) Three months ended Nine months ended
Sept 30, 2011 Sept 30, 2010 Sept 30, 2011 Sept 30, 2010
Net loss (2,366) (34,037) (15,753) (54,358)
Add back(subtract):
Impairment of Applied Magnesium (1,104) - (882) -
Loss (gain) on the sale of property, plant and equipment -
(78)
-
(64)
Interest 1,507 2,014 4,127 6,206
Amortization of intangible assets 575 706 1,724 2,120
Amortization of property, plant and equipment 937
3,219
2,812
9,562
Reorganization costs 2,969 - 4,723 -
Environmental remediation costs 405 519 465 519
Stock-based compensation (1,051) 946 360 2,833
Fair value loss (gain) on financial instruments at fair value (1,427)
-
(1,343)
(471)
Share of net loss of a jointly controlled entity (677)
-
(565)
-
Taxes - 19 - 19
EBITDA (232) (26,692) (4,332) (33,634)
(2) 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 ongoing income excluding non-operational costs originating from closed facilities and fair value adjustments of other financial liabilities. Investors should be cautioned, however, that adjusted net income (loss) 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 adjusted net income (loss) may not be comparable to measures used by other companies. Adjusted income (loss) is calculated as follows:

($000s) Three months ended Nine months ended
Sept 30, 2011 Sept 30, 2010 Sept 30, 2011 Sept 30, 2010
Net loss (2,366) (34,037) (15,753) (54,358)
Add back(subtract):
Impairment of Applied Magnesium (1,104) - (882) -
Loss (gain) on the sale of property, plant and equipment
-

(78)

-

(64)
Reorganization costs 2,969 - 4,723 -
Environmental remediation costs 405 519 465 519
Fair value loss (gain) on financial instruments at fair value
(1,427)

-

(1,343)

(471)
Share of net loss of a jointly controlled entity
(677)

-

(565)

-
Taxes - 19 - 19
Adjusted Income (Loss) (2,200) (33,577) (13,355) (54,355)
Timminco Limited
Consolidated Balance Sheets
As at September 30 December 31
(unaudited) 2011 2010
(in thousands of canadian dollars)
ASSETS
Current Assets
Cash and cash equivalents $ 2,798 $ 7,483
Restricted cash 10 105
Accounts receivable 7,315 12,365
Due from related companies 2,244 2,172
Inventories 7,710 14,473
Finished goods consigned to related company - 4,530
Prepaid expenses and deposits 182 1,365
20,259 42,493
Due from related companies - 1,275
Long term receivables 1,272 1,275
Long term inventories 2,199 2,874
Property, plant and equipment 57,065 59,826
Investments 43,673 43,171
Intangible assets 1,507 3,231
$ 125,975 $ 154,145
LIABILITIES
Current Liabilities
Bank indebtedness $ - $ -
Accounts payable and accrued liabilities 5,896 9,064
Deferred revenue - 6,319
Due to related companies 14,796 19,252
Current portion of long term liabilities 2,338 3,273
Current portion of long term provisions 2,000 2,555
25,030 40,463
Due to related companies 7,088 6,418
Other financial liabilities - 1,343
Long term liabilities 27,989 28,619
Employee future benefits 21,899 20,610
Long term provisions 6,858 6,855
88,864 104,308
SHAREHOLDERS' EQUITY
Capital stock 311,873 310,777
Contributed surplus 15,139 13,320
Deficit (289,901 ) (273,650 )
Equity attributable to owners of parent 37,111 50,447
Non-controlling interest - (610 )
Total Equity 37,111 49,837
$ 125,975 $ 154,145
Timminco Limited
Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
Three months ended September 30 Nine months ended September 30
2011 2010 2011 2010
(in thousands of Canadian dollars, except for loss per share information)
Sales
Revenue $ 23,199 $ 36,916 $ 68,163 $ 102,022
Recognition of deferred revenue 5,446 - 5,446 -
28,645 36,916 73,609 102,022
Cost of goods sold 28,586 62,282 75,570 135,827
Gross margin 59 (25,366 ) (1,961 ) (33,805 )
Administrative expenses 418 7,277 6,886 15,443
Other operating expenses (income) 3,708 (639 ) 5,569 (644 )
Operating profit (loss) (4,067 ) (32,004 ) (14,416 ) (48,604 )
Finance costs (income) 80 2,014 2,784 5,735
Impairment loss (recovery) on investment in Applied Magnesium (1,104 ) - (882 ) -
Share of net income of a jointly controlled entity (677 ) - (565 ) -
Loss before income taxes (2,366 ) (34,018 ) (15,753 ) (54,339 )
Income tax expense - 19 - 19
Loss and total comprehensive loss for the period (2,366 ) (34,037 ) (15,753 ) (54,358 )
Attributable to:
Owners of the parent (2,366 ) (33,916 ) (15,708 ) (53,947 )
Non-controlling interests - (121 ) (45 ) (411 )
Loss and total comprehensive loss for the period (2,366 ) (34,037 ) (15,753 ) (54,358 )
Loss per common share - basic and diluted $ (0.01 ) $ (0.17 ) $ (0.08 ) $ (0.30 )
Weighted average number of common shares outstanding - basic and diluted
198,545,216

195,734,769

196,692,174

180,269,265
Timminco Limited
Consolidated Statements of Cash Flows
(unaudited)
Nine months ended September 30
2011 2010
(in thousands of Canadian dollars)
Cash flows from (used in) operating activities
Net loss $ (15,753 ) $ (54,358 )
Adjustments for items not requiring cash
Amortization of property, plant and equipment 2,812 9,562
Amortization of intangible assets 1,724 2,120
Interest expense - 1,949
Accretion of convertible debt 772 552
Stock-based compensation 360 2,832
Termination benefits 4,723 -
Loss (gain) on disposal of property, plant and equipment - 14
Provision for contract termination claims - 2,126
Environmental remediation 270 518
Fair value loss (gain) on financial instruments at fair value (1,343 ) (471 )
Net realizable value provision for inventories - 26,986
Impairment of investment in Applied Magnesium 222 -
Interest on provisions 136 121
Benefits plan expense 1,066 2,553
Share of net income of a jointly controlled entity (565 ) -
Unrealized foreign exchange (gain) loss (282 ) (1,017 )
Accrued employee future benefits paid (3,070 ) (3,146 )
Expenditures charged against provisions (959 ) (550 )
Change in non-cash working capital items
Decrease (increase) in restricted cash 95 (244 )
Decrease (increase) in accounts receivable 5,050 (1,898 )
Decrease in inventories 11,968 10,911
Decrease in prepaid expenses and deposits 1,183 90
Decrease (increase) in accounts payable and accrued liabilities (3,080 ) 3,577
Decrease in related company balances (8,154 ) (275 )
Increase (decrease) in deferred revenue (6,319 ) 1,255
(9,144 ) 3,207
Cash used in investing activities
Capital expenditures (50 ) (1,506 )
(50 ) (1,506 )
Cash flows from (used in) financing activities
Issuance of common shares - 12,434
Issuance of convertible bond - 1,043
Decrease in bank indebtedness - (11,809 )
Funding from non-controlling interest 112 -
Decrease in long term receivable 3 5
Increase in related company balances 4,855 -
Decrease in long term liabilities (461 ) (47 )
4,509 1,626
Decrease (increase) in cash during the period (4,685 ) 3,327
Cash, beginning of period 7,483 1,170
Cash, end of period $ 2,798 $ 4,497
Supplemental cash flow information
Cash paid (received) during the period:
Interest $ 2,928 $ 2,745
Income taxes $ - $ 9
Timminco Limited
Consolidated Statement of Changes in Equity As at September 30, 2011 and September 30, 2010
(unaudited)
(in thousands of canadian dollars)



Issued Capital


Contributed surplus



Deficit
Total
attributable to the equity
holders of the parent


Non-controlling
interest



Total
As at January 1, 2011 $ 310,777 $ 13,320 $ (273,650 ) $ 50,447 $ (610 ) $ 49,837
Total comprehensive loss - - (15,708 ) (15,708 ) (45 ) (15,753 )
Non-controlling interest investment - - - - 112 112
Common shares issued in settlement of convertible notes 1,096 - - 1,096 - 1,096
Share-based payment transactions - 1,819 - 1,819 - 1,819
Acquisition of non-controlling interest - - (543 ) (543 ) 543 -
As at September 30, 2011 $ 311,873 $ 15,139 $ (289,901 ) $ 37,111 $ - $ 37,111


Issued Capital


Contributed
surplus


Deficit
Total
attributable to
the equity
holders of the
parent
Non-
controlling
interest


Total
As at January 1, 2010 $ 285,205 $ 9,438 $ (178,586 ) $ 116,057 $ - $ 116,057
Total comprehensive loss - - (53,947 ) (53,947 ) (411 ) (54,358 )
Common shares issued in settlement of repayment liability 12,726 - - 12,726 - 12,726
Common shares issued in settlement of trade payable 412 - - 412 - 412
Common shares issued for cash 12,434 - - 12,434 - 12,434
Share-based payment transactions - 2,832 - 2,832 - 2,832
As at September 30, 2010 $ 310,777 $ 12,270 $ (232,533 ) $ 90,514 $ (411 ) $ 90,103

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